What are boat loans?
Getting out on the water is a favourite pasttime for many Australians, but those who have their own boat are in the minority. Boat loans can help finance the purchase of a boat, either new or used and through a private or commercial sale. If you need a boat for business rather than just leisure, you can also find boat loans available for that purpose. These are personal loans and they work in the same way as loans for other purposes, such as buying a car or helping to fund a wedding.
Why do people use boat loans?
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 have to make a balloon payment when the loan term finishes.
What are the main features of boat loans?
If you decide to investigate a loan for your boat, you can look at secured or unsecured personal loans. If you choose a secured loan, one that has either the boat or another asset you own, such as a property or the boat itself, as collateral, you are more likely to be offered a lower interest rate. The lender has 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 negotiate for an unsecured loan, interest rates will in all probability be higher as the lender has no absolute guarantee of being paid back. It's also possible that the repayment time period will be less than for a secured loan and the amount you can borrow will not be as great.
Repayment options can be with fixed or variable interest rates and you may be able to get a deal whereby you can pay off the boat loan early without incurring a penalty. Always read the small print of a loan agreement to see what fees and charges there may be.
What are the pros and cons of boat loans?
Boat loans are a useful way of getting the money you need for your purchase without having to wait until you have saved up enough. For an expensive boat that's not always an option so a personal loan that you budget carefully for can make the difference between owning a boat and not. On a variable interest rate bear in mind that your repayments may go up or down depending on movements in the financial markets, and that if you default on a secured loan you are in danger of losing the asset used as the guarantee.