Finance

Understanding Boat Finance

According to Statista, the total number of people who owned boats in Australia as of 2016 was 2.5 million. The majority of the boats were dinghies, canoes or rowing boats: about 1.5 million started to live in houses that had boats of these types. While on the other hand, around 1.25 million stated that their homes had either a speedboat or motorboat, and about 166 thousand said they had a yacht or a different type of sailing boat. These are impressive figures as the ownership of boats is a status symbol in Australia. This isn’t just because of the purchase prices of boats but also owning property near a water body attracts extra value on the property, making it a real estate goal.

It is therefore of importance to us that we guide you as you make your boat purchases. We have the expertise and sound knowledge about the Australian boat industry, which will be important to you as you shop for your next boat for your family, friends, or businesses. You can count on us to deliver both quality advice and boats to you!

For most Australians, their choice of boat varies according to what purpose they intend to use it for. The types of boat you could consider include but are not limited to the following: motor yachts, personal watercraft, runabouts, sailboats, ski and wakeboard boats, trawlers, walkarounds, houseboats, game boats, among others. There are also many manufacturers, with each manufacturer having features unique to its boats, making experiences vary according to your choice of manufacturer.

Should you not have enough credit for your chosen boat, you could reach out to any financial institution of your choice and apply for credit at given interest rates. Most financial institutions offer low-interest rates, easy and cheap loan repayments, no arbitrary or ambiguous charges and safe and quick application procedures. However, below is an outline of the financing options available to a potential boat buyer below:

Boat Loan

A boat loan is a special type of instrument for financing a boat. It is a process that involves a financial institution borrowing a buyer’s money to buy the boat {asset} and then holding the financial company holds the security over the boat for the duration of the loan. A boat loan can be arranged for both individual usages or for commercial usage like the chattel mortgage. However, while a boat loan is the most common form of financing a boat in Australia, most financial institutions making the lending would prefer a credit score of about 700 or higher before giving out loans. Although you could have a boat with a much lower credit score, a borrower may expect to pay the penalty in the guise of a higher interest rate. So how then can you proceed to get a boat loan? You start by setting up a meeting with a boat dealer; a dealer usually has more in-depth knowledge about getting a boat loan and usually has close relationships with the lenders. After this, you proceed to meet a financial institution of your choice to apply for a loan; it is advised that you consider their interest rates and best to take out an equity loan as this is preferable. Afterwards, you proceed to execute a loan deal with a lender that is specialised in marine financing. Marine financing is distinct from other forms of finance agencies, and as such, some lenders are well established in it. As such, it is advised you meet with financiers with sound knowledge in it that know the pros and cons well enough.

Boat Leasing

Boat leasing is another type of financing method available to a person seeking to get a boat. A boat lease involves an application to use a boat for a defined period of time in return for the payment of certain agreed amounts. The essential features of a boat lease include the following: interest rates of the leasing finance company, a fixed term of the lease, payment methods which could be instalment or lump payment, among others. It is a common method of financing a boat in Australia and involves the leasing party having a right of ownership in the boat while the party taking the lease enjoys complete usage of the boat. The property or ownership of the boat may transfer to the borrower after payment of the last instalment due on the lease provided; they do not default on the payment or contravene other terms of the lease agreement if the lease includes such terms.

Hire Purchase

You can also use hire purchase to get the boat you want. When you get this kind of option from a finance company, what happens is that you will identify the boat you want to buy, and the finance company will buy the boat. Then, they will offer the same boat to you on a lease with an obligation that you have to buy the boat at the end of the agreement. In most cases, the hire purchase agreement will include the cost of the lease and the residual cost that you will pay for the boat into the same deal so as to make sure that with every repayment, you are buying the boat and once you pay your final repayment, the boat becomes yours fully. In some cases, you will only be paying for the lease, and when the deal comes to an end, you will have to pay a balloon payment which will transfer ownership of the boat to you. The most important thing to note is that during the duration of the hire purchase agreement, you are basically holding the boat on a lease, and you don't have ownership, and it is only after the deal ends and you fulfil your obligation that the boat ownership transfers to you.

Disclaimer

This information is only available as a general guide on the government policies. It is derived from the official Australian government sources. We do not bear any responsibility for the commentary and analysis of this public domain information nor any liability for how the facts are interpreted. It is recommended that you speak with an accountant or financial advisor to get precise information and advice on your situation.

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