As buyers requiring finance to purchase that dream boat watch interest rates being increased steadily over recent months, the question is sure to be, are cheap boat loans still achievable? The RBA has now increased the official cash rate at the Board’s last 6 meetings. The rate has gone from that historic low of 0.1% to the current 2.6%. A 9 year high for the official rate.
Many may have become comfortable with the nearly two years of historic low rates, implemented as a pandemic stimulus measure. Making these quite substantial rises in a relatively short space of time, as noted by RBA Governor Lowe, even more noticeable.
So what to do about it if your plans include the purchase of a new boat with finance? The objective of buyers requiring finance as rates rise at this time will likely be to seek cheap boat loans from specialist lenders such as Jade Boat Loans.
It can be helpful to understand how interest rates are set across different lending markets and how lenders arrive at the rate on individual loan offers. It is the Reserve Bank that establishes the official cash rate. This is the overnight rate on loans to banks.
The banks and non-bank finance company lenders then use this essentially as a base to set their rates on both loans and savings. Many may notice there is differences in interest rates which are advertised for different loans such home mortgages compared with say motor vehicle finance and boat loans. There are also differences between the rates offered by different banks and lenders.
The differences can stem from a range of factors which can include:- the individual lender’s interest in participating in a sector; the lender’s approach to being more competitive in a specific loan area; the lender’s analysis of the risk factors of lending in a particular market; varying business and operating costs and other matters.
As there is this variation in interest rates, even in the boat loan category buyers seeking the lowest rate face the prospect of covering off on many lenders for quotes. That is a key area where our services can assist. We have accreditations with many lenders, so we can swiftly and expertly identify which lender is offering the cheapest boat loan interest rates at a particular time.
In addition, through our bargaining power, we have the ability and connections to negotiate with lenders to achieve the cheapest rate for our customers.
In the initial planning stages, the advertised rates on lender websites can be used as a guide to what lenders are offering as their best rate and in general terms. But the rates offered to individual applicants can also vary.
Lenders will typically advertise the interest rate on boat loans available on new boats to applicants that a good credit score. Lenders assess applications in regard to the creditworthiness of the individual to repay the loan. The credit report and score form an integral part of that assessment.
To ensure the best rate is offered, applicants can address the issues around improving their credit score before lodging a new loan application. Information on how to do this can be sourced at the Government Moneysmart website.
Variable v Fixed Rates
Another important issue to consider with interest rates, especially at the moment, is the type of rate. Variable interest rate loans can be susceptible to increases when the RBA raises the cash rate and lenders respond accordingly. A fixed interest rate boat loan has the interest rate fixed for the full period of the finance term. S
Our Secured Boat Loan features a fixed interest rate and fixed loan which results in a fixed repayment. But some lenders offer personal loans at variable rates for boat purchases.
To achieve a cheaper boat loan that will remain affordable, ensure a fixed rate loan is secured.
Finance Amount and Term
The interest rate will impact the total amount of interest that the loan will accumulate and it will also determine the repayments. So the cheaper the rate the cheaper the loan in general terms. But there are other factors which determine the repayments and the total loan cost – the finance amount and the finance term. Buyers seeking to reduce their boat loan repayments can focus on these two aspects of their loan.
We offer No Deposit Boat Finance which allows buyers to include 100% of the purchase price in the loan, subject to lender approval. During periods of exceptionally low interest rates this can be an extremely attractive option. We can also, in many cases, include the costs of essential extras such as safety gear, trailers, covers and canopies etc.
But in this current period where rates have jumped up quite quickly, buyers that want to reduce their monthly outgoings may like to think twice about the no deposit option. By paying a deposit, obviously the amount required in the loan is reduced. The reduced finance amount then results in a lower repayment amount each month. A figure which may be crucial to an individual’s definition of a ‘cheaper’ boat loan.
The finance term also has a significant bearing on the repayment and on the total loan cost. Longer terms mean lower repayments but more in total interest where a shorter term can result in higher monthly payments but less interest payable in total. Lenders will have guidelines around the maximum loan terms but our consultants work to achieving the most acceptable term that suits our customers.
In summary, there are ways and means to achieving a cheaper boat loan in the current interest rate scenario starting with utilising our finance broking services. Individuals can determine their own definition and take on ‘cheaper’ in deciding which is the most suitable way for them to pursue. Whether that be achieving cheaper monthly repayments or achieving a lower total loan cost.
Contact Jade Boat Loans on 1300 000 003 for cheaper boat loans
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MISPRESENTED DATA AND DETAILS HEREIN.