A Guide to Boat Finance

Buying a boat whether large or small is a major investment to make, so, the manner in which you do that and with whom you decide to fund your purchase deserves due consideration.

Boat lending is broken into two main areas - finance for commercial use and finance for personal use.

Credit providers give you immediate use of the vessel you choose in exchange for regular repayments made over an agreed period of time, after the final payment has been made clear title passes to you.

In general, some of the features you can expect with your finance contract are:

• Payments will be structured to suit your budget and or needs.
• Finance terms - range from 1 year to 5 years.
• Fixed repayments allow for your budgeting needs and protect you against interest rate fluctuations.
• A deposit is generally not required. Alternatively if a deposit is made then a reduction in repayments, interest and term will be the major benefits.
• If your boat is to be used for business purposes you may qualify to claim part of the interest and depreciation as a tax deduction.
• Equity in your marine purchase can be increased, by making additional payments.
• Direct debiting of your monthly repayments can be arranged.
• Funding can be agreed to in advance giving you the ability to negotiate from a position of strength.

According to Boat Finance Australia's Peter Hall, marine finance is designed to take the work out of applying for a loan. For example, you may apply directly to Boat Finance Australia through any of its selected marine dealers, or online. The company will also assist in insurance needs and finance for boats and bikes as well.

How much should you borrow?

As with buying a house or a car, most people need to organise finance to buy a boat. But before buying a boat, you need to establish your budget!

This should be 80-90% of the money you have set aside to buy a boat. The remaining 10-20% will help fund the boat's maintenance, mooring or storage fees, registration and safety and ancillary gear. The balance will dictate how big you can go.

The mean average price for a boat is around $20,000, yet as little as $3000 can get you started. With $3000 you can buy a good second-hand aluminium dinghy with a 6hp outboard motor and trailer. While fibreglass boats offer great ride comfort, aluminium shines in the minds of many operators because it requires less maintenance. You can park an aluminium boat outdoors and do nothing more than hose the redbacks out before you head out on that perfect summer's day. You can hitch-it-up behind the family car, slip it in the drink on your own, snag dinner on the end of a line, cruise for views on calm water, and drag the dinghy ashore for a picnic somewhere.

In the realms of powerboating, an aluminium runabout is the closest thing you can get to a satisfaction guarantee.