All the signs are there that after 12 years, interest rates are set to rise shortly. Since the RBA cut the official rate to the record low of 0.1% in November 2020, borrowers have enjoyed extremely cheap interest rates on a wide range of loans. But the upcoming rate rise is unavoidable. Or is it? Well, technically it is unavoidable that lenders will follow the RBA’s rise by lifting their lending rates. These decisions will be based on their guidelines. But there are some steps that boat buyers seeking finance can take to ensure they achieve the cheapest interest rate boat loan possible.
Jade Boat Loans will always focus on achieving the cheapest boat loan interest rates for our customers to secure the cheapest loan offers to suit individual requirements. While we do the hard work to source and negotiate the loans, loan applicants can improve their prospects and expectations with a few tweaks from their side. Here are a few ideas to consider.
Reconsider Buying Timeline
The RBA is expected to raise the official cash rate at their Board meeting in June 2022. Further increases could likely follow in the ensuing months. Some analysts have predicted that the central bank may look to ‘claw back’ the rate cuts that it initiated as a stimulus measure during the crisis period of the pandemic in 2020.
So knowing that a rate rise could happen from June, buyers planning a new boat purchase may be in a position to speed up that process. Yes, the supply scenario needs to be considered. Stocks of some boat makes and models have been in short supply over the past few years due to a spike in demand and manufacturing issues arising from the pandemic.
But if you can source that dream boat pre-June, it may result in a cheaper boat loan than say post-June. So we hear you. That is stating the extremely obvious. But when you consider how much a small increase in the interest rate on a boat loan may cost you, it could be worth thinking about. Use the Boat Loan Calculator to see what a rate rise may mean on a loan you are considering.
If there is a wait time for the boat you want, why not cast your gaze wider and consider alternative makes or models that are available right now? The compromise could represent a significant saving over the boat loan term and you’ll be on the water faster also.
Realise the Relevance of Repayments
While better and cheaper interest rates are our priority, for our customers, the priority can often be the monthly boat loan repayment figure. The repayment is that figure that will need to be worked into the household or personal budget to realise the boat-owning dream.
Many buyers will have a target in mind that they would like to achieve as a boat loan repayment. Focus on that to put the interest rate scenario into a more relatable context.
So how can you achieve the target loan repayment? Here are a few ways to consider.
Review boat loan term: The longer the boat loan term the lower the monthly repayments. The shorter the term the higher the repayments. With longer terms, the total interest payable is more than with longer terms. With shorter terms, the boat will be owned sooner and less total interest payable. But if the key figure is repayments, then focus on a loan term that will achieve that figure.
In many instances, our lenders will have a view on what loan terms they will approve or offer. These decisions can reflect issues in the loan application and their lending guidelines. But your Jade consultant will negotiate on your behalf to achieve the optimum loan offer.
Reduce boat loan total: The repayment figure is derived from the interest rate and the total amount of the loan. It can be advantageous to opt for our no deposit boat loans and include the full purchase price of the boat and possibly accessories and extras in the loan. When interest rates are at record lows – that can be an astute choice.
But if a higher interest rate means that the loan amount pushes repayments outside your comfort zone, consider reducing the loan amount. That can be done by selecting a lower priced boat or by paying a deposit to the boat seller.
Maintain a Good Credit Profile
Credit scores and ratings are fundamental to achieving the cheapest and best interest rate and loan offer. You will note from the small print in lender advertisements for boat loan interest rates, including ours that the rate is for applicants with a good credit rating and new boats.
Lenders review credit profiles as a standard part of the loan application assessment process. It is a process that loan applicants can be strongly advised to do before applying. That good credit rating will increase in importance after the rate rises.
If you don’t know what your current rating is, refer to the Government’s Moneysmart site for more information on how to access a free copy of your profile.
To improve a credit score, individuals can look to reduce their debt levels to improve their balance sheets. This can include paying off credit cards and any other personal loans. Maintaining a good record of paying bills when due is extremely important.
Personal Balance Sheet
Being well-prepared with data and details when completing a boat loan application is important. If this very important step is completed in haste, some details may be overlooked. Do a thorough ‘stocktake’ of your assets – that’s the goods you own, so you can include them in the application form.
You may be surprised how this could tip the balance further in your favour when it comes to the lender assessing the application and making a boat loan offer. Assistance and guidance with the application process will be provided by your Jade Boat Loans consultant.
Take Full Advantage of Support
To gain that extra edge in achieving a better boat loan interest rate and subsequently, a cheaper loan, take full advantage of the services and resources that are readily available to assist those seeking boat loans.
We’re talking about using our boat loan broker services to source the loan by using our extensive resources and expertise. The services are available so why not use them? Also available free of charge is the use of our interest rate comparisons and calculators to assist with planning how you may like your loan structured. Our services are available for buyers of all types of boats.
So there may be little you or ourselves can do to prevent the RBA from moving on rates. But there are steps and actions that we both can do to ensure that you still receive the cheapest interest rate boat loan possible.
Contact Jade Boat Loans on 1300 000 003 for a boat loan quote
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.