Compare boat loans

Pros of using a boat loan

Depending on your own needs and circumstances, some reasons you might opt for a boat loan include:

• You can keep your savings intact: Purchasing a boat outright could potentially involve a significant cash outlay. If you choose to take out a boat loan, then you will pay the balance off in installments, as well as any fees and interest payments, but you will still have access to cash in your savings in case you need it.
• You can get out on the water faster: Saving money to purchase a boat outright is an option, but if you want to set sail as soon as you can, then taking out a boat loan can be a way to own a boat sooner, and you can use money from your savings to fund your repayments.

Cons of using a boat loan

If you are considering using finance to purchase a boat, there are also some potential drawbacks to keep in mind, including:

• You will be taking on debt: A boat loan is a form of debt, and when you take out a loan, your borrowing capacity elsewhere could be affected. This may not present an issue for all borrowers, but if you are considering applying for a home loan soon, it’s worth keeping in mind that lenders will consider your existing debts when calculating how much they are willing to lend you.
• Buying with finance will be more expensive in the long run: When you purchase a boat with finance, you will pay it off over a period of time, potentially several years. You will also have to pay interest on the loan along with the principal. This means that, in the long run, you will end up paying more than if you had initially paid cash.

You can generally use a loan to purchase a new or used boat. However, there are some things to consider if you are buying used. For example, you may not be able to take out a secured loan to buy a used boat—a loan where the vessel itself will be used as collateral. For a secured loan your lender may only accept your application if the boat you are offering up as collateral is new or almost new.

This means that if you want to use a loan to purchase a used boat, you may need to take out an unsecured loan. This is a kind of loan that is not secured to any one asset as collateral, and  tends to come with a higher interest rate than a secured loan. This means that, while you may be able to get finance to purchase a used boat, it is possible that the interest rate on your loan will be higher than if you were buying new.

If you’re planning to buy a used boat, it’s important to thoroughly check its condition before committing to the purchase. Ask for any available service and maintenance records to understand how well the vessel has been maintained. Consider an independent marine inspection to help identify any hidden issues.

Some other checks you may carry out include:

• Check the hull for damage or repairs: Look for signs of cracking, blistering, or patchwork repairs that could indicate previous damage.
  
• Inspect the engine and mechanical systems: Ensure the engine starts easily, runs smoothly, and has no unusual noises or smoke. A mechanic’s inspection can provide added reassurance.
  
• Review ownership and registration details: Confirm the boat’s ownership history and make sure it’s not stolen or under finance.
  
• Test the electronics and safety gear: Check that all navigation systems, lights, bilge pumps, and safety equipment are in working order.
  
• Take it for a sea trial: If possible, arrange a test run to see how the boat performs on the water.

Doing these checks can help you avoid unexpected costs and ensure you’re getting value for your money.

When weighing up boat loans, some things you might consider include:

• Whether the loan is fixed or variable: The interest rate on a fixed remains the same during the term of the loan, whereas on a variable rate loan it can go up or down, depending on the decisions of your lender and market forces. The kinds of loans available will vary depending on the provider, but when choosing a loan,you may decide you prefer the certainty or a fixed rate, or you may seek out a competitive variable one.
• Whether the loan is secured or unsecured: A secured loan is a loan that is secured against an asset. In the case of a boat loan, this would be the boat itself. If you are unable to make your repayments, your lender will have the right to claim the asset in order to recover their costs. In the case of an unsecured loan, a lender will not have a specific asset it can repossess but can take the borrower  to court to cover their costs if they cannot meet the repayments.
• The interest rate: This can also vary depending on such things as the provider, whether the loan is secured or unsecured, and your personal circumstances (such as your credit score and whether you have a loan guarantor).
• The comparison rate: This is a rate that takes into account both the interest rate and most upfront and ongoing fees, and is designed to give you a better idea of what the total cost of the loan will be per year.
• Fees and charges: Personal loans can come with a variety of fees and charges, such as application fees, monthly or annual fees, missed payment fees and early payment fees.
• The length of the loan term: The term is the amount of time you will have in which to pay off a loan. A loan with a longer term may have lower repayments, but it also means you will pay more interest over the life of the loan.
• Flexibility around additional repayments: Many lenders on Canstar’s database allow you to make extra regular and lump sum repayments. However, it’s important to check whether any additional fees apply for this.

When you apply for a boat loan, much like when you apply for any other sort of personal loan, you will be required to provide documentation such as:

• ID documents such as a drivers licence or passport to prove that you are aged over 18 and an Australian resident.
• Proof of income, typically in the form of pay-as-you-go (PAYG) payslips from your employer, to show that you earn a regular income that is sufficient to cover the loan’s minimum requirements.
• Your employment details for the past three years.
• Proof of savings, typically in the form of bank statements, to give the lender a picture of how you manage your finances.
• A list of any assets you own, including assets such as vehicles and property.
• A list of any debts you may have, such as other personal loans or home loans, credit card debts and credit limits, outstanding buy now pay later (BNPL) balances and the like.
• Details of your general living expenses, including groceries, utilities, streaming services, rent, medical and transport costs, school fees and so on.

If you take out a secured boat loan, you’ll typically be required to use the borrowed funds solely for the purchase price of the boat. In contrast, unsecured loans may offer more flexibility—allowing you to use the funds not only to buy the boat but also to cover additional costs such as safety equipment, boating supplies, or accessories.

In Australia, you can usually use a boat loan to buy different types of watercraft, including ski boats. Lenders will typically let you finance a new ski boat, as long as it meets their age and condition requirements. Some may also offer finance for used ski boats, though older models could come with extra checks or limits.

Getting finance for a new or nearly new boat is generally easier. These boats often come with warranties, which can reduce the lender’s risk. That’s why secured loans for new boats usually offer more competitive rates and terms.

For used boats, you may still be eligible for a secured loan—especially if the boat meets the lender’s criteria and you’re buying from a dealer. But if you’re buying through a private sale, it can be harder to get a secured loan approved.

In that case, an unsecured personal loan may be an option. This type of loan doesn’t use the boat as security. You can also use an unsecured personal loan to buy a new boat if you don’t want to offer the vessel as collateral. 

A boat loan is essentially a type of personal loan, and like most personal loans, it may come with a range of fees and charges. These can include application fees, ongoing monthly or annual fees, missed repayment fees, and even fees for paying off the loan early.