After an extended period of historic low and stable interest rates through late 2020 and 2021, the current rising rate cycle presents a different scenario. From a cash rate of 0.1% in April to 1.35% in July and more increases ahead, for those considering boat loans, the focus is well and truly on interest rates. For both existing boat loan holders and those planning to apply for boat loans the major concern may be how to shield their boat loan from rising interest rates.
Are there still ways to source boat loans at cheaper interest rates? How can loans be arranged so they are not impacted by rate hikes? Will boat loans already organised be affected by rises? Does a pre-approved loan offer any protection?
We’ll present several scenarios to address these concerns and offer solutions to achieving cheaper boat loan interest rates and ensuring that the rate remains the same over the full period of the loan.
Further Rate Rises Imminent
At the start of and during the worst stages of the pandemic the RBA slashed the cash rate to historic levels to stimulate the economy. But as restrictions were lifted in late 2021 and the economy rebounded faster than expected, inflation has surged. The RBA has responded over the past few months by lifting the cash rate.
Increases in the cash rate then flow through to increases in interest rates across the lending sectors including for marine finance. The RBA has stated it will be considering the latest economic data when deciding how much further rate rises will be and when those further rises will occur.
Recent economic figures as released by the ABS for unemployment and inflation, which has reached a 20 year high, will be putting pressure on the RBA for significant rate rises in the coming months.
Existing Boat Loan Holders
We’ll first consider the scenario for existing boat loan holders when interest rates rise. The outcome will depend on whether the interest rate on the boat loan is at a fixed or a variable interest rate. Jade Boat Loans secures our Secured Boat Loan at a fixed interest rate which is fixed for the entire loan term. Boat owners with this type of loan and fixed rate should not have any change to their rate or their loan repayments as a result of rate rises.
While we focus on achieving a cheaper fixed rate for our secured loan customers, some lenders do offer boat loans with a variable interest rate. This may be for a more general personal loan rather than a specific boat loan. Variable rate loans are subject to change as rates change. The changes will be dependent on individual lender decisions. Boat owners with this type of loan should contact their lender.
Our Unsecured Personal Loan may be arranged with either a fixed or a variable interest rate.
Pre-approved Boat Loans
Another scenario to consider is those with pre-approved boat loans. Many customers will have arranged loans before say the recent Sydney Boat Show so they were ready to order at the show.
Pre-approved loans are arranged based on the interest rate relevant at the time of application. They do have a time limit in which the customer must utilise the loan to achieve the interest rate and loan conditions in the offer. If the offer is not used during the validity period, the loan would need to be requoted. If rates have increased between the initial offer and requote, the new rate would apply.
Recently we have seen some lenders increase their rates even before announcements by the RBA. Lenders make their forecasts and adjust rates according to their own decisions and timeframes.
So unfortunately locking in a pre-approved boat loan is not an ironclad guarantee of shielding the loan from interest rate rises.
Avoiding Rate Increases
The way to avoid having a boat loan impacted by interest rate increases after the loan is secured is to ensure a fixed interest rate boat loan is obtained. Our consultants focus on securing a fixed rate on our secured boat loan as this provides our customers with the assurance that their loan and especially their repayments will not change over the full term of the boat loan.
As mentioned above, not all lenders offer fixed rates on the boat loans as can be seen in our boat loan finance rates. So when applying for a boat loan, to shield the loan from rate rises, look for a lender that does offer a fixed and not a variable interest rate.
Achieving Cheaper Rate Boat Loans
As interest rates rise the big question for many is how to obtain the cheapest boat loan rates. At Jade Boat Loans our policy of always sourcing better interest rates continues, while relative to the market conditions. As we have accreditation with many banks and non-bank lenders, we remain ideally placed to secure the cheapest boat loan interest rates from across a vast choice of lenders.
It is important to be aware that the rates that lenders, including ourselves, display as the lowest achievable, will be for boat loan applicants with a good credit rating and brand new goods. Used boats may attract a different rate. Maintaining a good credit score can be a key factor in being offered the cheapest interest rate loan.
To ensure the cheapest rate is obtained, buyers requiring finance can look to using our broker-style lender services. Our services are available to secure loans for all types of boats, both new and used, power and sail.
While economic conditions and global events and issues will largely determine interest rates in general, securing a cheap, fixed interest rate boat loan through Jade Boat Loans can be an assurance that the loan won’t change as rates increase.
Contact Jade Boat Loans on 1300 000 003 to discuss the options for a cheap, fixed rate 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 MISPRESENTED DATA AND DETAILS HEREIN.