There’s an old joke that the two best days of a boat owner’s life are the day they buy it and the day they sell it. Funny, but it doesn’t have to be true. Plenty of Australians get years of joy on the water without the horror stories, and a big part of that is setting the finance up properly from the start.
Marine finance has a few quirks that car finance, and even caravan finance, don’t. The buyers who come unstuck are usually the ones who didn’t know about them. Whether you’re after a little tinnie, a family bowrider, a serious offshore cruiser or a yacht, here are six smart moves to make before you sign, so your time on the water stays the fun part.
How boat and marine finance works
Marine finance is a loan used to buy a boat, repaid in regular instalments over an agreed term, usually somewhere from one to seven years, and sometimes longer for larger, higher-value vessels. In most cases the loan is secured against the boat itself, which generally means a sharper rate than an unsecured loan, because the lender has the asset as security.
It covers everything from trailer boats and runabouts through to cruisers and yachts, bought new from a dealer or used from a private seller. Some lenders will fund the full purchase price, while others look for a deposit, particularly on an older boat. Personal watercraft like jet skis are usually financed a little differently, and we cover those under jet ski finance. The wide range of vessels, and the fact that a boat lives in a harsher environment than a car, is what gives marine finance its own set of considerations. Here are the six that matter most.
6 smart moves for boat and marine finance
Work through these before you commit, because marine finance rewards the buyer who does the homework and punishes the one who rushes in.
1. Decide new or used, and know the age rules
A new boat brings warranty, the latest gear and often sharper finance, but also the steepest depreciation. A good used boat lets someone else wear that first hit, so your loan is smaller. The catch with marine finance on a used boat is that lenders care about the boat’s age, not just yours. Many set a limit on how old the vessel can be at the end of the loan term, so an older boat can be harder to finance over a long term or attract a higher rate. Check that before you fall for a bargain a lender won’t back.
2. Get a marine survey on a used boat
This is the big marine-specific one, and it’s the equivalent of a building inspection for a house. A marine survey is a professional assessment of a boat’s condition by a qualified surveyor, covering the hull, structure, engine, electrical and safety systems. Boats hide their problems well, and water damage, osmosis in the hull, and tired engines are expensive surprises.
For a used or higher-value boat, a survey is money well spent, and lenders themselves often require one before approving marine finance on an older vessel. It can also be a powerful negotiating tool: a survey that turns up issues is fair grounds to talk the seller down. A survey typically costs a few hundred dollars, a small fraction of what a hidden hull or engine fault can cost to put right. Treat it as protection, not a hurdle.
3. Run a PPSR check before you buy
Before you hand over a cent for a used boat, especially in a private sale, search it on the Personal Property Securities Register. A PPSR check tells you whether there’s finance still owing on the boat, which matters enormously, because if you buy a vessel with a debt attached, that debt can follow the asset and the boat could be repossessed even though you paid for it. It costs only a couple of dollars, and skipping it is one of the most expensive mistakes a private buyer can make.
4. Budget for the extras, not just the boat
The purchase price is only the start with a boat, and the running costs catch plenty of owners out. Before you commit to a repayment, budget for the whole picture:
- Registration and insurance. Most boats need registration, and the rules vary by state. Comprehensive marine insurance is usually required on secured marine finance.
- Storage or a berth. A marina berth, dry storage or a mooring is an ongoing cost that can rival the loan repayment for a bigger boat.
- The trailer and tow vehicle. For a trailer boat, make sure your car can legally tow it, and factor the trailer into your budget.
- Maintenance and running costs. Fuel, servicing, antifoul and the general upkeep a marine environment demands all add up.
A boat you can afford to finance but not to run and berth isn’t one you can afford. Work the whole number, not just the sticker price.
5. Match the finance to the boat
Most marine finance is secured against the boat, the sensible and usually cheaper option. An unsecured loan can suit a smaller or older vessel a lender won’t take as security, but it generally costs more. Whichever you choose, line the loan term up with how long you’ll realistically keep and use the boat, and consider a deposit or trade-in to shrink the loan and sharpen your rate. As with any secured loan, a lender weighs up your income, your credit history, the size of your deposit and the boat itself when deciding what to approve, so a clean application on all fronts helps. Larger vessels like cruisers and yachts are a different world again, with bigger loans, longer terms and stricter survey and valuation requirements, so expect a more thorough process the higher up you go. You can estimate repayments with our repayment calculator, which uses the same maths marine finance does.
6. Work out whether it’s consumer or commercial use
How you’ll use the boat changes the finance. If it’s purely for recreation, it’s consumer marine finance, covered by Australia’s consumer credit protections. But if you’ll use it to earn an income, running charters, commercial fishing, or a hire operation, it’s likely commercial finance instead, often structured as a chattel mortgage with different tax treatment. It’s the same crossover that applies to a van used for business, and our guide to commercial caravan finance explains how the commercial side works. As always, the tax detail is one for your accountant, not to guess at.
Where a broker helps with marine finance
Marine finance is a specialised corner of lending, and appetites vary a lot. Some lenders love trailer boats but shy away from yachts, some cap the age of a used vessel tightly, some insist on a survey and others don’t. Sorting through that yourself, application by application, is slow and dings your credit file each time.
As an accredited finance broker, Get A Loan compares boat finance options across our lender panel, and matches your vessel, its age and your situation to the lenders most likely to say yes at a fair rate. We apply once, and our service is free for you because we’re paid by the lender. For the wider picture on funding a leisure purchase, our main guide to caravan and leisure finance is worth a read, and so is our warning about borrowing before you commit to any loan.
Your boat and marine finance checklist
- Decide new or used, and check the lender’s age limit before you fall for a used boat.
- Get a professional marine survey on any used or higher-value vessel.
- Run a PPSR check for money owing before you pay, especially in a private sale.
- Budget for registration, insurance, a berth, the trailer and running costs, not just the boat.
- Match secured or unsecured finance and the term to how you’ll use the boat.
- Work out whether it’s consumer or commercial use, and get tax advice if it earns income.
Final Thoughts
A boat should be a source of good times, not sleepless nights, and getting the finance right is how you keep it that way. Respect that marine finance looks harder at the vessel than a car loan does, get a used boat surveyed and checked on the register, and budget for the full cost of ownership rather than just the purchase. Do that homework and you set yourself up for years on the water instead of a costly lesson. When you’re ready to compare your options, that’s what we’re here for, and it costs you nothing to ask.
Disclaimer
The information in this article is general in nature and does not take into account your objectives, financial situation or needs. It is not personal advice, tax advice, legal advice or a recommendation to apply for any product. The right finance and any tax treatment depend on your circumstances, so seek independent financial and tax advice before acting.
Get A Loan Finance Pty Ltd is not a lender. We are an accredited finance broker and work with a panel of lenders and finance providers. Product features, eligibility criteria and availability can change without notice, and all finance is subject to lender approval.
