Buying a boat especially with finance is not something that even the most avid boaters and fishers undertake all that often. Boats last many years and it can be a long time between new or upgraded vessels for enthusiasts. So when it does come time to buy that new boat, whether it’s the first boat ever or the next one, most buyers will be wanting to refresh their knowledge. In particular in regard to boat loans. As part of our boat buying tips, we provide resources and information on how boat buyers can align their buying plans and expectations with affordability and boat loan repayments. Aligning repayments with boat models prior to embarking on the buying process may speed up the process, save time and a lot of disappointment.
It doesn’t make a lot of sense to start talking deals with a boat broker for a high-end luxury cruiser if in the reality is your budget in terms of affordability is better suited to a mid-range model. On the flip side, and the better side of this discussion, with our current cheap interest rates on boat loans, you may be very surprised to discover that a better, bigger boat is well within your repayment expectations.
Boat Loan Interest Rates
Interest rates have changed considerably over recent years, predominantly for the better for potential borrowers. The interest rate is the key determinant of the cost of the loan and of course those all-important monthly repayments.
In response to the effect of the COVID-19 pandemic on the Australian economy, the RBA cut the official cash rate several times during 2020. In November 2020 the cash rate hit the historic low of 0.1%. A level at which it has remained since.
The cash rate is not of course the interest rate which applies to boat loans or other types of consumer finance. But it is a key indicator and determinant for lenders when setting the rates they will offer on different loans.
The current low interest rate environment has made boat ownership more affordable and accessible to more people. This has been reflected in the spike in boat ownership due to COVID travel restrictions. This enhanced affordability may mean that buyers can select a higher-priced boat than they originally anticipated.
Interest rates will differ across marine finance lenders. To assist buyers do a quick comparison, we’ve prepared a table of a selection of banks and lenders which shows the loan they offer for boat finance and their interest rates.
Estimating Loan Repayments Pre-Purchase
The recommended price for a boat can mean very little for buyers that intend to purchase with finance. Looking at a price quote and trying to convert that to repayments can be a mathematical challenge too far for many people.
Contacting multiple lenders to get loan quotes before committing to a purchase can be time-consuming. With stock of some boats currently limited, any delay in the buying process can mean missing out or waiting a longer time for delivery.
As you can see from the lender comparison chart, the interest rate for starters differs across the market. Those smaller incremental variations can mean significant differences over the loan term.
Comparing interest rates alone must also be done with caution. But as a rule of thumb, in general, if the interest rate is high, then repayments will be higher. If the Comparison Interest Rate is lower than other lenders, then the repayments will be lower than other lenders.
Lenders have their own specific fees and charges to include in the cost of the loan in addition to the interest charges. These costs are reflected in the Comparison Interest Rate as opposed to the Advertised Interest Rate. This applies to all consumer finance and is required under Australian consumer finance legislation.
To estimate what repayments may be on a boat loan prior to purchase, buyers can take advantage of a Boat Loan Calculator.
Using a Boat Loan Calculator
We’ve provide a boat loan calculator which is free to use and very easy to navigate. No special maths or calculation skills are required! Just enter the price of the boat, the loan term you’re keen to achieve and the current interest rate we are displaying.
The estimated monthly repayment will be immediately displayed. This is of course only an estimate and not a quote or an offer. But it is a great indicator for aligning choice of boat with repayment expectations and personal budgets.
Additional Considerations
While the loan repayment estimates provide great assistance in aligning a boat buy with affordability, there are additional considerations worth mentioning:-
- Loan inclusions, conditions and other factors will have an influence on the overall attractiveness and suitability of the loan. If a lender won’t agree to the number of years of a loan term that you are seeking, the repayments could end up out of your ballpark or the entire loan unworkable.
- Insurance will be required on boats purchased with finance.
- Annual rego for boat and if included, the trailer should also be budgeted for.
- Safety gear will be required to be compliant with state marine authority regulations. When purchased with the boat, discuss with your Jade Boat Loans consultant about including this cost in your overall loan amount.
- Timing! As we mentioned earlier, low stocks can mean buyers need to be in a position to act quickly. Engaging a broker like Jade can speed up the boat loan process and expedite the purchase process. With access to many lenders we can quickly provide the cheapest loan quote to suit individual buyer requirements much faster than individuals can source multiple quotes.
Aligning expectations with reality can be critical in boat buying and the resources and expertise available through Jade Boat Loans can assist buyers in the process.
Contact Jade Boat Loans on 1300 000 003 to discuss a quick quote, fast approval and additional assistance with securing your boat loan.
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.
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