Being smart and savvy around finance is important to ensuring you are well-informed to capture the best deal when you’re buying a boat. Whether it’s your first, second or forever boat purchase, it’s not difficult to get swept away in the dream and the hype from an overly-eager seller.
At Jade Boat Loans we’re not only committed to sourcing you a cheap boat loans we’re equally committed to ensuring that our customers are educated and informed around all aspects of borrowing to buy a boat.
In this blog, we’re sharing some less well-known information on the costs, fees, charges and other terms around boat buying and boat loan borrowing. This information is intended as general information only and if you require financial guidance and advice on your specific situation, we advise you consult with your financial advisor.
Buying a boat for private recreational use and purchasing vessels for marine businesses involve different loan products. Here, we’re focussing on consumer boat loans, ie personal loans for boats that will be used predominantly for private use.
Boat Loan Basics
Essentially a personal boat loan, whether secured or unsecured, is comprised of the principal (the amount you request to borrow), the interest charged on the loan and a range of fees and charges. We can’t quote specific amounts for these fees and charges as individual lenders vary in this space and in regard to individual loan applications. This is an area where your Jade Boat Loans consultant will be negotiating hard on your behalf when sourcing your loan. We aim to not just deliver the best interest rates but also the most favourable terms, conditions and costs.
If you are looking at sourcing your boat loan directly from a bank or finance company, we advise you request an itemised quote so you can clearly see what fees and charges are included. It is unwise to make a loan decision based on interest rate alone.
- Interest: consumer finance involves interest rates and comparison interest rates and we recommend you check our full explanation on these terms on our dedicated webpage. Interest is charged on consumer boat loans in accordance with the Consumer Credit Code Act. It is calculated at the daily rate based on the daily balance and charged monthly to the loan.
- Boat Loan Establishment Fee: this is sometimes referred to as a Loan Application Fee and is a standard fee charged by lenders for establishing your boat loan.
- Monthly Fee: some lenders may charge a monthly fee for servicing your loan account. Your Jade consultant will have included this fee in the repayments quote you are offered.
- Default Charges: lenders can charge a fee if you are late with your monthly payment or default on a payment. To avoid these charges, always ensure that your bank account where the monthly repayments are deducted from has sufficient funds to cover the repayment on the due date.
- Break Fees: this refers to the charge by the lender when you finalise your loan prior to the agreed loan term. Ie break your loan contract. On Secured Boat Loans, break fees are minimal and usually do not apply to Unsecured Personal Loans. If you think you may be in a position to pay out your loan before the usual 3-7 year loan term, talk to your Jade consultant about the options to minimise any break fees.
- Additional Charges: your Jade consultant will be explaining your boat loan quote in detail to you and will be eagle-eyed when it comes to identifying any hidden charges when sourcing your loan. But if you are DIY boat loans, ensure you read the T&Cs of the contract closely before you sign to check for any miscellaneous costs.
Having your Jade Boat Loans consultant working in your best interests can give you the confidence that we will be sourcing you the best boat loan with all elements taken into consideration.
Boat Purchase Costs
With the loan side explained, let’s have a look at some of the extra charges which you may come across when purchasing your boat.
- Dealer charges: if buying a new boat, there may be ‘dealer delivery charges’ on top of the advertised purchase price. This covers the dealer’s expenses in preparing the boat to hand-over to you.
- Transport charges: if you’re buying interstate or from other than your home port, you may have to consider the cost of transporting the boat to your home port. Most brokers and dealers can assist at least with crew or transporter recommendations, if not provide the service.
- Registration: check your state maritime department for details of boat rego costs. You will need to transfer the rego if buying a used boat.
- Auction fees: if buying at an auction house you will be charged a fee. These are usually based on the purchase price and are displayed on the auction house website so you can plan in advance. If buying via an online marketplace, usually the seller incurs any fees, but worth checking that out.
- Trailer: stating the obvious but if you’re buying a trailer boat you’ll need a big enough trailer!
- Storage and moorage: you’ll need somewhere to store or moor your boat and this will involve annual fees, unless you park your trailer on your own land or street of course. Check out the options as often they vary depending on the length of the boat. This may influence your buying decision.
- Insurance: when taking out a boat loan, most lenders will insist you also have a comprehensive insurance policy. Marine insurance policies vary as to what is and isn’t included, ie gear and equipment and boat or boat only. Check the detail carefully when selecting the policy that best suits your requirements.
- Accessories: dealers will likely try to upsell you with a range of options and accessories. This is an area where you need to be savvy. Do you really need that option? Can you get a cheaper price at your local boating centre? Sometimes dealer extras cost more and sometimes it is more expensive to install some gear/tech post-sale.
What costs are included in your boat loan repayments?
When your Jade Boat Loans consultant provides you with a quote for your loan, it will include the fees and charges as applied by the lender including loan establishment, monthly service fees and interest.
When it comes to costs incurred in regard to the purchase, ie rego, insurance, delivery, it can be your choice whether you include some or all of these in the loan amount or pay for them separately. If you do choose to include them in your loan amount you will be paying interest on them and it will increase your loan amount and hence your repayments.
Speak with a Jade Boat Loans consultant to discuss how we can source you a cheap boat loan and for more information on all aspects of the process. Call 1300 000 003