Getting Used Boat Finance & Buying A Second Hand Boat
Accessing the best used boat lenders.
Understanding the options for a used boat loan is key to a successful second-hand purchase. Many borrowers often go through a long process to only be declined towards the end and miss out on their boat. Not all lenders will finance boats, and some will only finance newer models. It is important to be clear with your lender on what you are purchasing to ensure eligibility from that lender.
- Thousands of Aussies are eligible for low rate used boat funding
- Purchase any type of vessel
- Flexible terms, reduced repayments & low deposits
- Purchase for personal or business use
- See what you qualify for in 60 seconds
Is there a difference between new or used boat loans?
There is a difference between securing loans for new versus used boats. New boats often attract favourable financing rates from lenders, thanks in part to the security that comes with new warranties. When it comes to used boats, a key point of difference is the inspection process and accessed value. For private sales, an inspection is generally a prerequisite to obtaining a loan, as it assures the lender of the boat’s condition. In the case of dealer-sold boats, this step may be unnecessary, as dealers typically perform inspections before placing boats on the market, ensuring they meet certain standards.
What impact does the boat age have on the loan?
Boat financing operates on the premise of a secured loan, with the vessel itself serving as collateral. The amount that can be borrowed is contingent upon the appraised value of the boat, which factors in depreciation. Lenders typically have stringent guidelines regarding the age of the boat they are willing to finance, setting various age thresholds based on their risk assessment policies. While some specialised financiers may offer loans for boats approaching 30 years of age.
For older boats options become more limited. In such cases, borrowers may have to resort to accessing an unsecured personal loan, which usually has a cap of around $200,000. Alternative strategies might include leveraging additional assets for security or making substantial deposits to mitigate the risks associated with financing newer models.
Is the eligibility criteria different for a used boat loan?
The eligibility criteria for a used boat loan shouldn’t be any different than that of any other finance. The only difference would be in the actual finance – rate, loan length and term/conditions. Typically its a combination of the below:
Must have a credit score above 550
Must be employed and not currently in probation
Must be at least 18 years old
Must be able to provide bank statements (3 mths) & 2 payslips
Must have a drivers licence or passport
Must be an Australian Citizen or Permanent Resident
What is the difference in rate between a used and new boat?
Interest rates are determined by the value of the transaction and the customer’s credit profile. This can range from lender to lender. With many specialist marine finance lenders, they typically add around a half percent (0.5) to the rate that a new boat would receive.
Other traditional lenders that don’t specialise in marine finance, especially for used boat loans may add a higher percentage. Their range can be anywhere from 1% to 2% plus. Higher rates are typically allocated to items over 5 years in age.
In general, the better your borrowing capacity and credit profile along with a well kept used boat, the better the rate you will receive.
Is it easy to buy a used boat privately with a loan?
If you have found a boat you are happy with, purchasing it shouldn’t be an issue if it’s in good working order and has a positive inspection. Thousands of boats are bought privately each year with no issue.
For such transactions, lenders typically require an independent inspection to ensure the vessel’s soundness. This not only protects your interests by preventing the purchase of a substandard boat but also assures the lender of the vessel’s value.
If approval for a secure boat loan proves challenging, you still have the option of acquiring it through a personal loan, which is a viable alternative.
Australia’s best boat finance. Get your rate today.
Applying For Used Boat Finance
What is the oldest boat a bank will finance?
Most big banks will only finance new or fairly new boats that still have a warranty attached to them. There are other specialist marine finance lenders that will finance boats up to 30 years or higher in age. Marinewise has a range of partners that may be able to assist with the purchase of older boats, especially those that traditional banks won’t touch.
Who provides the best used boat loan interest rates?
Depending on the age of the vessel, typically, the older the boat, the smaller the options available. Traditional banks and many other prefer new or close to new boats for finance. Specialist marine finance lenders provide more flexibility in terms of rate and vessel age. In cases where a lender won’t approve a older vessel, a personal loan may be the best option.
Marinewise works with experienced experts in the marine finance space and can help provide the best options to ensure the lowest rate and approval for older boats.
What is the longest term for a used boat loan for a second hand boat?
Boat loan terms are typically between 1 – 5 years but as long as 7 years. In certain instances if you need longer, refinancing the asset could be an option.
How long does it take to get approved for used boat finance?
Approvals for a boat loan can be as quick as any other type of loan. If you have all the documents required by the lender ready to go for immediate assessment and approval. In certain circumstances borrowers can receive funding within 24 to 48 hours. However, inside a week is a more common time frame.
Quick funding is dependant on having all documents required by the lender ready to go for immediate assessment and approval.
14 reasons why a bank may decline a loan for a used boat.
Age and Condition of the Boat
Many lenders have restrictions on financing older boats, typically setting a cut off around 10–15 years. Boats older than this or in poor condition (e.g., with structural damage or major repair needs) may be deemed too high-risk, leading to a decline in financing.
Boat Type and Intended Use
Banks may avoid lending for certain types of boats, such as houseboats, high-performance speedboats, or heavily customized vessels, due to the niche market and higher depreciation. Intended use, such as commercial fishing or live-aboard purposes, might also impact the loan eligibility since it increases wear, affecting resale value.
Lack of a Comprehensive Inspection or Valuation Report
Lenders often require a professional marine survey or valuation to assess the boat’s value. Lenders may decline a loan if the boat doesn’t pass the inspection or if a thorough report is unavailable.
Unclear or Insufficient Ownership History
A used boat with an unclear ownership history may raise red flags for lenders. Lenders may decline the application to avoid complications in ownership transfer if the vessel has outstanding liens or debts attached (shown on the PPSR).
Applicant’s Credit Score and Financial History
A low credit score, history of missed payments, or other negative marks on a credit report can be a primary reason for loan rejection. Lenders want assurance that borrowers have a stable credit history and are likely to make timely payments.
High Loan-to-Value (LTV) Ratio
If the applicant is seeking a loan that exceeds the lender’s LTV limits for used boats (typically around 70-90%), the application might be declined. Used boats generally have lower LTV thresholds to account for faster depreciation, so a high loan request relative to the boat’s value is often rejected.
Debt-to-Income Ratio
A high debt-to-income ratio (the amount of monthly debt payments relative to monthly income) can indicate to lenders that the borrower may struggle to manage additional debt. If the DTI ratio is deemed too high, the application is likely to be declined.
Lack of Down Payment
Most lenders expect a down payment on used boats, typically between 10-20%. A lack of sufficient funds for a down payment can signal to lenders a higher default risk, leading to a decline.
Employment Instability or Insufficient Income
Lenders assess income stability and employment history. If the borrower has recent job changes, irregular income (especially for self-employed individuals without tax records or proof of regular cash flow), or income that doesn’t adequately support the loan payments, the application may be declined.
Negative Marine Survey Findings
Issues such as hull damage, engine problems, or potential safety hazards noted in a marine survey can cause lenders to reject the application. Lenders prefer to finance boats in good condition, as a poorly maintained boat might lose value faster or require repairs, which could impact the borrower’s ability to repay. In addition, if a boat has been modified from its original state, this can affect loan approvals.
Insurance Availability and Cost
If the boat cannot be insured (either due to condition, age, or lack of insurable documentation), lenders will typically decline the loan. Comprehensive insurance is often required as a condition of the loan, as it protects both the borrower and lender’s investment.
Market Liquidity and Resale Value
Lenders assess the ease of resale in the event of repossession. If the vessel type is niche, rare, or difficult to sell, lenders may view it as a risk and decline the loan.
Existing Debts on the Boat (PPSR Check)
The presence of any pre-existing debt or lien registered on the PPSR against the boat can lead to immediate rejection. Lenders avoid the risk of legal complications from outstanding claims against the boat.
Purpose or Usage
If the boat is intended for high-risk activities (e.g., racing) or if the borrower intends to use it commercially without specific business income to support it, lenders may reject the loan.