Selecting the boat to buy is typically the fun part of the boat buying process, as long as your wish list is not in that ‘in your dreams’ range! What is not as popular on the ‘to do’ for boat buyers is comparing boat loans and ensuring they have secured the one that is the best and the cheapest for their needs. Marine finance can be a speciality field and comparing boat loans successfully involves understanding the loan market including how interest rates are determined and applied and where to source the cheapest loan offer.
As specialists in marine finance and boat loans, Jade Boat Loans has prepared this basic guide to those embarking on the process of comparing boat loans and needing to refresh their finance knowledge.
Marine Finance Market
Not every bank and every finance company will have specific ‘Boat Loans’ listed in their portfolio. They may offer such loans under more general categories such as Secured Loans or Unsecured Loans. But in general terms, the lending scene includes banks, finance companies, specialist non-bank lenders and the finance broking sector which includes Jade Boat Loans.
When it comes to boat loans and marine finance, buyers will need to make more enquiries of lenders or do more research of each lender if they are approaching the process themselves.
- Banks in general terms are the main source of loans for many purposes. Due to their wide loan base the boat loan may be a more generic type of loan. In line with their status as a banking institution and their large corporate format, they typically adhere to strict loan guidelines.
- Finance companies are usually also large corporates and while often appearing highly competitive as a result of advertising campaigns, they to usually work to corporate rules in regard to lending conditions.
- Specialist non-bank lenders can include lenders that operate in specific fields such as marine finance in this case. They can offer specific loans designed for specific purposes and their speciality field can result in a greater understanding of buyers in that market.
- Boat broker or marine dealer finance is widely available. For new boats that may be due to the provision of finance through the boat building company, often in association with a finance organisation. Used boat dealers may set up arrangements with either brokers or finance companies so they can offer the convenience of finance to their customers. Jade Boat Loans establishes this type of arrangement with selected businesses.
Boat Loan Interest Rates
The interest charged on a boat loan is by far the largest additional cost to the boat purchase price. While small variations in advertised interest rates may seem not worth bothering about, compound that small amount over the number of years of the loan and you will quickly see how that insignificant variable suddenly becomes VERY significant.
So why do interest rates on boat loans differ across the lender market? The RBA sets what is known as the official cash rate which is the rate that much of the media talk about ‘rates’ is focussed around. From that level, individual banks and lenders then derive the rates they will charge on loans across their own portfolios.
Rates vary on different categories of loans so car loan rates say may be different from boat loan interest rates. Specialist marine finance lenders by their nature, can typically be more competitive and offer cheaper rates on boat loans.
Consumer boat loans, that’s loans to private individuals for boats for personal use rather than boats for a business, will also show a Comparison Rate. That is the interest rate on an exact example of a boat loan after that lender’s fees and charge have been included. The Comparison Rate is of course always marginally higher than the Advertised Rate due to the inclusion of fees.
The interest rate generally advertised by banks and lenders will in the most part be based on the purchase of new goods as opposed to second hand boats for loan applicants with a good credit profile.
A risk assessment of every loan applicant is a standard part of the loan approval process. Applicants may improve their possibility of being offered a better rate by addressing any issues with their credit profile.
Types of Boat Loans
We’re focussing in this piece on recreational boat purchases and as such we focus here on consumer boat loans. That’s boat loans for boat being purchased purely for private recreational use. These fall into two main categories: Secured Boat Loan and Unsecured Personal Loan.
The Secured Boat Loan will be one that suits most buyers of brand new and relatively new model boats. This type of loan can be used for many types of boats – sail and power, jet skis, house boats, etc, dependent on the individual lender guidelines.
Where the boat is not accepted as security by the lender, buyers can opt for an Unsecured Personal Loan.
Sourcing the Cheapest Boat Loan
Comparing boat loans can be a time-consuming process especially as many will need to actually apply or request a quote to get figures for comparison purposes. To get a rough idea of the boat loan market, we have prepared a Lender Comparison Calculator. This is available on our website and shows the boat loans available from a number of banks and finance companies.
Jade Boat Loans eliminates the time and the need for multiple quote requests and loan applications by handling all that for you. Our consultants take your brief and then source the cheapest quote from across the lenders that we hold accreditation with. For us as experts in marine loans, it’s a quick and easy process.
Comparing boat loans or having boat loans compared for you as we do at Jade is an essential step in achieving the cheapest loan offer. But it doesn’t have to take the enjoyment out of the boat buying process. Engage with Jade Boat Loans to handle the process and keep the excitement in your boat purchasing experience.
For assistance with comparing boat loans, 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 MIS-PRESENTED DATA AND DETAILS HEREIN.