Boat Financing

Boat Financing

Owning a boat, a yacht, a super yacht or any personal water craft can be a wonderful opportunity and lifestyle to spend quality time with family and friends. Depending on the type of boat you want to purchase and the price tag that comes with that boat, financing the purchase can be a great way to secure the vessel faster than saving the cash over time. Some of the type of vessels available with a boat loan can include:

• Cruising yacht, sail boat
• Motor yacht, luxury yacht
• Catamaran for blue water cruising or for charter / fleet
• Commercial boats
• Game fishing boats, commercial fishing boats
• Personal craft like bowriders, wakeboats, tinnies, jet skis and more

New or used boats can be purchased through a range of financing options. These include main stream lenders, non-conforming lenders and private lenders. The source of funds available to each applicant will be determined by the individuals circumstances (is the purchase in the individuals name or being purchased through a business), the type of vessel and the amount of funds required. For example, private boat financing is generally for smaller loans and main stream lenders can cater for much larger loans.

In addition to this, there are secured loans and unsecured loans which can be accessed. To explain this, the lender will consider the asset (the boat) and determine the depreciation rate, the duration of the loan term, the age of the boat and consider if the asset will be a suitable security on it's own or if some other form of security (e.g. a property) will be required as collateral. The interest rate for a secured loan is generally going to be lower than unsecured loans due to the security (e.g. the owners property) reduces the risk to the lender.

The lenders are going to be considering:

• The boat value
• The boat age
• The amount the borrower is seeking (loan to value ratio - LVR)
• Resale opportunities and the market
• The individual, the strength of their application and risks

Boat financing comes with so many variables that each application is assessed on a case by case basis by the lender however there are a few general rules of thumb that to consider to help prepare your application:

• Always work with an experienced broker who can guide you though the finance application. A broker will have access to multiple lenders, saving you time and hassle.
• Buying a newer boat is more favourable than older boats as they can retain value for longer.
• Have a healthy deposit to reduce the loan amount required and exposure to the lender (i.e. a 50% LVR offers more opportunity for finance).
• If you have nil boating experience and want to buy a $1,000,000 yacht, this may not look appealing to a lender unless you have significant security to offer.
• Understand there are many options for boat financing aside from walking into a bank branch.

Depending on the loan terms you are seeking, some options include:

• Short term boat loans or longer term finance (e.g. 1-5yrs).
• Ballon / residual payments (e.g. making a large lump sum payment at the end of the term).
• No deposit boat financing.
• Variable or fixed interest rates.
• Understand there are many options for boat financing aside from walking into a bank branch.

Most importantly, boat financing needs to be considered carefully. Before submitting an application ensure the required repayments terms are clear and understood to not place unneccessary financial stress on the borrower. There's no point in having a boat if you cannot afford to take it on the water.

We at Fordable are passionate about being on the water, so much so that our business name ties us to this lifestyle - 'A shallow place in a body of water where one can cross’!

Our Managing Director has been a Volunteer Lifesaver, a Professional Lifeguard at Bondi Beach (i.e. Bondi Rescue), holds commercial and RYA maritime licences, grew up spending holidays on Lake Macquarie fishing and learning to sail, has done the Sydney to Hobart Yacht Race and is quite frankly a little obsessed with boating. So if there is any reason at all to discuss boat financing with us, this is one good reason, even if it's just to talk boats!

To submit an enquiry and discuss your boat financing needs with our team, please complete our contact us form and a representative will be in contact with you shortly.