When arranging boat loans for our customers, our consultants discuss the loan term required and negotiate the preferred number of years as best as possible. Boats are quite long-lasting and some people keep their vessels for years and years of boating enjoyment. But in some cases and for a range of reasons, people may choose to change boats or sell their boat before the end of the loan term. That brings in the issues of selling a boat under finance.
‘Under finance’ refers to an item, in this case, a boat which has money owing under a loan agreement.
You might be wanting to sell your boat to upgrade to a better, bigger or different boat as your current vessel no longer suits your boating activities. Your family may have grown, you may want to change from a trailer boat to a larger, permanent moored boat, you may want a boat to take on waterways further afield or you may just aspire to something better.
There are a number of options to proceed when selling under finance which we cover off to educate and inform. Note that many of the points we raise in this article are applicable to both the selling and buying side of the transaction. Buyers faced with purchasing a boat which is still under finance need to be especially aware of what to look out for. When sourcing your boat loan through Jade, assistance with these matters is another benefit of our marine lending service.
Know and Own Your Loan
First and most important thing to realise is that you own the boat loan. The boat loan has been taken out by yourself most commonly as a Secured Boat Loan and it is in your name. You personally are responsible for the loan obligations. The loan is not attached to the boat. So if you trade your boat in on a new one or you sell it privately, what is outstanding on the boat loan isn’t part of the sale.
Whoever purchases your boat doesn’t acquire your loan as well. You must finalise your boat loan before the purchaser can take ownership. The boat has been used as security against the loan and the lender holds that security until the loan is finalised. The loan does not transfer to the new owner along with the boat. Personal loan contracts are essentially non-transferable.
For Secured Boat Loans, selling a boat at a time when it is under finance, puts you in a position of paying out the loan early. Depending on how you dispose or sell the boat can present you with different options to finalise the loan.
Personal Properties Security Register – PPSR
The PPSR is the online noticeboard operated by the Federal Government which is a register of security interests in a range of personal property items, such as cars and boats. It was launched in 2012 and replaced some of the state-based registers such as REVS which you may be familiar with. When a lender issues a personal secured loan they register their interest in that item, that is the boat, on the PPSR. When the loan is finalised, the security is released and the entry in the PPSR is removed.
The PPSR is a publicly accessible service so if you are buying second hand property such as boats, you can refer to the PPSR to see if any money is still owing. If you do inadvertently or are misled into purchasing a boat with a security interest registered, it can get very messy. So buyers beware – check PPSR And sellers be aware that buyers can easily check if you owe money on the boat you’ve put up for sale. If you’re applying for a loan with Jade, your consultant can assist with PPSR checks for you.
Know What You Owe
Paying out a Secured Boat Loan early will attract break fees applied by the lender. These fees will be advised when you take out the loan initially as is the requirement under Consumer Finance Laws. But not everyone will recall exactly the amount or the specific details.
To receive an exact pay out figure on your boat loan, you will need to contact your lender. You will be given an amount which is due to the day you make the request. It will include the outstanding monthly repayments, interest due to that time and the break fees. As interest is calculated usually on a daily basis, the amount owed on your boat loan will change over time so that payout figure will be valid for a set amount of time which you will be advised.
If you’re trading in your boat with an authorised marine dealer and you’re applying for a new boat loan for your new loan, your Jade consultant and the dealer can liaise to payout your existing loan with the funds from the trade-in.
Alternatively, you can request the dealer give you the trade-in money, you add whatever else is owing out of your cash reserves and finalise the loan. Then take out your new loan on your new boat through Jade for usually the full purchase price.
Alternatively, pay out the old loan with your cash and use the trade-in as a deposit on the new boat to reduce the amount required for your new boat loan.
Private Boat Sales
If selling a boat privately while you still owe money on your loan, you will need to payout the loan before the buyer can finalise the transaction. If the buyer is taking our their own loan to make the purchase, they or their lender will check the PPSR, see you owe money and an interest is already registered and will request that be finalised before they proceed.
Assistance from Jade Boat Loans
Selling your boat to upgrade while still owing money on your loan may sound complicated but it doesn’t have to be. As part of our marine finance services, Jade Boat Loans assists our customers through these matters to streamline the entire process. Upgrading to a better boat can be easy with a better boat loan service provider – Jade Boat Loans.
For a new boat loan and assistance in finalising your existing loan, call Jade Boat Loans on 1300 000 003
DISCLAIMER: READERS ARE ADVISED THAT THIS INFORMATION AS PRESENTED IN THIS ARTICLE IS INTENDED FOR GENERAL INFORMATION PURPOSES AND NOT AS FINANCIAL ADVICE. PEOPLE NEEDING FINANCIAL ADVICE ARE RECOMMENDED TO CONSULT WITH A FINANCIAL ADVISOR TO ASSIST IN REGARD TO THEIR INDIVIDUAL CIRCUMSTANCES. INFORMATION AND CONTENT IN THIS ARTICLE MAY HAVE BEEN SOURCED FROM A RANGE OF PUBLICATIONS AND INFORMATION RESOURCES. NO LIABILITY IS ACCEPTED FOR ANY ERRORS, MISINTERPRETATION OF OTHER ISSUES AROUND THE PRESENTATION.