Compare personal loans for buying boats in Australia

Getting out on the water is a favourite pastime for many Australians, but those who have their own boat are in the minority. Boat loans can help finance the purchase of a new or used boat through a private or commercial sale. And if you need a boat for business rather than just leisure, you can also find boat loans available for that purpose.

Boat loans are a specific type of personal loan. They work in much the same way as personal loans for other purposes, such as buying a car. 

When it comes to both boat loans and car loans, they follow a similar financing structure in that a lender will provide the borrower with a specific amount of money relative to the cost of the vehicle, which will be paid back by the borrower over a predetermined period of time.

People use boat loans when they want to make a marine purchase but don't have all the capital finance available. Boats can be expensive so it's no surprise that you may need some additional funds to acquire what you want. 

Because of the high value you may find that this type of personal loan will offer a larger amount for you to borrow and you could also benefit from longer repayment terms. Depending on what sort of loan you get, you may also be required to make a balloon payment when the loan term finishes.

There's a wide variety of marine recreational vehicles that may be considered for boat finance. Some of these include:

• Boats
• Yachts
• Dinghies
• Jet boats
• Sailboats
• Powerboats
• Jet skis
• Motor cruisers
• Other marine leisure craft

Secured vs unsecured

When you take out a personal loan for your boat, you will need to choose between a secured or unsecured personal loan. If you choose a secured loan, one that has either the boat or another asset you own as collateral, you are more likely to be offered a lower interest rate. This is because the lender will have the guarantee that, should there be a problem with repayments, the boat or other asset could be sold to pay off the outstanding amount. If you opt for an unsecured loan, interest rates will generally be higher as the lender will have no absolute guarantee of being paid back. It's also possible that you may be approved to borrow more with a secured loan.

Fixed rate vs variable rate

Your interest rate will either be fixed or variable. Loans with fixed interest rates will have regular repayment amounts. On a variable interest rate, however, your repayment amount may go up or down depending on movements in the financial markets.

Extra features

There may be some loan features that are important to you, such as the option to make unlimited extra repayments or access to a redraw facility. Keep in mind that some credit providers may charge for use of these features.

Fees and charges

Be sure to factor in fees and charges to get a better idea of the overall cost of the loan. You'll find that the comparison rate includes most the main fees charged, but might not include them all. Common fees include:

• Establishment fees
• Ongoing monthly fees
• Late payment fees
• Redraw fees
• Early repayment fees

The amount you need to borrow on a boat loan will likely be substantial - generally as much as, or often more than, what you would borrow to buy a car. For this reason, your credit history will impact a number of factors when it comes to getting approved for a boat loan, including:

• The loan amount - Borrowers with excellent credit scores are more likely to be considered for a higher loan amount than those with lower credit scores.
• The interest rate - Excellent credit score borrowers will also be likely to access a more competitive interest rate than those with a substandard credit history.
• The lender - Some lenders may not be willing to provide such a loan to borrowers with a history of irresponsible credit behaviour.

If you have a bad credit score, consider taking some time to build it back up before applying for another financial product.

With so many different kinds of marine vehicles eligible for a boat loan, the size of the loan one might want to take out will vary widely from one borrower to the next. For example, a borrower who's looking to buy a jet ski won't need to apply for a loan nearly as big as a borrower who's in the market for a luxury yacht.

You'll find that most personal loans have a minimum loan amount of around $1,000, while upper limits can often be more flexible. It's important to do your research to find out which lenders may offer your required loan size.

Lenders will factor in your income, credit score, and whether you're interested in a secured or unsecured loan when deciding how much they are willing to lend you.

Depending on the amount borrowed, and whether it's a secured or unsecured loan, the typical loan term for a boat loan ranges from one to seven years.

A longer loan term will generally mean cheaper regular repayments, but more money spent on interest charges over the life of the loan. A shorter loan term, on the other hand, will likely mean your repayments are more expensive, but you'll pay the loan off earlier and in turn save money on interest charges.

Ultimately, the length of time it will take you to pay off your boat loan should be determined by what repayment amount will fit comfortably into your budget.

If you choose a longer loan term, but feel you may want to make additional repayments down the line in order to pay it off sooner, ensure the loan product you choose allows for extra repayments.

Once you have a good idea of how much you will need to borrow to buy your new boat, you can start comparing your personal boat loan options to find the best boat loan for you.

You might like to start by using RateCity's boat loans comparison table on this page. It will allow you to filter down your search results by lenders, security type, extra features, loan amount and credit score.

Next, you can use RateCity's personal loan calculator to get a repayment estimate. Simply enter your preferred borrow amount, loan term, interest rate and credit rating to see how much your weekly, fortnightly or monthly repayments might be. You might like to enter different interest rates or loan terms to see how it might affect the overall interest payable and the total cost of the loan.

Once you've shortlisted your preferred credit products, consider reading the product disclosure statements (PDS) for specific information on loan costs, any significant benefits and risks, and any fees and charges that may apply, before submitting your loan application.

To apply for any kind of personal loan, most lenders will require that you:

• are at least 18 years old;
• are an Australian citizen, permanent resident or have a valid visa;
• are employed or receiving regular income;
• earn a minimum income (dependent on lender), and;
• have a good credit rating.

When you make a personal loan application, you’ll typically need to provide:

• Proof of identity (driver’s licence, passport etc.)
• Proof of income and employment (payslips, tax information)
• Details of any other financial commitments
• Details of additional assets (particularly for secured loans)

To get started on your boat loan application, consider the following steps:

1. Search and compare competitive rate boat loans using RateCity's comparison table on this page. Use the search filters to find products that best suit your needs.
2. Use RateCity's personal loan calculator to get a repayment estimate to ensure your repayments will fit within your budget.
3. Read the product disclosure statement (PDS) of your preferred loan product and check that you meet the eligibility requirements.
4. Apply online.