Boat Finance Loans Are Easy To Navigate If You Know How; At Finance 48, We Know How
To quote the great Humphrey Bogart in Key Largo “my first sweetheart was a boat”. At Finance 48 we love nothing more than getting out on the water at the weekends, so we understand the passion behind your decision to purchase a boat.
Crucially, we know how to help you broker the right finance deal for you.
To make life easier for you, below we have compiled some FAQs to help you navigate this area and help you make informed choices. It’s just one of the reasons why we are the best finance broker Perth has to offer.
How Much Can I Borrow To Finance My Boat?
How much finance we can arrange is always on a case-by-case basis. Typically, we broker finance on vessels on anything from a $5,000 tinnie to a $2m yacht.
We are happy finance anyone, anywhere in Australia.
What Is The Duration Of The Loan?
Finance for your vessel may range from between 12 months to 7 years. However, our Perth based finance broking team is skilled at building a case when outside traditional lending parameters.
You will receive a personalised finance solution that is bespoke to you.
What Is The Interest Rate And Is It Variable?
At Finance 48 we work on a case-by-case basis. It all comes down to rate-for-risk profiling, but a standard rate as of November 2022 is between 5-7% for newer vessels with clients with a strong risk-rating.
We will search for the best rate for you across our network of more than 50 national lenders.
Are Interest Rates Fixed Or Variable?
Whilst interest rates on boat finance may vary, they are not variable. Depending on how much you are looking to borrow, what your deposit is and your lending profile the rate will vary.
But ultimately, the rate we negotiate will be fixed for the term of the loan. That means that if interest rates do rise, your rate, and repayment, stays the same.
Are There Penalties If I Pay Off My Loan Early?
Yes. Most lenders will charge an exit fee or penalty for paying back the loan early. However, this is unlikely to be more than a few hundred dollars.
Do I Need A Skipper’s Ticket To Buy A Boat?
The short answer is no, you don’t need a skipper’s ticket in order to get the finance you require for your vessel. However, when it comes to buying insurance – and believe me, you need insurance – you will need to have either a skipper’s ticket or evidence to show that the person behind the wheel of your vessel has got a valid skipper’s ticket.
What Deposit Do I Need To Put Down To Get A Boat Loan?
Most boat finance loans do not require a deposit – it’s not like buying a house. That means lenders will finance 100% of the purchase price of the vessel.
That said, if you find the boat of your dreams is $75,000 and owing to your circumstances or rate-for-risk profile we can only finance you for $50,000, then you’ll essentially have to find $25,000 as collateral to make the purchase.
Another point worth making is that whilst lenders do not necessarily require a deposit, you may find that the seller requires you to commit to the purchase by putting down a down payment to confirm the sale.
So What’s Rate-For-Risk Profiling?
Lenders like to see certain criteria before they lend. This means that a steady job, stable residence and owning your own property all help considerably when it comes to arranging finance for your boat.
The stronger your profile, the lower the perceived risk, and therefore the lower the interest rate.
If you’re PAYG all you’ll need is your last two pay slips.
What If I’m Self-Employed?
You may need to provide 2 years of tax returns and a Notice of Assessment as issued by the Australian Tax Office.
What If My Business Suffered During COVID And Is Now Performing?
At Finance 48 we will help you find a way to make a case to our lenders. In these circumstances last years’ tax return and letter of support from your accountant will certainly help you obtain financing. As will Purchase Orders or contracts for future work. Anything that can support a positive cash-flow projection is extremely useful.
What About Financing For Shared Ownership?
A father and son living in the same residence looking to jointly finance their purchase of a boat shouldn’t have too much trouble.
However, a group of mates may find it more challenging to jointly finance a vessel.
Again, Finance 48 likes to judge each application on a case-by-case basis. We have built good relationships with assessors over the years, and they will listen to us and judge each circumstance on its merit.
Can I Cross-Collateralise Finance For My Boat With My Mortgage?
The short answer is no.
Lenders do not generally like to mix lending on an appreciating asset (such as a house) – with a depreciating asset (in this case a boat).
That said, Finance 48 can assist with releasing equity from your property, but there are advantages to using the boat itself as the collateral. Home loans are generally for a 25–30-year term, so if you were to borrow using money in your house, you could end up paying for that boat for many, many years after you’ve disposed of the vessel.
How Can I Check That The Vessel I Am Buying Is A Legitimate Purchase?
We strongly urge our clients to check the Hull Identification Number of the vessel. The HIN is unique to that boat and all vessels manufactured after 1972 will have a HIN.
You can also do a background check on the Personal Property Securities Register to see if there is any outstanding finance owed on the vessel. Here you’ll find more information on how to do a PPSR check.
What Other Costs Are Involved That I Need To Be Aware Of?
You know what BOAT stands for right? Bring On Another Thousand! They cost money. And when you add up the maintenance, fuel bills and additional extras it’s worth doing some sums to consider just how much you can really afford to borrow.
Lenders will ask you to account for your living expenses and ask you if you are expecting any significant changes to your financial situation in the future. As someone who loves boats, owns boats and spends a fair bit of time on boats, what I can say is there are quite a few additional running costs that you should factor in to ensure you can really afford to own a boat as well as make the repayments comfortably.
I’m A Yachty Who Lives On My Boat – Can I Get Finance?
This is a tricky one as the answer is no. If necessary, lenders like to know that there is a door they can knock on to retrieve their funds. Not easy to do if you happen to be anchored offshore in an undisclosed location somewhere in the Gulf of Mexico.
I Would Like To Own A Boat And Charter It For Guests – Can I Get Finance?
Absolutely. At Finance 48 we love enterprise and as one of the top commercial loan brokers in Perth we will happily help you secure a commercial loan.
If you are looking for a commercial loan, lenders will look at your current business & trading history. They will also factor in your financials and the value of an existing fleet if you are already established.
Do I Need To Know The Precise Boat I Am Buying Before I Arrange Finance?
No, you don’t but it’s worth pointing out that we recommend securing your finance before you go shopping and here’s why: applying for pre-approval for a loan will actually improve your negotiating power when it comes to looking at your options with vendors. If they know you already have the finance in place for $50,000 and they have a vessel on the market for $55,000 then your diligence in arranging the finance beforehand may well save you five thousand bucks. Not bad at all!
It’s worth noting here that contracts can be drawn up with “subject to sea trial” or “subject to mechanical inspection” clauses to give you that added safety net.
My Boat Doesn’t Need Finance But It Does Need A New Engine
You’ve come to the right place. We can arrange repower engine finance, so you will be able to get a brand-new engine.
What Are The Fees And Charges?
This is very important. Please make sure you read the fees and charges and broker fees. We can talk more about these when you make an enquiry.
Should I Shop Around For Finance?
Yes, and no. Whilst it is worth exploring the different finance options, we do stress that you should not make any unnecessary applications. Having multiple finance applications in a short space of time can adversely impact your credit score. This may sound unfair, but it is the commercial reality to lending here in the Australian market and we urge our clients to be protective of their credit file.
At Finance 48 we welcome those who have had finance rejected before – it’s our passion to find a way to get you what you want. So if you’ve had knock backs, please reach out to us before applying for another loan and we will do everything we can to have you out on the water in no time.
Any Further Questions?
Well that just about covers all the main FAQs. If there’s anything else you’d like to know about boat finance loans or to get started, why not get in touch?
Contact us today and help you get ready to set sail. To borrow once again from our old pal Humphrey Bogart, this could be “the beginning of a beautiful friendship”.