For boat buyers who have arranged pre-approved boat loans, we offer a timely reminder to ensure you act on the loan before its expiry time. Pre-approved boat loans do have a timeframe in which the borrower must activate or use the loan. If the loan expires before use, the loan would need to be re-quoted. With interest rates on the rise as the RBA prepares for another rate rise in August that could mean a higher interest rate and higher repayments.
Pre-approved loans are a great way to secure finance before purchasing a boat and to provide clarification about how much you would be approved to borrow. These aspects can be of great assistance in guiding purchase decisions based on price.
Knowing ahead of time exactly how much you are approved to borrow can be invaluable in identifying exactly the price range of boats to consider. Knowing boat loan repayments ahead of the purchase can assist in working repayments into the monthly personal or household budget.
Pre-approved boat loans are particularly useful in a limited supply market and if planning to buy at a boat show such as the upcoming Sydney International Boat Show. By knowing you have your finances secured, you can place an order with confidence. This may mean securing or missing out when there is limited stock on some models. A scenario that has been quite prevalent over the past few years due to global supply issues.
We update on what is involved with a pre-approved loan, how interest rates work with this type of loan and what happens if not used before expiry.
Pre-approved Boat Loans: Overview
Pre-approved loans are simply loans that are sourced, quoted and offered before the actual boat purchase. We provide this service across our loan portfolio and it is especially popular with our Secured Boat Loan.
The same features apply to Secured Boat Loans whether they are pre-approved or arranged after the boat purchase process is commenced. The key difference is around the exact loan amount that will be required.
When a loan is applied for after the boat is selected and a purchase price is agreed on with the boat dealer, the applicant knows how much they need for their boat loan. The dealer typically will issue an invoice for the boat which our customers forward to us and we use to source the loan.
When applying for a pre-approved boat loan, that exact figure will not be known. So what happens? The loan applicant can guesstimate the amount they think they will need for their loan. Most boat price ranges are readily acquired and most buyers will have a guide as to what they think they can afford or choose to spend.
The pre-approved loan is arranged based on that guesstimate. When the buyer does decide on a boat and arrives at the exact purchase price, the loan is finalised during settlement, based on the dealer invoice amount. This enables the opportunity for additional options and accessories to be acquired and included in the loan amount.
Tip: when planning budgets and using our boat loan calculator, allow an amount for those extras that you know you are going to want to buy.
Pre-approved loans have a valid period which will be advised at the time of application.
Interest Rates on Pre-approved Loans
The interest rate offered on pre-approved boat loans will be in line with the rate that would be offered after the boat purchase decision. We source the cheapest interest rate regardless of the timing of the application – pre or post purchase.
An assessment of the applicant’s credit profile is the key determinant of the interest rate offer. The rates that lenders advertise as their best offer are typically for those with a good credit score.
The interest rates on marine finance will vary across the sector as can be seen on our boat finance interest rates chart. Lenders set their rates based on the official cash rate and their guidelines and costings. When the RBA acts to increase rates, that increase will be seen in marine finance rates.
What happens if the pre-approved loan lapses before use?
Our alert to those with pre-approved loans to act is motivated by the prospect of significant rate rises in the coming months. Pre-approved loans have a set period. If the offer is not accepted and the loan application is processed and finalised within that time, it expires.
If the customer requires to ‘renew’ the loan after the expiry time, a new quote would need to be obtained. This would involve a renewed assessment of the financial and credit profile. If your credit rating or financial situation has changed the loan offer and rate may be different on a new loan.
The new loan quote would be based on the interest rates current at that time. Not at the time of the previous pre-approved loan. If interest rates increase between the previous and ensuing loan quotes, the loan would be re-quoted and the new, higher rate will likely apply.
Quick Action Advised
With the RBA set for further increases, possibly significant, as soon as 2 August, it is highly advisable that those requiring marine finance act quickly. Whether you have a pre-approved boat loan or if you are planning a purchase with finance, acting quickly may avoid facing a higher rate loan.
Contact Jade Boat Loans on 1300 000 003 to act on your pre-approved boat loan or apply for a new loan before the next rate rise
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.
