What is boat financing and how does it work?

Before you get the boat finance South Africa and jump on board, let us tell you what options of loans you need to consider. If you take a marine loan, you get a one-time payment, which partly or completely covers the price for the boat or ship purchase. If you have a perfect credit history and sufficient income, a lot of the marine lenders will provide you with a sufficient amount of credit. Generally, however, the highest amount of credit is up to R300,000, still, it is negotiable.

A shipping financing is traditionally paid by a monthly payment (mostly by automatic one) during the loan term, which can last up to 7 years (84 months).

You can choose one of the different types how to finance a boat:

  • Secured. The boat you purchase will be used as collateral. As a bonus, from boat financing companies you gain beneficial interest rates and bigger loan limits. On the other hand, the boat will be lost if you fail to complete the payments. However, if you are looking for marine loans with a bad credit score, a secured loan may be the only way to get money.
  • Non-secured. Your ship is not collateral (so there will be no loss of it in case of non-payment), but you will face high interest rates and reduced amounts of credit. You must have a perfect credit history to get approval for such an option.
  • Loans on private boats. With such an option you gain an opportunity to buy a ship from a private salesman.
  • Dealer financing. A separate marine companies dealership can provide you both a boat and different options of financing in case you are searching for a multi-purpose service.
  • Variable-rate of interest. For this option, the interest rate may increase or decrease due to the economic situation in South Africa. You can potentially benefit from quite low-interest rates. Still, it is better to repay the loan faster when the rate becomes non-beneficial.
  • Fixed-Rate of Interest. Marine finance may have a higher initial interest rate. Still, on other hand you can be sure that your regular transactions to repay the credit are constant throughout the whole time of the deal.
  • Deposit. As with car buying loans and other large purchases, you may have to put a deposit on the account. In general, the required deposit amount is about 10-20% of the shipping price. The bigger the deposit, the bigger the monthly payments and interest payments, and the overall price of your loan will be lower because you need to charge less.
  • New boat. In case you buy a completely new boat, you can probably borrow more and choose a credit with a more convenient repayment period.
  • Used boat. Here you may use a ship loan to buy a used item if it matches the creditor’s requirements.

Important advice

Before you search for boats and take out a loan, make sure you understand the full cost of owning a boat. Apart from that, keep in mind that as soon as you enjoy your boat, it will start to drop in value as a thing, but will continue to grow in price as the loan that must be paid. Sum up all costs and compare them to the total cost of your ship financing, to investigate whether a boat loan can be considered a good and acceptable option.

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