Buying a boat is a major purchase decision. It is important to choose the one that fits your preference and the most efficient way to finance it. The information below provides everything you need to know about boat loans.
Terms from 1 to 10 years. Representative example: 5 year £10,000 loan with comparison rates from 2.8% to 49.9% APR would cost between £10,728 and £27,321, including fees. The interest can vary between £728 and £17,321.
What is boat financing?
Boat financing is a type of loan dedicated to buying a new or used boat. Similar to other loans, it allows borrowers to get a specific amount of money to purchase their preferred asset. They will then repay the loan over the agreed terms with a specified interest rate.
How does boat finance work?
Repayments for your loan will depend on various factors, including the type of boat, loan terms, interest rate and other fees.
Boat type. There are all sorts of boats you can buy with a boat loan. Some people might want a wakeboard boat for tubing and skiing on the water. Others might prefer a narrow boat for travelling or living on the canals and rivers of Great Britain. And still, others might choose a traditional sailing boat or powerboat.
Terms. Most boat loans typically offer terms between 3 to 5 years, while some can offer even up to 15 to 20 years.
Interest rates. Interest rates can range from 3% to 15%, and are often calculated based on the terms and the borrower’s eligibility. Interest rates can be:
- Fixed-rate. The initial interest rate offered to you will not change throughout the loan term.
- Variable or floating rates. Interest rates change monthly depending on market conditions.
Additional fees. Some lenders may charge arrangement fees, as well as late repayment or overpayment fees. There are also lenders that offer additional services, like boat registration and insurance, which can be charged on top of your monthly repayments.
What boat financing options are available?
There are a variety of finance options available for boats in the UK.
- Marine Finance – A type of loan designed for the maritime industry. This often covers not just purchasing a boat, but also refinancing or account transfers. Marine loans can also include other services, like boat registration and documentation, as well as getting boat insurance.
- Unsecured boat loans – Unsecured loans do not require collateral. Such loans are easier to obtain but come with higher interest rates.
- Secured loans – This type of loan requires an asset, such as your home or car, as collateral. It often comes with lower credit score requirements and may offer lower interest rates.
- Asset Finance – In this type of financing, the loan is secured against the asset you purchase, in this case, the boat.
- Balloon payment boat finance – Loans with balloon payments allow borrowers to make smaller repayments during the loan term. By the end of the loan, they will pay an inflated one-time amount.
