Personal loans for recreational vehicles

Australians have long had a love affair with the great outdoors - going off-road in a four-wheel drive, fishing in a tinnie, or tearing it up on a quad bike or snowmobile. But this pastime may require finance to be affordable, so it’s important to compare the available personal loan options and make a choice that suits your needs.

In addition to the purchase price of  your recreational vehicle, it’s important to consider how you’ll be financing any extra and ongoing costs that may be involved. For example, while a typical car needs fuel, servicing and insurance, a motorboat may need all of these plus safety gear and berthing expenses. This can add up over time, so make some calculations to be sure you can afford the costs.

Some recreational vehicles (particularly used models) may sell for relatively low prices, so you may be able to buy one with cash or a credit card. For pricier examples, you may be able to apply for a personal loan to buy a recreational vehicle from a major bank or a smaller specialist lender. Every personal loan is different, so be sure to compare the rates, fees, features and benefits offered by different lenders to find a suitable option for your financial situation and goals.

You may be able to secure your personal loan with the value of the recreational vehicle you’re purchasing, similarly to a secured car loan. This may let you enjoy a lower interest rate and more features and benefits, even if you don’t have a perfect credit score. Of course, this also means that you could lose your vehicle if you don’t keep up with the repayments.  

However, not all lenders may accept recreational vehicles as collateral for the purpose of securing a loan. These lenders may not be confident that the vehicle’s value will be enough to secure the loan, or they may be concerned about the increased risk of the vehicle being written off if it’s being used primarily for recreation. If you can’t use the vehicle you’re purchasing, in some cases you may still be able to secure a personal loan with the value of equity in your home or savings in a term deposit.

You could also purchase a recreational vehicle with an unsecured personal loan, so you don’t risk losing your new toy if you have trouble with the repayments. However, the interest rates will most likely be higher, which may make financing your purchase somewhat less affordable.

It's also important to remember that your credit score may play a role in determining the interest rate you’re offered for a personal loan. If you have a history of borrowing and repaying money on time, you may have good credit and be eligible for lower rates. But if you’ve had credit problems in the past, it may not be as easy to get a personal loan approved, and you may be charged higher rates. In some cases, you may want to look into finding ways to boost your credit score for some time before applying for your personal loan.

At the end of 2022, it cost around $72,000 to buy a four-wheel drive for off-roading, according to RACV. However, depending on the vehicle you choose, prices for some models range between $54,000 and $97,000.  Plus, it may cost you around $2,000 per month to keep the vehicle on (or off) the road, especially when you consider the extra wear and tear it may experience, and the potential insurance premiums.

Keep in mind that 4x4s may be offered with a wide range of accessories and extras, from bull bars to snorkels. While these can expand the range of uses for your vehicle, the costs all add up. You may want to consider how you plan to use your 4WD before you buy, and whether the value of these features may be worth the extra expense.

The cost of water-based recreational vehicles can vary wildly, depending on the size and scale of your maritime ambitions. Some of the options you could consider include:

• Boats
• Yachts
• Dinghies
• Jet boats
• Sailboats
• Powerboats
• Jet skis
• Motor cruisers 

While you may be able to buy a basic tinnie for a few hundred dollars, a yacht or top of the range motorboat could be a much more significant financial commitment that requires finance (some luxury craft sell for millions of dollars!). Keep in mind that depending on the boat loan you choose, you could risk losing your vehicle if you can’t keep up with the repayments on your secured boat loan.

Much like buying a car, it’s important to consider the ongoing costs of boat ownership. This may include insurance, fuel (if a motorboat), safety gear, berthing/storage, servicing, and maintenance.

Smaller recreational vehicles often have lower prices than cars, though some of the top-end models can reach comparable price points. For example, in 2023 BikeSales.com.au lists quad bikes and ATVs from under $200 to $30,000 and up. Similarly, motorbikes (including dirt bikes and scooters) can range from $400 to half a million dollars.

Loans for smaller recreational vehicles are often similar to car loans, with a few key differences. For example, not all lenders will accept a motorbike or similar recreational vehicle as security, so if you want to benefit from a lower interest rate with a secured loan, you may need to offer up equity from your home or savings in a term deposit as collateral.

While snowmobiles aren’t a common sight in Australia outside of the areas that experience regular snow seasons, they’re treated similarly to other recreational vehicles in many respects. You’ll need an appropriate driver’s license to operate one, and as well as covering the purchase price, you’ll also need to consider the cost of fuel, insurance, maintenance and storage (especially outside of the snow season).