A handy guide to boat finance

Just as the boats you’re looking at come with many power choices and accessory options, so too do the many financial options on the market. In fact, choosing the right finance package can potentially make a pleasureboat more pleasurable, or can help make a commercial or chartervessel a better business proposition.

Mark O’Donoghue, principal finance broker Finlease, explains: “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.”

ASK THE RIGHT QUESTIONS
Firstly, ask yourself how long you’re likely to keep the boat. Will it be purely a pleasureboat, 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’re 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 your home loan is with one lender, think about going with someone else for your boat, another for your car and so on.

BETTER TIMES
With the 2009 boat show season well underway, initial reports suggest a much brighter picture. Feedback from exhibitors at the Sydney International Boat Show was particularly enthusiastic, and official visitor numbers were up significantly compared with last year’s show, suggesting the boating industry is rising up from the recession faster than the industry in other countries. This may mean that, as more buyers are returning to the market, sellers may not be quite as willing to negotiate as before.

Even so, 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.

Then, once you have your funding and paperwork in place, take a good look at the details. 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. Boat finance contracts are often entered with the borrower having little or no appreciation of the long term commitments. Before signing on the dotted line, ask yourself whether you understand the structure of your loan and what your repayment commitments are. Also check whether there are any early termination costs, check the interest rate, and find out of the loan is secured by just the boat.

BOAT BUYER’S CHECKLIST
Finally, here’s a checklist of what lenders will be looking for when approving your loan.

1) Your capacity to meet the repayments based on your income.

2) For 100 per cent finance you need to prove that you have “tangible net worth”, i.e. equity in property or investments.

3) A good credit history.

4) Stable employment and income.

This article was provided by Finlease, a specialist finance broker with nearly $1 billion worth of funds currently arranged and in place for its predominantly small to medium business clients. Visit finlease.com.au for further information.

For a great deal on financing your new purchase, contact Australia's best reviewed finance broker on 1300 Credit (1300 273 348) today or visit CreditOne.com.au