Taking on consumer finance of any type can be a significant event in anyone’s life. Regardless of how old or young you are, making a financial commitment over the term of a boat loan can be a major undertaking. When you’re seeking a loan to buy a boat, it can be extremely beneficial to have at least a reasonable understanding and appreciation of your own finances. This is known as financial literacy. It doesn’t mean you have to be an accountant or study bookkeeping or be a maths whizz. It can simply mean have a basic understanding of the fundamentals. Essentially, having a handle on your income and expenses, knowing where your money comes from, where it goes and how best to utilise your hard-earned to achieve personal financial and lifestyle objectives.
Whether this is the first boat you have purchased or your next boat, applying for a loan is an important process. As a licensed credit provider, Jade Boat Loans adheres to the Responsible Lender Guidelines as covered by the consumer credit laws. This means we are required to and willingly provide our customers with information and explanations around consumer credit and specifically their boat loan. For more information, click here
As part of the boat loan application process, your Jade Boat Loans consultant requests a range of details, docs and data from you. In preparing to apply for a loan, gathering this information can be a useful step. If you have plans at some future time to apply for a loan, taking a step towards improving your financial literacy now may provide you with greater confidence and improve your prospects of an even better loan.
Understanding Your Finances
Financial literacy is not rocket science, its fundamentally having an ability to understand money, budgeting, cash flow and managing debt including regular weekly expenses. It can of course extend well beyond that depending on your stage of life with planning for retirement and other aspects. But at any stage of life, having a basic level of financial literacy can be empowering and contribute to a person achieving economic and financial goals.
Some of the essential elements include keeping a track of your income and expenses, planning for future and unforeseen expenses and having the skills to understand finance products. When taking out a boat loan, you want to ensure that you meet your loan repayments on time to avoid getting into problems with your credit history. That may just mean ensuring you have the correct amount for the loan payment in your nominated bank account on the due date each month.
Some people choose to commit to writing up a weekly/monthly budget while others just ‘wing-it’. For the majority, they probably sit in a middle ground. One tip is to check your bank account and credit card statements when they arrive. Ensure there are no irregular transactions or questionable charges. If you have any doubts, contact your bank and enquire.
When your Jade consultant is assisting you with your boat loan application, you will be required to provide details around your regular and recurring expenses and your income as well as assets and liabilities.
Assets are what you own and liabilities are debts or what you owe. Having this information readily accessible can speed up your boat loan approval process. So having a good idea of where your money is, where your wealth is and where you money goes can be very useful.
Boat Loan Basics
Changes to the Consumer Credit Laws are currently before the Australian Parliament and being debated by the Senate. If/when the changes are passed into law, the effect will be to place a greater onus on the borrower to prove their capacity to repay a loan rather than on the lender. More information here.
Loan applicants will need to provide details of debt and assets. Debt includes other loans you may have such as a home loan, car loan and credit cards. Assets are wealth you have such as in savings and the value of possessions you own.
Having Jade as your boat loan lender brings many advantages to the process, especially in explaining the detail of contracts and documents to assist in cutting through any confusion our customers may have around the loan process.
Loan documents do however include financial terminology. So having an understanding of the basics may be very helpful.
- Capital: this is the loan amount or the amount you are borrowing.
- Loan term: this is the amount of time, represented in years or months, you have to repay the loan.
- Repayments: this is the amount you will pay per month. Using our boat loan calculator will assist you with this process.
- Interest: the lender charges interest on the loan amount. It is a rather complex mathematical process to work out how this plays out over the term of a loan. But we assist customers with working out loan payments with the interest calculated.
- Fees and charges: in addition to interest charged on the capital/loan amount, lenders will also charge a fee for their services in providing the loan. Fees and charges vary from lender to lender. A loan establishment fee is a typical and standard charge. Some may charge a monthly service fee and other charges may also apply. When making a loan application your Jade consultant will advise you of the applicable fees and charges.
- Comparison interest rates: by law, lenders of consumer finance must display both an advertised interest rate and a comparison interest rate. The comparison rate is the interest rate on a specific loan example when some fees and charges have been incorporated. You will see the specifics of the example next to the displayed rate. Compare boat loan interest rates here.
- Default: this is when a borrower fails to pay their loan repayments. They default on the loan. With a Secured Boat Loan, when a borrower defaults, the lender holds the right to repossess the vessel and sell it to recover monies owed.
So that’s the basics around financial literacy and boat loans. Your Jade consultant will be there to assist you at every stage of your boat loan application process and as a financial lending professional can explain the steps and answer your questions to remove any doubt or confusion. Buying a boat is an exciting experience and at Jade we want the boat loan experience to be an equally enjoyable and streamlined process.
Contact 1300 000 003 to discuss your financing.
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.