Boat Loans

The price tag of a new boat can vary a lot depending on what kind you’ve got your eye on, from a two-person fishing dinghy, all the way up to a luxury yacht. That’s why the borrowing limit on boat loans varies as well - they often have a minimum borrowing amount, which can be as low as $1,000. Some also have a maximum amount you can borrow, though there are plenty of options without this limit.

How much you’ll be able to borrow depends on a few different factors, including your credit history, income, whether you’re securing your loan and which lender you’re applying with.

Just like with any other kind of personal loan, there are a few steps you can take to make sure you’re going to get the best possible deal when shopping for a boat loan, including:

• Keep your credit in ship shape. Quite a few personal loans come with different rate tiers, depending on a borrower’s credit. If you have excellent credit, you can often snag the lowest boat loan rates around. If your credit is not so good, well… not so much. So make sure you keep your credit report looking healthy by managing your other credit sources wisely - for example, always meeting home loan or credit card repayments.
• Look outside the box. As we mentioned above, some personal loans are for buying boats only, others are more general. So don’t think it has to be labelled a “boat loan” to be right for you - other personal loan options might be a better choice. Similarly, only considering your current bank or the big four when it comes to getting a boat loan can really limit your choices - by looking at smaller lenders, online lenders or peer-to-peer platforms, you may find a tonne of other great low rate boat loans.
• Ask for a better deal. There’s a simple trick to scoring a better deal on your boat loan - ask for it! Not everyone is comfortable with haggling, but sometimes all it takes to get a better interest rate or have a fee waived is asking for it. One trick is to compare boat loans beforehand, so that you can ask your lender of choice to price match a better offer from a competitor. Some lenders will also offer discounts if you bundle other products with them as well.
• Compare your options. Finally, the top strategy to finding the best boat loan rates around and snagging a great deal is to thoroughly compare your options. If that sounds like a lot of work then don’t worry - that’s where Mozo comes in.

There are a few key features that you should keep a weather eye out for when choosing a personal loan for your boat purchase, such as:

• Low interest rate. One of the most important factors in how much you’ll pay on your boat loan is the interest rate. There can be huge differences between the highest and lowest personal loan rates, and making sure you’re on a good deal can mean thousands of dollars in savings.
• Low fees. The other big cost associated with a boat loan is fees. These can include upfront application fees, ongoing service fees, late payment fees and even break fees if you pay the loan off early. The good news is there are plenty of loan options available with few or no fees attached, so make sure you search them out!

TOP TIP: Check the comparison rate. One super useful tool to work out the ‘true’ cost of a loan is the comparison rate. This is a percentage rate which takes into account interest and fees to help you compare loans on even footing. So make sure you check this rate while doing your comparison.

• Handy features. You might also want to opt for a boat loan with a few extra features to help you pay off your loan faster and save on interest. Being able to make fee free extra repayments and have access to a redraw facility are a couple of the most common features you might want to look for. The chance to choose monthly, fortnightly or weekly repayments might also help you fit repayments into your budget.
• Loan term and amount. Boat loans are often available for terms between 1 and 7 years, and sometimes have minimum and maximum amounts you can borrow. These are important things to keep in mind when narrowing down your shortlist of suitable loans.

Before you get carried away by dreams of sailing the world and lazing around on the deck of your new yacht (or tinnie) take a minute to consider some of the pitfalls of a boat loan. Being prepared for these potential mistakes is the best way to avoid them, so make sure you don't get caught:

• Sticking with just the big banks. While it may be convenient to stick with one of the big four banks when searching for a boat loan, chances are that’s not where you’ll find the best value. So don’t get stuck in the trap of the big banks, and make sure you check out competitor lenders before signing on the dotted line.
• Paying early repayment penalties. Making fee free extra repayments and paying off your loan quicker is a great way to save on interest - but beware, some loans include break fees that apply when you pay the loan out early. So if you’re planning to do this, make sure you weigh up the benefits of saving on interest against the cost of any fees involved.
• Taking on a huge loan amount. If you’re in the market for an expensive boat, the price tag can stretch to hundreds of thousands of dollars - and the bigger your loan amount, the more interest you’ll be racking up. So when you’re working out how much you can afford to spend on your new boat, make sure you crunch the numbers using a boat loan calculator and account for interest in your budget.
• Not budgeting for extra costs. So your budget will cover the monthly repayments on your boat loan? Great! But have you thought about all the other costs that come with owning a boat, like boating equipment, maintenance, insurance, fuel and docking fees? Failing to account for these costs and having to put them on your credit card or missing loan repayments because your budget is tighter than expected is a major pitfall, so be sure to think your expenses through before committing.

TOP TIP: Don’t forget the exchange rate. If you’re buying your boat from outside Australia, don’t forget to factor in exchange rates into the cost of your boat and plan for that when you crunch the numbers on how much you can borrow.

Having a bad credit history can put a damper on securing a boat loan, but depending on just what your credit history looks like and which lenders you approach, you should probably still be able to snag a loan. The downside is that generally, the worse your credit score is, the higher the interest rate you’ll pay and the trickier it will be to get approval.

If you’ve got bad credit, here are a couple of steps to consider before applying for a boat loan.

• Check that your credit report is accurate. The first step should be to get a free copy of your credit report, and go through it to make sure there aren’t any mistakes that may be leaving a black mark against your name. Mistakes aren’t super common, but it’s a good idea to check on your credit every once in a while anyway.
• Reconsider borrowing - for now. If you have bad credit, taking out a boat loan might not be the best idea, especially if you have doubts about being able to meet the repayments. You might need to put your boating fantasies on hold for a year or two while you work on getting your credit score back on track. A few tips for doing this include paying off any loan defaults, and make sure you’re meeting repayments on other loans or credit cards.

Yes! If you’d like to crunch the numbers on personal loan options from the Mozo database, all you need to do is scroll up to our personal loan comparison table and enter your loan amount and term. This will show you the estimated monthly repayment on each option listed in the table.

Or, you can head over and use our personal loan repayment calculator to work out just how much your brand new boat could stretch your budget. And if you’re tossing up between two options and not sure which one will save you the most, check out our personal loan comparison calculator to crunch the numbers on both side-by-side.

Curious about other vehicle specific loans? Check out bike loans, new car loans or even car refinance loans.