The short version
- Boat and caravan loans are usually secured against what you buy, which keeps the rate down.
- Lenders often limit how old a boat or caravan can be.
- Budget for insurance, registration, storage and upkeep too.
Borrowing for a boat
A boat loan pays for a new or used boat, from a tinny or a jet ski to a yacht, and can usually cover an outboard motor or a trailer too. Most are secured against the boat, like a car loan, which keeps the rate lower than an unsecured loan.
Only a few lenders publish separate boat loans, but many secured personal loans can be used for one. Ask the lender before you apply.
Caravans and campers
Caravan loans work the same way, secured against the caravan, camper trailer or motorhome. This page lists both, and there's a page of caravan loans alone under car finance.
How to compare boat loans
Look at the comparison rate as well as the interest rate. The comparison rate adds the lender's standard fees to the interest rate for an example loan, so it shows the cost of two loans on the same footing.
Then look at:
- The lender. Banks and credit unions often have lower rates but stricter criteria. Online lenders can be quicker and more flexible, with rates that depend more on your circumstances.
- New or used. Some lenders set different rates for new and used boats, and limit how old a used boat can be.
- The term. A longer term lowers each repayment but adds to the interest you pay overall.
- The amount. Check the lender's minimum and maximum, and that the repayments fit your budget.
- Fees. Look for establishment, monthly and early repayment fees.
- Security. If the loan is secured, the lender can take the boat back if you fall behind on repayments.
Pros of a boat loan
- You can buy the boat now and spread the cost over a few years.
- Secured boat loans usually have lower rates than unsecured personal loans.
- Many lenders let you apply online and give a decision quickly.
- Repaying on time adds positive history to your credit report.
Cons of a boat loan
- Repayments on a large loan can be high.
- On a secured loan, the lender can repossess the boat if you can't keep up.
- Boats lose value, so you can owe more than the boat is worth if you sell early.
- Insurance, registration, mooring or storage, fuel and servicing all add to the cost of owning a boat.
Alternatives
- An unsecured personal loan, for an older boat or caravan a lender won't take as security.
- Redraw or offset on your home loan. If you have extra repayments in your home loan, using them can be cheaper than a new loan, as home loan rates are usually lower.
- Saving first. If the cost can wait a few months, saving for it costs nothing in interest, and a high interest savings account pays you instead.
What you'll need to apply
Lenders usually ask for:
- Your personal details, such as your name, date of birth, address and whether you own or rent your home.
- Details of the boat, such as its make, model, age and price, and the seller's details.
- Proof of income, such as recent payslips, or tax returns if you're self-employed.
- Details of your spending and any debts. The lender will also check your credit report.