To apply for a boat loan at the best rate and lowest cost, buyers should select the right lender and loan and present good financials with full documentation. While there may appear to be many lenders in the consumer credit market offering low-rate loans for boats, the specifics of each application are integral to any offer.
When purchasing a vessel with finance, the priority for most buyers will be securing the lowest cost loan. That can start by considering eligibility and application requirements and understanding what lenders are looking for when preparing interest rate offers.
What affects the cost of marine finance?
There are a number of factors that affect the cost of consumer finance. The major factor being the interest rate. Interest rates are the risk to lenders of lending to a particular individual or business. Applicants assessed as a higher risk of defaulting on their loan are offered higher rates and may even have their application rejected. Minimising that risk with a good credit profile and presenting strong financial documentation may result in the best possible rate and lower the overall cost.
The financial position of the applicant – their personal balance sheet, is assessed by lenders. Both income and expenses, debts and assets are considered to determine the individual’s ability to furnish the loan requested.
The credit score and report are reviewed. Credit reports are built up over time with entries for existing and past loans, new loan applications, defaults, credit card details and other financials. Maintaining a good payment history is important for a good credit score. Lenders advertise their best rates for applicants with a good credit score.
The amount of the loan can impact the rate which is essentially the cost. Where the loan requested represents a high percentage of the value or price of the boat, it may be assessed as a higher risk application and attract a higher rate.
Where ‘cost’ is seen by a buyer as the amount of each monthly payment, the term of the loan will also be an issue for consideration. The loan amount, term and rate work together to determine the monthly payment. Shorter terms result in higher repayments but less total interest payable. Longer terms reduce the monthly outgoing but may attract higher total interest.
The specific lending product may have hidden fees and charges. Secured loans for boats offered by all credit providers may not all be the same in respect to fees and features. Some may include additional features which may be appealing but may come with additional charges. Basic lender fees and charges are standard, but some loans may include other fees.
What You Need to Apply for a Boat Loan
ASIC set the requirements for consumer credit that lenders must adhere to. To be eligible to apply for marine finance, applicants must be over 18 and provide documents verifying income, employment, residency, financials, debts and expenses, etc. These requirements apply to both Secured Boat Loans and Unsecured Personal Loans. Lenders may have additional criteria specific to their loan portfolio.
When preparing financials don’t forget to include all income streams and assets and don’t misreport or withhold details of debts and other expenses. Lenders can find this information.
Presenting the fullest and most complete application can streamline approval and ensure you are approved for the loan that is best suited to your requirements. In addition to the documentation requirements, an amount will be required as well as the price or value of the boat.
Vessel details will be required to assess value and the age and condition of used boats for suitability as loan collateral. If applying for pre-approved finance, the boat details will not be required. Applicants can estimate how much they require for finance for conditional pre-approval.
Apply for a Boat Loan at Best Rates
The Reserve Bank sets the cash rate but lenders set their own rates on lending products such as finance for boats. The rate offered to individual applicants is determined by the financials, credit score and loan amount requested. Rates for new and used vessels differ.
Rates vary with lenders, making lender selection an important consideration. When using Jade to find your loan, we find your most suitable lender to ensure the best rates are achieved.
We assist buyers to complete their application to offer the best prospects. Buyers should consider the amount being requested as lower amounts can attract lower rates.
Before applying, review how you may reduce expenses to present a better balance sheet. The credit card limit, not the current balance, is treated as a potential debt by lenders. While it may be reassuring to have a large limit available in case of emergencies, it may be a negative when applying for a new loan. Ask the bank to reduce the limit to within what you may require.
Don’t apply for multiple loans or request multiple quotes. Lenders report loan applications to Credit Reporting Agencies. These agencies list these events on the individual’s credit report. This can be seen as desperate by some lenders – a negative.
Use a broker to cover off on many lenders without causing an impact on the credit score. We will advise the most suitable lender and credit product for you and your vessel. Minimising the rate and other costs of your marine finance.
For expert assistance to apply for a boat loan and secure the best possible financing, connect with Jade Boat Loans on 1300 000 003.
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.
