Whether it’s the first boat purchased or the next craft in a long history of boat ownership, boating enthusiasts are sure to know their stuff when it comes to which vessel they want to buy. Sure, there may be shortlists to pare down, but most will know what they are looking for. But when it comes to the finance stage of the process, many buyers may not know exactly what to look for when comparing boat loans.
Taking on finance and loans is not a process that a lot of Australians do on a regular basis. Not everyone has the time or interest to stay across the finance sector and lending markets to acquire a full and comprehensive knowledge of every aspect.
As specialists in marine finance, we share our insights to assist those seeking boat loans to know what factors to look for when considering applying to a lender, information on how to identify the differences and differentiate what may appear to be similarities.
Loan Variations re Boat Types
One of the key differences in boat loans can be between new boats and second-hand boats. The general interest rate that you will see advertised or quoted in the public arena by a lender, including Jade Boat Loans, will be for new boats. That includes the Advertised Interest Rate and the Comparison Rate. Second-hand boats may attract a higher interest rate.
Within the vast range of new boat categories – power, sail, cruisers, trailer boats, jet skis, house boats, yachts etc, in general terms the Secured Boat Loan should be a suitable loan. Jade Boat Loans offers specifically titled loans for some boat types such as our Jet Ski Loans and Yacht Loans. The format and structure of these as secured loans is essentially the same. The lender accepting the boat as the loan security and the borrower repaying the loan over a pre-set timeframe known as the loan term.
With used boats it will depend on the lender’s assessment of the goods in regard suitability to be accepted as security. If rejected on that basis, buyers can consider an Unsecured Personal Loan.
Variations with Marine Finance Lenders
Boat loans are available through a range of sources, which include:-
- Finance companies
- Dealer/manufacturer finance
- Finance brokers
- Broker-style lenders such as Jade Boat Loans
Loans for privately-used boats come under the umbrella of consumer finance. An area of lending which is regulated through ASIC. Lenders operating in this sector must meet certain legal requirements in place to protect consumers.
Some lenders will have a general Personal Secured Loan to cover a range of goods such as boats, caravans, motorbikes etc. Individual lenders will structure and price their loans according to their own individual guidelines and interests – these issues are covered below.
All lenders will require the goods under finance to be insured and all will assess the credit profile of the applicant.
Some of the key differences across the lender market are that finance brokers and lenders like Jade handle the loan process on behalf of their customers. This includes sourcing the cheapest offer from across a range of lenders, negotiating on terms and conditions, assisting with paperwork and liaising between lender and boat dealer to finalise settlement.
With banks, finance companies and dealer finance the customer handles the loan themselves. This can add to the time taken to source multiple offers to compare and possible confusion in identifying which represents the best option.
Loan Structure and Conditions
Lenders can have variations in the structure and conditions of their boat loan.
These variations may include:-
- Break fees and conditions around when a loan is finalised prior to the agreed loan term.
- Minimum and maximum loan amounts may apply.
- Payment default conditions and fees.
Boat Loan Interest Rates Variations
The interest rate is where the greatest variations occur with boat loans. Lenders set the rate that they are prepared to offer on each of their loan products based on a range of factors including: their own costs of acquiring funding; their business costs and margins; interest in a particular loan segment; and if they choose to specialise and/or be competitive in a certain market.
Lending rates will vary as the RBA raises or lowers the official cash rate. This is typical across most lenders and most lending markets.
We have prepared a table which shows the current interest rates on boat loans offered by a number of lenders. Some of the variations may seem small and possibly insignificant. But when you enter the amount required for the loan and see the estimated repayments, the true significance of how much extra you will be paying each month on a higher interest rate loan becomes clear.
Interest rates can be fixed or variable. We opt to offer a fixed interest rate on our boat loans and this provides customers with the assurance that their repayments will remain constant over the full term.
Shortcutting the Source and Compare Process
As you can now see from this brief overview, when handling the boat loan process themselves, buyers have their work cut out. The shortcut is to simply engage a broker-style lender such as Jade Boat Loans to source your boat loan.
In so doing, customers receive not only the cheapest boat loan but expert analysis of the different loan options and professional insight and vast experience as to which loan is best suited to meet individual requirements.
Contact Jade Boat Loans on 1300 000 003 for all types of 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 MIS-PRESENTED DATA AND DETAILS HEREIN.