| mortgage rates | 18 Sep 2008 11:00 PM |
| Looking for a boat loan? Make sure you know the “ins and outs” of boat loan finance by Vicky Edema | |
Boat loans are generally sought to purchase a boat for either personal or commercial purposes. Just like an auto loan, a boat loan can be structured to meet your particular cash flow. The average boat in Australia costs around $20,000 – although you can get started for a lot less than this – a boat loan for $2500 can get you into a $3000 aluminium runabout which can give you hours of delight (and hopefully some good fishing) over the summer period.
The fact is that often the minimum boat loan amount is $10,000. Some lenders will only provide a boat loan when you purchase through an acceptable marine merchant and in some instances they will only give a boat loan to people residing where they have office representation such as in Queensland, NSW and WA.
To qualify for a boat loan you must be over 18 years of age and be either an Australian citizen, Permanent Resident, or have an approved working visa. If you are a bankrupt or have a poor credit history (outstanding defaults) then it is most unlikely that you will qualify for a boat loan.
Those lenders that are in the boat loan market will seek certain documentation in support of your boat loan application. These will include your driver’s licence, details of your income and assets and liabilities, as well as contact details of your employer. All information submitted in relation to your income will be verified by checking with your employer. If you are self employed then you will still be eligible for a boat loan but you will need to provide your accountant’s details. Again the lender considering the boat loan will want to check turnover and other figures relating to your business before giving final approval to the boat loan.
As a general rule there are no on-going fees on a boat loan but there may be an establishment fee when you make the application although this is unlikely to exceed $500 and will generally be refunded if the boat loan is not approved. Some states also require stamp duty to be paid on the boat loan contract.
When deciding on the term of your boat loan (a boat loan is generally for between 1 to 5 years) you should consider your cash flow – your monthly repayments on the boat loan will be less the longer the loan term and the greater the residual value. A boat loan is usually be on a fixed rate basis so you avoid any unpredictability with interest rates. You can budget your outgoings. However, if for any reason you decide to repay your boat loan before the end of the boat loan term, then just like a home loan, you will incur break costs. If interest rates have decreased then the break costs will generally be the equivalent of the difference between the interest you would have paid under your boat loan and the interest the lender can now receive, for the period from the date you repay early to the end of the boat loan term. If rates have increased then you may still have to pay some sort of fee for loss of interest income that results form your breaking the boat loan contract.
The fact is that often the minimum boat loan amount is $10,000. Some lenders will only provide a boat loan when you purchase through an acceptable marine merchant and in some instances they will only give a boat loan to people residing where they have office representation such as in Queensland, NSW and WA.
To qualify for a boat loan you must be over 18 years of age and be either an Australian citizen, Permanent Resident, or have an approved working visa. If you are a bankrupt or have a poor credit history (outstanding defaults) then it is most unlikely that you will qualify for a boat loan.
Those lenders that are in the boat loan market will seek certain documentation in support of your boat loan application. These will include your driver’s licence, details of your income and assets and liabilities, as well as contact details of your employer. All information submitted in relation to your income will be verified by checking with your employer. If you are self employed then you will still be eligible for a boat loan but you will need to provide your accountant’s details. Again the lender considering the boat loan will want to check turnover and other figures relating to your business before giving final approval to the boat loan.
As a general rule there are no on-going fees on a boat loan but there may be an establishment fee when you make the application although this is unlikely to exceed $500 and will generally be refunded if the boat loan is not approved. Some states also require stamp duty to be paid on the boat loan contract.
When deciding on the term of your boat loan (a boat loan is generally for between 1 to 5 years) you should consider your cash flow – your monthly repayments on the boat loan will be less the longer the loan term and the greater the residual value. A boat loan is usually be on a fixed rate basis so you avoid any unpredictability with interest rates. You can budget your outgoings. However, if for any reason you decide to repay your boat loan before the end of the boat loan term, then just like a home loan, you will incur break costs. If interest rates have decreased then the break costs will generally be the equivalent of the difference between the interest you would have paid under your boat loan and the interest the lender can now receive, for the period from the date you repay early to the end of the boat loan term. If rates have increased then you may still have to pay some sort of fee for loss of interest income that results form your breaking the boat loan contract.
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