Boat Finance

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DOLLARS AND SENSE

When considering your first or next boat purchase, evaluating finance options is not always high on the list of priorities, although it should be. Finance broker and consultant MARK O’DONOGHUE outlines a checklist of things to consider when looking for boat finance.

Just as the boats you’re looking at come with many power and accessory options, there also are many more finance options available than you might have thought. In fact, choosing the right finance package can potentially make a pleasure boat more pleasurable… or can help a commercial or charter vessel be a better business proposition.

It’s a good idea to get your finance in place and obtain a pre-approval for your loan before you go shopping. It’s wise to submit an application for a hypothetical boat for a given sum of money and, once it’s approved, you can confidently negotiate on a boat knowing the finance is ready to go. This should be a completely obligation-free service, so if you eventually decide not to take up the finance, there’s no charge.

To get a feel for affordability, many boat listing websites offer interactive financial calculators to provide an indication of what the repayments on your loan would be.

SOURCING BOAT FINANCE

Sourcing the right finance solution is not as easy as popping down to the local bank for finance. It can be well worth enlisting the services of a specialist finance broker experienced in boat finance who understands the unique dynamics of boat finance.

There are different ways to finance boats, whether it’s a runabout, luxury cruiser or charter boat. So, in looking for funding, there are some handy pointers you should keep in mind.

First you need to ask yourself some questions: How long you are likely to keep the boat? Will it be purely a pleasure boat? Could there be some business use?

When it comes to evaluating one finance proposal over another, your broker should make you aware of obligations such as your minimum commitments, the loan’s security and any special conditions that apply.

It’s also a good idea not to limit your options by securing your boat loan. For some, a stand-alone boat loan (similar to a car loan) is preferred, for others, using an undrawn line of credit facility against their home provides a more flexible cost-effective alternative.

Once you have your funding in place and have the paperwork, take a good look at the detail. Always check the payments to ensure you are getting the interest rate you expect, and be sure to read all the fine print.

LOAN APPROVAL CHECKLIST

Here’s a checklist of things lenders will be looking for when approving your loan:

  • Your capacity to meet the repayments based on your income
  • For 100 per cent finance you need to prove you have ‘tangible’ net worth (ie equity in property or investments). Financiers do not want a mortgage, but will simply want to feel comfortable that you have the ability to make good any shortfall between the second-hand value of the boat and the amount owed.
  • A good credit history
  • Stable employment and income

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