After an extended time of the lowest interest rates ever and the resultant cheaper boat loans, the tide has changed. In efforts to address surging inflation and to cut back the pandemic level, with extraordinary support, the RBA is normalising interest rates. That means increases to the cash rate in both May and June, so far. Further rate rises are more definite than possible.
The latest economic data in Australia and moves by the US Federal Reserve and Bank of England and other factors all point to another rate rise in July. Philip Lowe, Governor of the RBA, recently said that inflation could be as high as 7% by later this year and further rate rises would be required. Some commentators are predicting that a July rise could be 0.5-0.75%.
The cash rate forms the basis for lenders to set their rates including in the marine finance market. So when rates across the sector were historically low, were boat loans. With the cash rate on the rise, so will be boat loan interest rates.
So rate rises are, yes, inevitable. But the same does not necessarily have to be the case regarding boat loans. Expensive boat loans, as in loans at higher than could be achieved interest rates and repayments, are not necessarily inevitable and can be avoidable.
There are steps, considerations and decisions that boat buyers seeking affordable boat loans can take and make to ensure they achieve a boat loan at the cheapest possible interest rate that delivers affordable boat loan repayments.
Before getting the deep dive details, here are a few general basic guidelines:-
- Make sure the boat loan is at a fixed boat financing interest rates. A variable interest rate boat loan will likely be impacted by rises in interest rates by the RBA and lenders. Resulting in higher repayments down the track.
- Focus on a target loan repayment amount that works with your budget and aim to secure the loan terms, interest rates and conditions to deliver that target.
- Utilise loan tools and resources including the services of professionals such as Jade Boat Loans to source the cheapest interest rates and provide access to a good choice of lenders.
Loans and Lenders
The lender market for marine finance is vast and the types of boat loans available and interest rates offered can vary markedly across the market. While submitting loan applications to several lenders to have several offers to consider may seem the diligent thing to do, it may not be. This practice can hurt a credit rating.
Don’t rush into signing up to say a finance offer made by a boat dealer without comparing both the interest rate and the loan terms and conditions with say what we can offer. FOMO especially when stock is limited can cause buyers to act impulsively. That doesn’t have to happen.
Our consultants can provide quick quotes and fast approvals so you don’t miss out on the boat at the expense of paying too much on the loan. Our same cheaper boat loans apply to fast loans. Pre-approved boat loans can be arranged ahead of the boat buying stage. This can be extremely helpful in setting a target price for the boat which is in line with the pre-approved boat loan repayments.
Study the terms and conditions of the loan. Our Secured Boat Loan suits most buyers. Other lenders may only have a generic leisure market loan which is not as attractive in some respects as specific marine finance.
Request Preferred Loan Term
The term of the boat loan, and the number of years to repay the loan, will be a key factor in calculating the loan repayments. Longer term lower repayments and shorter term higher repayments. Lenders often have strict guidelines around the boat loan terms they will approve.
Using our services provides you with our bargaining power and negotiating skills to work to secure the term that delivers the target boat loan repayment. To establish your targets for repayments and terms, use our Boat Loan Calculator.
Setting the Boat Price and Finance Amount
The entire loan process essentially starts with how much you want to borrow, and the loan amount. As do other lenders, we do offer a no deposit boat loan option. This refers to the full sale price of the vessel included, plus possible extras, in the total loan amount.
When rates were at historic levels, the decision to opt for a no deposit loan was very popular. But with higher interest rates, the higher loan amount will result in a higher loan repayment compared with when rates were lower.
So to keep the boat loan affordable and cheaper, consider either a lower-priced boat or making a deposit payment to the boat dealer to reduce the loan total.
Maintain a Good Credit Profile
Lenders will review the credit rating and profile as a standard step in the loan assessment and approval process. The cheapest interest rates advertised by lenders do apply, unless otherwise stated, to good credit rated applicants for the purchase of new goods.
Accessing a free copy of your credit profile and taking the necessary steps to improve the rating may result in a cheaper boat loan.
Sourcing a Cheaper Boat Loan
In summary, more expensive boat loans in relative terms, may be avoidable in a rising rate scenario by taking a few simple steps. One of the key steps is to utilise our specialist marine finance services to source you the cheapest boat loan that meets your application and your requirements.
Utilise the services of Jade Boat Loans by calling on 1300 000 003 to avoid paying too high interest rates on 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 MIS-PRESENTED DATA AND DETAILS HEREIN.