Boat ownership has become increasingly popular over the years of the pandemic and during the era of travel restrictions as many Australians opted for boating as a great way to enjoy their holiday and recreational time. That trend seems to be continuing even as many restrictions have eased. Many buyers will require finance in order to bring their boat ownership dreams into the real world. That means securing a boat loan. With interest rates currently at historic low levels it is not surprising that fixed interest rate boat loans are extremely popular right now.
Setting aside the actual boat loan amount, it is the interest component which makes up the largest consideration for the overall loan. The rate at which interest is charged on the boat loan of course determines the total interest charged in conjunction with the term of the loan.
These loan components work together to also determine the monthly loan repayments. So securing a boat loan with a low interest rate can ensure a lower overall loan cost and lower boat loan repayments. The bottom line being that the boat will cost less when everything is taken into account, making boat ownership more affordable.
But critical to maintaining those low repayments and costs over the full say 7 years of the loan term is ensuring the interest rate won’t change. Those with home loans will be well aware of how interest rates on mortgages can vary as the official cash rate changes and/or banks and lenders adjust the rates they charge. These variations can mean uncertainty for mortgage holders, not knowing exactly what their loan repayments will be in coming years.
For those considering marine finance, be assured, that boat loans can be achieved with confidence and certainty with a fixed interest rate boat loan through Jade Boat Loans.
Fixed v Variable Lending Rates
The obvious difference between a fixed and a variable interest rate is that it would be presumed the fixed would not change while the variable could change. The RBA sets the official cash rate which then flows through the lending markets where banks and lenders set their own rates for each of the loans they offer. When the RBA cuts or lifts rates, many banks and lenders follow suit and change their own rates.
So holders of a variable interest rate boat loan face the possibility that their rate and repayments could change during the loan term. If a variable rate loan is taken out when the cash rate and general lending rates are high, then there is a potential positive outlook that rates could drop over the loan term.
If a variable rate loan is taken out when lending rates are low, then the loan holder faces the possibility their loan repayments will increase at some time during their repayment period.
Before discussing fixed interest rates in the boat loan market, it is important to highlight the key difference between home loans and boat loans in this respect. Fixed rate home loans typically have the fixed rate only for a few years, not the entire full 10, 15 or 20 years of the mortgage.
That is different with consumer goods loans. A fixed interest rate boat loan means that the interest rate is fixed over the complete time of the loan.
Popularity of Fixed Rate Boat Loans
In the boat loan market, the Secured Boat Loan is the most commonly used type of loan for the purchase of new vessels. This type of loan suits sail and power boats, jet skis, trailer boats, luxury cruisers, motor yachts, catamarans and many others.
Jade Boat Loans offers this type of loan at a fixed interest rate so our customers know that they will have a fixed boat loan repayment over the entire term of the loan. The specifics of boat loans will vary with different lenders and applicants should look closely at the detail of secured loan as some may attract a variable interest rate.
The popularity of fixed rate boat loans has increased over the past 2 years as a result no doubt of the historic low interest rate situation. Buyers are keen to lock-in a boat loan at current cheap rates to make the boat affordable now and over the loan term. Loan applicants can improve their prospects of being offered the cheapest rate by ensuring they have a good credit profile.
Fixed rate boat loans provide security and assurances for the buyers that they will not face an increase in their loan repayments during the term of the loan. This level of confidence and certainty allows them to plan other purchases and their financial situation for the years of the boat loan.
With the RBA holding the cash rate steady at the lowest ever rate of 0.1% since November 2020, fixed rate boat loans have been extremely attractive. Rates will go up at some time, when exactly is not certain. But those seeking to take advantage of the current attractive scenario should contact us to find out what cheap boat loan we can secure for their boat purchase.
For a quote on a fixed interest rate boat loan, contact 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 MIS-PRESENTED DATA AND DETAILS HEREIN.