It’s been on the cards for quite a few months and now it’s official, the RBA has moved to lift interest rates. Further, it has stated that further increases will likely be required to address inflation and bring it back to target levels. For those with existing boat loans and for those planning to buy a new boat with finance the big question is – what does all that mean for my boat loan?
A second question on many minds will likely be – are cheap interest rate boat loans still going to be available?
Putting these big picture announcements around the official cash rate into context and the smaller scale perspective of individual loans can be overwhelming, challenging and for some, worrying. There is a lot of media discussion around the impact of rate rises on home mortgages and that can create concerns for those with other types of loans. To ease concerns and to explain how better interest rate boat loans can be achieved, we provide this explainer.
The Big Picture
The RBA sets the official cash rate from which banks and non-bank lenders then set the rates they will apply to their loan products. Since cutting the cash rate several times as a stimulus response to the pandemic, the RBA has left the cash rate on hold at the historic rate of 0.1% since November 2020.
This record low rate has provided borrowers with exceptionally low interest rates across lending markets. The economy has rebounded from the economic effects of the pandemic, inflation is surging and the RBA has acted to start returning monetary conditions (interest rates) to more normal levels.
That has meant the first of what is expected to be several increases in the cash rate. The May RBA Board meeting resulted in the decision to lift the cash rate by 0.25% to 0.35%. Lenders followed by increasing their rates.
Immediate Impact on Boat Loans
The immediate impact on existing and new boat loans will vary and will be dependent on aspects of the loan and the lender. Especially the interest rate – whether it is a fixed rate or a variable rate. Jade Boat Loans offers a fixed interest rate for our Secured Boat Loan but some lenders and for Unsecured Personal Loans, the interest rate on their boat loans may be at a variable rate.
- For existing boat loans that have been secured at a fixed rate, the decision by the RBA to lift rates will not affect the loan. A fixed rate boat loan means that the rate is locked in place for the full period of the loan.
- For those with existing boat loans or loans to purchase boats at a variable rate, it is possible that the lender will increase the rate. That would increase the monthly repayments.
- For those that have pre-approved boat loans possibly being prepared to attend and buy at say the upcoming Sanctuary Cove Boat Show, the loan offer that has been made will have a period. If the offer is taken up and acted on within that period the interest rate should be honoured.
- If pre-approved boat loans are not used by the expiry date, the offer simply expires. If the applicant then decides to proceed, a new loan offer would need to be sought. That new loan offer would be priced at the interest rates currently on offer. Rates which would likely reflect the rate rise.
- For those applying for new boat loans, our consultants will be sourcing the cheapest rate quote from across our vast lender network. New loans are quoted based on the interest rates current on the day the quote is secured.
If you have any questions about a pre-approved boat loan that you have secured through Jade Boat Loans but are yet to act on, please reach out to your consultant for answers.
Tips for Securing Better Boat Loan Rates After a Rate Rise
While boat loan interest rates would in general be expected to reflect rises by the RBA, Jade Boat Loans has a commitment that we will always seek to achieve better interest rates for boat loans for our customers. While we do a lot of the hard work to ensure we secure the cheapest interest rates for customers, there are some actions that individuals can undertake to place them in a better position to be offered a cheaper interest rated loan.
- Ensure your credit score is in the good range. Creditworthiness and a review of credit ratings is a key parts of the loan assessment process.
- Reducing the amount of debt owed on other loans and credit cards may also improve the loan application to our lenders.
- Use the lending tools we provide including yacht loan calculators to crystallise your ideas on how you would like your loan to be structured – the number of years to repay and other aspects.
- Consider whether or not to pay a deposit to the seller to reduce the loan amount requested. In some cases, a lower loan amount compared with the value of the asset may be seen as a lower risk loan and hence attract a lower interest rate than if 100% of the purchase price is included in the loan.
- Proceed with the boat purchase as soon as feasible to avoid any future increases in interest rates as a result of RBA decisions at upcoming meetings.
- Ensure your boat loan is at a fixed interest rate so the rate and the repayments do not increase with any rate rise in the future.
And finally, utilise our services to source and secure your boat loan. Compared with sourcing your loan on your own, our consultant offers significant benefits in time saved, the ability to source from multiple lenders without impacting the credit report and providing expert skills to negotiate with lenders on crucial loan terms and conditions.
Contact Jade Boat Loans on 1300 000 003 to discuss better interest rate 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.