With any boat purchase, It is important to take into account your finance options. Boats come with many power choices and accessory options and there are many finance opportunities available. Choosing the right finance package will potentially make a pleasure boat more pleasurable, or may help to make a commercial or charter vessel deal a better business proposition.
Mark O'Donoghue principal finance broker Finlease advises, ‘It is a good idea to get your finance in place and obtain a pre-approval for your loan before you go shopping. We suggest putting in an application for a ‘hypothetical boat' for a given sum of money. Once it is approved, you can confidentially negotiate on a boat knowing that the finance is ready to go. This should be a completely obligation free service, so if you eventually decide not to take up the finance, there is no charge.”
To get a feel for affordability, websites such as boatpoint.com.au and yachthub.com.au offer interactive financial calculators to provide an indication of what the repayments on your loan would be.
Sourcing the right finance solutions is not as easy as contacting the local bank. It may well be worth enlisting the services of a specialist finance broker experienced in boat finance who understands the unique dynamics of boat finance. There are different ways to finance boats, whether it's a runabout, luxury cruiser or charter boat. So in looking for funding, there are some handy pointers you should keep in mind.
First you need to consider some questions. How long you are likely to keep the boat? Will it be purely a pleasure boat, or could there be some business use? When it comes to evaluating one finance proposal over another, your broker should make you aware of obligations like your minimum commitments, the loan's security and any special conditions which apply.
It is a good idea not to limit your options by securing your boat loan against real estate. If you are using your existing bank, chances are the bank will want to ‘cross collateralise' the loan against your home or other assets. When you deal with a specialist boat finance broker, in 99% of instances the boat should stand as its own security. Also, don't put all your loans with the one financier. So if you have your home loan with one lender, think about going with someone else for your boat, another for your car and so on.
Credit markets are still tight, so you'll need a watertight case to secure funding. This is where a good broker acts as your advocate in presenting your case to a financier and securing the funds you need.
Then once you have your funding in place and have the paperwork, take a good look at the detail. Always check the payments to ensure that you are getting the interest rate you think you are and be sure to read all the fine print.
Often boat finance contracts are entered with the borrower having little or no appreciation of the long term commitments. Before signing on the dotted line, ask yourself, “do I understand the structure of this loan and my repayment commitments? Are there any early termination costs? What is the interest rate and is the loan secured by just the boat?”
This article has been provided by Finlease, a specialist broker in marine finance for over 20 years, further information can be found on www.finlease.com.au.