buying a boat on finance header

How to Finance a Boat

With the high price tags associated with buying a boat, getting out on the water can seem like a distant fantasy. While you may think that’s the end of your boating dream, it doesn’t have to be. Rather than waiting years to replace your old dinghy or buy your first yacht, many people find it useful to buy their boat with finance.

This article will tell you all you need to know about getting a boat loan.

What does it mean to finance a boat?

If someone finances a boat, it means that they’ve taken out a boat loan to make the purchase. The money can be lent from either a boat dealership, a credit union, bank, or an online lender such as QuickCash. This money is borrowed on the condition that the borrower will pay it back in instalments over an agreed period, generally with interest.

What are the different types of boat loans?

There are two main types of boat loans: secured and unsecured. To find out how they differ, check out the summaries below.

Secured boat loan

A secured boat loan is when the borrower has put up an asset as ‘security’. The asset must be an item they own that’s of considerable value, such as a piece of real estate or a car. Having this security means that if the borrower can’t repay the loan, the lender can take ownership of the asset and sell it to regain the money owed. Usually, when taking out a boat loan, people will use the boat itself as security. Accordingly, if they can’t pay back the borrowed money, the lender will take ownership of the boat.

As this type of loan allows the lender to be confident that they’ll be repaid, it’s considered lower risk. As a result, the interest rates will likely be lower, allowing the customer to save money on interest.

For more information about interest, read our article: “How Does Interest Work on a Loan?”.

Unsecured boat loan

On the other hand, an unsecured boat loan is when the required money is borrowed without having any security. With a higher chance of the lender not being repaid, the loan is of higher risk. As a result, the interest rates are also typically higher, making it more expensive for the customer.

QuickCash can offer a great rate for both secured and unsecured boat loans. Contact us today to discuss your options.

boat for sale with finance

Is it best to get a loan from a boat dealership or lender?

When a person finances their boat through a dealership, the dealer organises the loan for them. Although this option is typically a simpler process, it isn’t necessarily the cheapest way to go. As the dealer is essentially in control, they’ll get to organise the details of the customer’s contract. Therefore, the customer has to trust that it’s the best deal for them. Unfortunately, this isn’t always the case. Instead, some lenders choose to increase the cost of instalments to make a profit for themselves — costing the customer much more than it should.

Alternatively, if a borrower wants to arrange the details of the loan themselves, they can do so by borrowing money from a bank, online lender, or credit union. Accordingly, the customer can be fully aware of the structure of their loan. Choosing this type of finance is typically going to cost the customer less as it removes the possibility of instalment costs being marked up by the boat lender.

How do I apply for boat finance?

Following the usual loan process, a borrower will need to fill out an application form before the lender can decide whether or not to loan them the needed cash. Although each lender may have unique requirements, usually all forms require similar information. To make it easier, we’ve compiled a list below.

Details of the boat

A customer will need to provide the lender with the details of the boat they plan to purchase. Even if the customer is in the early stages of shopping, they’ll still need to give a general idea of the make, model, and year that they have in mind.

Size of the loan

Once the type of boat has been identified, this can help to estimate its value. Both the lender and customer must know an estimate of how much money is needed to make the desired purchase.

Current financial status and commitments

To determine if the money will likely be repaid, the lender needs the customer to provide financial information such as their bank statement or payslip. From this, the lender can establish whether the customer’s expenses are higher than their income. If this is the case, the lender may deny the application over concerns that the loan might not be paid back.

Length of the loan

On the application form, the borrower will need to choose how often they can make repayments. Generally, they can choose between weekly, fortnightly, or monthly instalments. Once this has been decided, the lender can start structuring the loan.

Address and driver’s license

To ensure that the loan is being taken out in the customer’s name, they’ll need to provide their address and driver’s license to the lender. If the borrower uses someone else’s details when applying, this may not only cause them trouble but also risk their loan not getting approved.

Current assets

If someone is applying for a secured boat loan, they’ll need to tell the lender which asset they’ll be using as security. As mentioned before, this security must be an item they own that’s of considerable value, such as a piece of real estate or a car.

boat on water with paddle boarder

Tips for buying a boat with finance

Review your budget

People typically benefit from reviewing their budget before applying for a boat loan. Doing so is helpful to check that there’s enough room amongst existing finances to make frequent repayments. Although this budget can sometimes be forgotten when the shopping begins, most consumers find it best to stay within a realistic price range.

Consider what boat reflects your lifestyle

It’s useful for customers to think about the purpose of the boat before making their purchase. For example, choosing if a bowrider or aluminium boat is the right option will depend on whether the customer is an avid water skier or enjoys fly fishing. By carefully selecting the appropriate boat, the customer is likely going to save money in the long run.

Recognise the running costs

To ensure a stress-free purchase, customers find that it’s beneficial to recognise the boat’s running costs when making their decision. Usually, this involves researching how fuel-efficient the boat will be and estimating the costs of repairs, maintenance, and insurance premiums. If a customer purchases a boat without looking into the associated expenses, they may not be able to afford it in the long-run.

Check the history of the boat

If someone is buying a second-hand boat, it’s essential to know the boat’s history to ensure that it hasn’t been stolen. Customers can check this information with the NZ Police.

Check if the trailer is registered

In New Zealand, it’s a legal requirement that when a vehicle (such as a trailer) is being sold, it needs to have a current WOF and registration (rego). If the seller doesn’t have these or refuses to acquire them, this can be considered a red flag.

Make sure the boat is up to standard

Customers generally find that it’s helpful to have a boat-savvy friend to check if the boat is in good condition. If they want a more comprehensive assessment, find a local boat specialist to perform a pre-purchase inspection.

That’s everything you need to know about financing your boat. If you have any questions or want to apply for a boat loan, don’t hesitate to call us on 0800 784 252 or apply online now.


Disclaimer: This article is intended to provide general information only. It does not take into account your financial needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.