Get personalised boat finance for smooth sailing
If you regularly picture yourself sailing off into the sunset, then boat financing can help turn your vision into reality. Whether you’re searching for a low interest rate loan, flexible repayments, or a 0% deposit plan, CompareLoans can guide you towards a customised solution that works for you.
Before you jump on board and buy your boat on finance, here’s how the process works, features you can use to personalise your loan, the best way to compare loans, and other options to consider.
What are boat loans, and how do they work?
When you receive a boat loan, you get a lump sum to partly or entirely cover the purchase price of a boat, watercraft, vessel, or even a jet ski. As long as you have a good credit score and the required income level, most lenders will provide you with the loan amount you need. However, as a reference point, maximum loan amounts usually go up to R300 000, although this can be negotiable.
The boat loan is typically repaid in monthly instalments (in most cases via automatic payments) over loan terms that can stretch to 84 months (7 years).
Get a personalised loan by choosing various boat financing features
You can get a boat loan to work for you and your financial situation by choosing some of the following loan options:
- Secured. You use the boat you’re purchasing as security or collateral for the loan. In return, you benefit from lower interest rates and higher borrowing limits. On the downside, you lose the boat if you can’t finish making repayments. However, if you’re looking for boat financing for bad credit, a secured loan might be your best option.
- Unsecured. The purchased boat is not used as collateral (no risk of losing the boat if you fail to make repayments), but you have to deal with higher interest rates and limited loan amounts. You must also have a good or excellent credit score.
- Private boat financing. This financing option allows you to purchase your boat from a private seller. This could be a family member, friend, private individual or business.
- Dealer financing. Some dealerships can offer you both the boat and in-house or third-party financing if you’re looking for a one-stop deal.
- Variable interest rate. The interest rate can go up or down, depending on the economic climate. You can potentially benefit from a decline in interest rates. However, it is best to quickly repay the loan before the rate gets too high.
- Fixed interest rate. The loan might have a higher starting interest rate, but you get peace of mind from knowing that your monthly repayments are constant throughout the life of the loan.
- Deposit. Similar to car loans and other big-time purchases, you might have to put down a deposit. The required deposit amount usually ranges from 10% to 20% of the purchase price. A larger deposit reduces your monthly and interest payments, and the total cost of your loan will be lower since you have to borrow less.
- New boat. If you’re buying a brand-new boat, you’ll most likely be able to borrow more as well as choose a more flexible repayment period.
- Used boat. You can use a boat loan to purchase a pre-owned watercraft as long as it meets the lender’s requirements.
Comparing boat loans in South Africa
Use the following key points to help you choose a boat loan with the most suitable structure:
- Requirements. Make sure you choose a lender or boat loan with requirements you can easily qualify for.
- Interest rate. Low interest rate boat loans are possible if you have a good credit score. However, bad credit boat loans come with high interest rates.
- Fees and charges. A better way to compare loans is the APR which takes into account the interest rate and loan fees. Looking at the APR helps you to calculate the total cost of the loan so you can figure out if your current loan option is affordable.
- Loan structure. This includes the loan term, monthly payments and whether you can make early or additional repayments at no extra cost.
- Loan amount. This depends on the boat’s cost and whether you have enough savings to afford the required deposit. Also, make sure the lender can offer your requested loan amount.
Boat finance calculator
Your monthly payments are another key point to consider if you want to stay ahead of your budget. You can calculate these payments with our easy-to-use boat loan calculator. Simply enter your preferred loan amount and repayment period before clicking “Calculate Repayment.”
Using the loan calculator helps you to pinpoint an affordable monthly instalment that can be smoothly integrated into your monthly budget. Check for the results in our comparison tables and click the “View fees and additional info” link if you wish to know more about a particular lender.
What you need to get approved for boat finance
Some lenders might have more specific requirements, but the basic ones are as follows:
- A clean credit report and excellent credit score. This reduces the risk for the lender and affords you a more favourable interest rate.
- Stable income. Your latest bank statements and payslips are used to prove you have a regular, monthly income and can afford your repayments.
- Net worth. You might have to provide documents that detail all your assets and their value.
- Low debt-to-income ratio. You should not have too many debts because lenders want to make sure your current income can handle the additional debt.
- Minimum 18 years.
- South African citizenship or permanent residency.
- Boat licence and insurance.
Apply for your boat loan online
Once you have gone through our comparison tables and used the boat loan calculator, you can now make an online boat loan application. Simply click “Go to Site” for your desired lender, and once you have landed on their website, go ahead and fill in the application form. An extra step involves uploading some important documents.
If you’re lucky, you can get pre-approved, which enables you to go boat shopping with a confirmed budget. However, some lenders might require a purchase agreement from your seller before approving the loan.
Can you use a personal loan to finance your boat purchase?
Personal loans are a more flexible option that enables you to pay for boat-related expenses like insurance, maintenance and service costs if the lender allows it. Other options to consider include:
- Using your savings. This should be your number one option since it’s the cheapest option.
- Home equity. You can take out a second mortgage to cover your boat’s costs and get lower interest rates since the loan is secured.
- Boat lease. Renting enables you to experience the feeling of owning a boat without having to deal with maintenance costs or issues like registration and insurance.
- Boat clubs. When you join a boat club and pay a membership fee, you can enjoy the same benefits of renting a boat.
Important tip
Before looking for boats for sale on finance, make sure you understand the full range of costs associated with owning a boat. Also, keep in mind that from the moment you start enjoying your boat, it will immediately begin depreciating and continue to do so as you repay the loan. Add all the costs and compare them with the estimated total cost of your loan to check if boat financing is a viable option.
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