Owning your own boat is practically an unofficial part of the Australian dream. After all, what ocean lover wouldn’t want to have the freedom to cruise around the country’s beautiful oceans whenever they please?

While owning a boat is certainly a goal for many Aussies, it can be a costly affair. After all, the price of the boat itself needs to be accounted for, as well as running costs, maintenance, replacement parts and mooring. For these reasons, many people will take out a loan to cover the cost of purchasing a boat.

However, there are many different factors that must be taken into account when taking out a loan; and if you sign on the dotted line for the wrong loan, you may end up parting with a lot more money in the long run. Therefore, you should consider a few factors before taking out a boat loan. Below, we’ve compiled a checklist to help you secure financing for the boat of your dreams – without getting swindled with unnecessary fees and charges. 


1. Get pre-approval for your boat loan

If you’ve dreamt of owning a boat, you probably have an idea of where you’d like to take it, and what features you want it to have. Perhaps, you’re looking for a small dingy to take on quick fishing trips, or maybe you’re after a large boat that you can sleep in and take longer trips on.

While knowing the kind of boat you’re after is important – you should actually assess your financial means first, and how much you’ll be able to borrow. You can do this by applying for pre-approval for your boat loan. 

During the process, the financial institution will assess your current assets and your financial means to determine how much they are willing to lend you. Once you have an idea of how much you’re able to borrow, you can realistically figure out the kind of boat you’ll be able to purchase.


2. Start boat shopping

Now that you have an idea of your budget, you can get to the fun part – boat shopping. You should conduct some market research to get an idea of the current rates. For example, if you’re pre-approved for a $50,000 loan, you can browse advertisements to see what kind of boats are being sold for this amount.

After you have a general idea of the going rate, and the features you can afford, you can hone in and find your dream boat. The pre-approval will make the purchasing part much quicker and easier too. As long as the price of the boat fits within your pre-approval range, the financial institution should be able to provide the loan quickly.


3. Secure the boat

From here, it’s just a matter of purchasing the boat itself. You will need to present the financial institution with the necessary purchase documents that they require, then they will be able to produce official loan documents that you will need to sign in order for them to transfer the payment. However, before signing on the dotted line, there are a few things you should consider…

Things to consider before signing a loan contract

The loan terms

It’s easy to get swept away with the excitement of owning a boat, but it’s vital that you take the time to properly understand the loan terms. 

Most loans will allow varying repayment times and frequencies. It’s important to consider that a longer loan will accrue more interest. So, do the maths and figure out how much more money you’ll pay with a longer loan term, and whether the convenience of this is worth it to you.

Additionally, you should tailor the repayment frequency to your specific situation. For example, if you’re paid fortnightly, you can ensure that your repayments are debited just after payday.

Hidden fees

Some loans have hidden charges where borrowers are stung with extra fees for making early or extra repayments. However, there are many financial institutions out there that don’t charge extra money for this. If there is the possibility of being able to pay your loan off early – and as a result, save your money in interest fees – you should check that there is no penalty for doing so.


Additional costs

The cost of a boat is usually a relatively large lump sum, but, that’s not the only amount of money you’ll need to pay. Boats have a number of additional costs. Of course, there’s stamp duty and registration at the onset, but, there’s also ongoing costs like mooring and maintenance. For this reason, we recommend applying for a loan that’s slightly higher than the cost of the boat, so that these things can be accounted for.