If you’re considering purchasing a boat, you may be asking yourself: what’s the best way to finance it? You may not have the cash to buy it outright or prefer not to use your cash. So, you will need to look at your financing options, whether it’s the total amount or perhaps just a top up loan to buy the boat you really want.
However, there’s still an important decision to be made: which loan product is the best solution for you? This will ultimately come down to the type of boat you are looking to purchase and where you are buying from.
Boat loans and personal loans are both viable options for financing your dream boat. But wait — what’s the difference? In this article, we’ll make it easy for you. We’ll define what a boat loan is and what a personal loan is, we will outline the advantages and disadvantages of each. This will give you all the information you need to make an informed choice and one which you will feel most comfortable with.
When you work with Credit One to finance your dream boat, your boat loan specialist broker will work closely with you, and together you will determine whether a secured boat loan or personal loan is the best solution for you. But to clear it up early on: we’ve included a detailed comparison of boat and personal loans, complete with a set of pros and cons for each option.
What is a Secured Boat Loan?
A secure boat loan is a type of secured loan used to finance the purchase of a boat or similar vessel. It’s a specific type of personal instalment loan like a car loan. Similar to a car loan, a secured boat loan comes with a fixed interest rate, repayment term, and schedule.
Typically, the boat will serve as collateral for the loan. Like other secured loans, the lender provides the funds upfront, and the borrower repays the loan plus interest over a fixed period of time.
When applying for finance through the boat dealer you will be obligated to purchase from that specific dealer. However, if you apply for finance through Credit One you will have the option to buy from any Boat Dealership or private seller.
Boat Loan Pros & Cons
As mentioned above, a boat loan is structured to cover the costs of a boat purchase and additional related expenses. Here are some of the most important pros and cons to keep in mind when considering taking out a boat loan.
Boat Loan Pros:
- Using the boat as collateral strengthens the application.
- Repayment terms can be longer than some other loans, making repayments more affordable.
- Boat loan interest rates are generally lower than unsecured personal loans.
- Higher loan limits and possible longer repayment terms
- You can generally get a better deal on a secured boat loan
Boat Loan Cons:
- Depending on your financial profile, the value of the boat and age you may be required to put down a larger deposit.
- You may be only able to purchase a new boat or a second hand boat to a certain age, so finding secured finance for an older second-hand may not be an option.
- You can only borrow the purchase value of the boat.
- The lender takes security over the asset, you must payout the loan if you wish to sell the asset.
What is a Personal Loan for Boats?
Sometimes, personal loans are marketed as a ‘boat loan’, but what this really means is you are using an unsecured personal loan to finance a boat. You could use your personal loan to buy a new or used boat, make modifications, or upgrade your existing boat, you can even use the funds to obtain your boat licence. Personal loans can be more flexible as they are not holding security to obtain the funds. Because you don’t have to provide details of your purchase the approval process can be quicker than a secured loan.
Personal Loan for Boats Pros & Cons
Personal loans are more flexible, but you can still use them to finance your dream boat. Here are some of the main pros and cons of taking out a personal loan.
Personal Loan Pros:
- You won’t have to provide any security to obtain the loan
- You have more options with the funds borrowed, this is useful if you have other expenses to cover, like accessories etc.
- There are no restrictions about what type of boat you buy, and you will be able to purchase second-hand or older marine vessels
- You should be able to adjust the loan amount according to your needs.
Personal Loan Cons:
- Personal loans interest rates can be higher than boat loan interest rates
- Your monthly repayments will probably be higher than a boat loan
- You may be restricted with the amount you can borrow
So, What’s the Difference Between a Boat Loan and a Personal Loan?
You can finance your boat through either a secured boat loan or a personal loan. So, why does it matter which one you choose?
Put simply, a personal loan is provided by a lender to a borrower. This loan is used to make a large purchase. It doesn’t matter what this is — that’s up to the borrower. But a boat loan is specifically created to fund the purchase of a boat or other marine vessel. The fact that you can use a personal loan to purchase a boat doesn’t change the confusing fact that a boat loan is generally the same as a personal loan.
Here are a few comparisons to make the difference between boat loans and personal loans more transparent:
- Secured Boat loans generally have lower interest rates than personal loans
- Secured Boat loans are secured loans, and personal loans are (usually) unsecured
- Generally, the loan amount is more negotiable with a personal loan , meaning you can borrow more than the boat purchase price
- Personal loans are generally easier to obtain as no security is being held against the loan
- Boat loans require collateral, while personal loans don’t.
Which Loan is Right for You?
You can undoubtedly choose between a secured boat loan or an unsecured personal loan to finance a boat. The choice exists because a personal loan may be more appropriate for one buyer, and a more specific boat loan may be better for another, depending on their circumstances, needs, and personal preferences.
When you’re deciding whether to apply for a boat loan or a personal loan, ask yourself the following questions:
What am I using the loan for?
If you want to buy a boat, and only a boat, a secured boat loan will generally be your best choice. But if you have any additional expenses you need to cover, you should consider a personal loan for its flexibility. With a personal loan, you can buy a used boat, while you may be limited to brand-new boats if you choose a secured boat loan. You need to discuss your options with the specialist Marine Lender from Credit One.
How much do I need?
A secured boat loan may be the best choice if you need a lot of money for an expensive boat as there are limits on personal loans. But a personal loan is more suitable if you need less money, perhaps for a cheaper, or older second-hand boat.
Do I need to have a strong credit score?
If you have a lower credit score, your Credit One Broker will need to look at your overall financial profile and based on that will be able to advise which may be the better option. However, if you have a perfect credit score, you can achieve a better interest rate and a higher probability to be approved for a secured boat loan.
Secure Your Dream Boat with Credit One
At Credit One we can help you determine what’s most appropriate for your circumstances. We’ll also take the hard work out of the research into finding the best lender and comparing data on boat financing and boat loans in Australia. Credit One will explain to you in detail what will be the best option for you, whether it’s a personal loan or a secured boat loan.
Credit One is Australia’s highest-reviewed finance broker. We have years of experience helping Australians secure their dream boat through personalised boat loans and finance solutions. No matter what you’re looking for, we’re confident we can help you find the best loan product for the boat you’ve got your eye on, whether it’s a secured boat loan or a personal boat loan.
Apply online for a free boat finance quote or call us at 1300 273 348.
