The current economic conditions may have many prospective boat buyers wondering if there is any way they can still afford that dream boat. The RBA Governor has forecast inflation to rise further placing more pressure on living costs, the RBA has also indicated further rate rises are ahead which will flow through to boat loan interest rates. But keep that boat-owing dream alive with our tips on the ways to realise savings, whether directly or relatively on a boat loan.
The way the process is approached will be determined by an individual’s interpretation of savings. It can have different definitions for different purchases.
Typical ‘savings’ which may be pursued include:-
- Sourcing a cheaper interest rate on the boat loan
- Paying less in the total amount of interest which is payable on the boat loan
- Reducing the monthly repayment to ease pressure on the household budget
- To avoid paying some fees
As specialists in marine finance, we work with individual customers to assist them in achieving their goals regarding their boat loans. We share some of the actions that can be taken by individuals when approaching their loan application and in forming their preferences regarding their boat loans.
Cheaper Rate of Interest
Getting the cheapest boat loan interest rate is a key goal for most boat buyers at all times and our key objective. But when rates are rising from the historic low period we have been enjoying, it could be time to pay more attention to getting the lowest rate.
- Start with your credit score. The cheapest rates which are promoted by most banks and lenders will refer to boat loans for individuals with a good credit rating. Check how your score is currently and take what actions are possible to improve the score before you submit that loan application.
- Take an analytical approach to deciding on the lender for your boat loan. Rates vary across the lending sector – not all boat loan interest rates are created equal. Also, look behind the rate to the loan terms and conditions to ensure it’s not a ‘too good to be true’ offer.
- Referring to our interest rate comparisons highlights many of the variations across the market and how we can offer better rates. Avoid paying more in interest by thinking twice when presented with boat finance from possibly a dealer. At a minimum, give us a quick call for a quote to compare. There’s a very big chance that our rate will be lower and that could mean significant savings.
- Rates are set to go up further and are not expected to decline again any time soon. So acting as quickly as possible on the boat purchase and securing finance could represent a significant saving on the interest rate.
- In the current climate, ensure the interest rate is a fixed rate to guard against the increases in rate and repayments associated with variable interest rate loans.
Saving on the Total Amount of Interest
Savings can be made on the total amount of interest which is payable on a boat loan. This figure in conjunction with the loan amount effectively determines how much a buyer is paying for the boat. This may have an impact when the buyer comes to sell the boat and looks to recover monies to cover any outstanding payments.
The key components determining total interest are the number of years in the boat loan term, the total loan requested and of course the interest rate. Most won’t want to be out of pocket when selling.
Here’s what buyers can consider:-
- Reducing the loan amount by depositing the purchase and not selecting a no deposit boat loan. In times of record low-interest rates, no deposit finance makes perfect sense. But as rates rise, it is a factor to give a second thought to.
- Consider a shorter boat loan term. The fewer number of years in the term will calculate out to higher boat loan repayments each month. But the loan will be repaid sooner and less interest will be payable overall. This represents a significant saving if the higher monthly repayments can be managed comfortably.
Reducing Boat Loan Repayments
The major issue for many boat loan applicants is what the loan going to cost them every month. After all, this monthly outgoing is what is either going to work with the existing commitments or put undue pressure on the monthly budgets.
Achieving a lower repayment figure can be seen by many as savings as such. It may not represent a real saving but a perceived reduction. The reductions that we can achieve for our customers on repayments compared with other lenders may derive from a cheaper interest rate or skilful negotiations regarding loan terms.
A great way to start forming a plan as to what will work for an individual is to use our Boat Loan Calculator. The data can be varied to see exactly how the dollar repayment figure changes. You’ll note that a longer boat loan term will reduce the repayments. However many lenders will have strict rules regarding approving certain loan terms. This is where our consultants will be negotiating with our lenders to achieve that repayment goal.
A longer boat loan term will deliver a lower repayment but it will take longer to own the boat and more interest in total is payable.
Avoiding Early Payout Charges
While minimal, Secured Boat Loans at a fixed interest rate will attract a charge when the finance is paid out before the conclusion of the fixed loan period. These charges can be quite minimal but annoying to some.
So look at how you may avoid that situation from occurring. Think resale and upgrade time before you’ve even purchased the boat and applied for finance. If you’re the type that holds onto a boat for many, many years, well beyond a typical boat loan term, then there may be little chance of reselling and paying out the loan early.
On the other hand, if you are the type that likes to upgrade to a newer model every few years, possibly a PWC or jet ski, then including an upgrade timeframe in the boat loan arrangements can result in avoiding those early payout fees.
Whatever the boat you are considering or your approach to boating, our consultants will be focussing on saving you money on your boat loan with better rates and better service.
Speak with Jade Boat Loans by calling 1300 000 003 to see how we may be able to assist you in saving 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.