Financing your boat
Realise your boating ambitions with the right finance solution:
When considering that next boat purchase, evaluating finance options is not high on your list of priorities, yet it should be. Just as the boats you’re looking at come with many choices and accessory options, so too there are many more finance opportunities available than you may have thought. In fact, choosing the right finance package can potentially make a pleasure boat more pleasurable, or can help a commercial or charter vessel a better business proposition.
Gain pre-approved finance first:
As Mark O’Donoghue principal finance broker Finlease advises, ‘It’s 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 www.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 popping down to the local bank for finance. It can be well 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 yacht, or charter boat. So in looking for funding, there are some handy pointers you should keep in mind.
Assess your needs:
First you need to ask yourself 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’s 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.
With the 2011 boat show season well underway, initial reports suggest a much brighter picture, however 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?”
Boat Buyers Check List:
Here’s what lenders will be looking for when approving your loan:
- Your capacity to meet the repayments based on your income.
- For 100% finance you need to prove that you have ‘tangible’ net worth, i.e. equity in property or investments. Our financiers do not want a mortgage, but will simply want to feel comfortable that your have the ability to make good any shortfall between the second hand value of the boat and the amount owed.
- A good credit history
- Stable employment and income
This article has been provided by Finlease, a specialist broker in marine finance for over 20 years.
Multihull Solutions highly recommend Finlease (Australia) Pty Ltdas financiers for boats.
Finlease are experts in the area of boat loans, both power or sail, for pleasure or business. They’re also boat enthusiasts themselves and understand how to finance a boat purchase.
The Multihull Solutions team has worked with a number of marine finance companies over the years. However, no company has stood out like Finlease. Their knowledge of the boating industry, in particular charter, is clearly ahead of their competitors.
So whether you want a boat loan or a boat lease, they can search amongst around 20 lenders for the solution that’s right for you. Then they’ll process the application and manage the whole process to make marine finance easier, so you won’t be left waiting in queues.
Finlease (Australia) Pty Ltd
Contact: Mark O’Donoghue
Unit 26, 177-199 Pacific Hwy, North Sydney NSW 2060
PO Box 1013, North Sydney NSW 2059