While buyers of medium to top end priced boats will typically seek finance through a lender, buyers of lower priced, entry level boats may have a number of other finance options. The finance industry continues to expand with new payment systems offered through fintech services and other providers. Particularly buy now pay later, or BNPL, payments services which have surged in recent times. Another option may be to purchase say a small tinnie with a credit card rather than applying for a loan through the bank or a lender such as Jade Boat Loans.
While some of these payment options may appear convenient, they may also have downsides by way of fees and high interest charges. We provide a brief overview of a number of payment options compared with the benefits of a Secured Boat Loan.
BNPL
Buy Now Pay Later (BNPL) is a payment system which has emerged in recent years. Though term payments on goods such as electricals and whitegoods is not all together a new concept. Term payments through stores on some goods have been available for decades.
What is relatively new is the easy way in which customers can opt for BNPL and the increasing number of stores and outlets where it is available. Due to the popularity of the system with customers, more companies are getting in on the action. Even one of Australia’s major banks is set to offer a service in the near future.
This type of payment system can be convenient and appear straightforward. But those looking to use such a service should assess the costs and other factors.
- BNPL allows buyers to purchase goods in instalments rather than pay the entire amount at once.
- While providers typically do not charge interest on the funds they do charge fees. Fees may include a payment fee, a monthly account fee and account establishment fees.
- Payments are usually fortnightly not monthly like for a secured boat loan. Watch out for this difference when making comparisons.
- If you select the payment to be deducted from a credit card rather than a debit card (using your own money) you would be charged the relevant interest on that credit card. Credit card interest is high compared with many secured loans.
- Missed payments can be reported to credit agencies and as such impact a credit report.
- Lenders do assess BNPL activity when assessing loan applications.
- Credit checks may be conducted by some providers prior to approval.
These services can be offered on many goods and some have account limits up to $30,000. For more information check out the details at https://moneysmart.gov.au/other-ways-to-borrow/buy-now-pay-later-services
Credit Cards
We all know how credit cards work. They’ve been around forever, well at least since around the 1960s and most adults have at least one card. During the peak of the COVID-19 in 2020, it is reported that many people reduced their credit card debt significantly. The emergence of debit cards by the major credit card providers has facilitated the payment of online purchases with your own money, possibly making credit cards less used.
However, recent articles in the finance news are reporting customers are being tempted back to using their credit cards. Some providers report that credit card use is back to levels seen prior to the start of the pandemic.
If a person cleared their credit card balance when stuck in the 2020 lockdown, they may have a large credit limit available to be used. Enough perhaps for the purchase of a small or even a medium priced boat depending on the limit. A tempting scenario.
This can create a false sense of having ‘funds’ readily available to spend. Appealing as it may appear to simply pay for your boat on the spot entirely with your credit card, multiple factors should be considered.
- No loan application process would be required for credit card payments so the convenience factor is high.
- Also high, and in many cases very high, are the interest rates charged on most credit cards. While interest rates on loans including secured boat loans, are at low levels due to the historic low cash rate, the interest rates on credit cards has typically not decreased in the same way.
- While there are lower interest rate cards available the interest rate on credit cards typically ranges between around 12% and up to 19%. To see what that may cost you in interest on your loan, use our boat loan calculator. Input the interest rate on your credit card and say a loan term of 7 years to see what the repayments would be compared with our current loan rates.
- Credit card companies calculate minimum payments due each month at a rate of around 1-3%. It may appear very tempting to only pay the minimum amount each month – it could ‘feel’ like your boat purchase is not costing you much each month. But look further down on the credit card statement where it states how long it will take the card holder to repay the balance if they only make the minimum payment each month.
It can take great diligence and a very conscientious approach by the card holder to reduce a credit card balance significantly each month to minimise interest charges. Those using this method to buy a boat may find they still owe a lot more even when they sell the boat in a few years. Overall, this would present a very expensive form of finance for major purchases.
Secured Boat Finance
A Jade Secured Boat Loan offers a workable option for most boat buyers at cheap interest rates and individually negotiated terms and conditions.
- Our cheap fixed interest rates ensure a consistent repayment amount over the entire loan term.
- Our interest rates are typically far lower than credit cards and a secured boat loan a much cheaper option than buying a boat on a credit card.
- The monthly payment schedule for our loans can make it easier to manage household budgets than the fortnightly or weekly payments as offered by some BNPL providers.
- With credit cards, it may be tempting to just make a minimum payment and the result being more interest at higher rates paid over the repayment period. With a secured loan you make the commitment to that monthly repayment which can result in the finance being repaid and the boat wholly owned sooner. And with much less interest paid compared with credit cards.
- Compare repayments on our loans using our calculator with say credit card interest payments over the same term to see how much you could be saving with a Jade boat loan.
- If comparing a secured boat loan with BNPL, make sure you include all fees charged by the provider when using the calculator.
- There is no maximum limit on boat loans for most of our lenders, subject to individual applications. BNPL and credit card providers will have credit limits.
- We do have a minimum boat loan amount of $7,000 for our secured loans. However, in many instances, additional items such as the trailer, motor and accessories can be included in the same loan. This may allow you to achieve the minimum loan amount if purchasing an entry level boat.
By sourcing your secured boat loan through Jade Boat Loans, you have the services of an expert finance professional working in your best interests to secure you the cheapest loan option. While there is a loan application process to be followed, we ensure that is as streamlined as possible with quick quotes, fast approvals and prompt settlements.
To discuss boat loans and marine finance, contact Jade Boat Loans on 1300 000 003
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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