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If you're thinking about borrowing money to buy a new or used boat, here are 11 questions you should ask that may help you get the best deal on your finance.
1. How’s my credit?
It can be useful to know what your credit score is. There are several credit check websites that will give you this information for free such as equifax.com.au that will provide you with a free report every 12 months. Additional free reports may be available under certain circumstances as well.
2. Fixed rate or variable?
A fixed rate loan is the most common. You’ll know exactly how much you’ll be repaying every month. Variable rate loans mean interest rates, and therefore your repayments can rise and fall over the life of the loan.
3. Should I use equity in my home?
While your interest rate on your home loan may be lower, you are paying it back over a much longer period. This can increase the total interest on your loan by thousands. If you go this route it is important to increase your home repayments adequately to cover the amount you borrow, or you will be paying off the boat for a lot longer and perhaps long after you own the boat, costing you more money in the long run.
4. What are the interest rates?
Compare monthly repayments not interest rates. A low interest rate may hide high monthly fees. Your total monthly repayment is what matters not the interest rate being quoted. Loans for new boats will sometimes offer lower rates and longer loan terms than for older boats.
5. Is this interest rate as good as it looks?
Be sure to check the small print in ads. A low rate may only be available on 2 or 3 year terms, or it may be for a different type of boat than the one you want. Or the purchase price of the boat may be inflated as a condition of the low interest finance, where a ‘cash’ buyer is able to negotiate a more favourable purchase price. This consideration should be factored in to your decision making.
6. What about manufactures low rate finance?
Low interest rates sound great but there’s usually a catch. The lower the rate the less you may be able to negotiate the purchase price. Always negotiate on the price first before advising how you will pay. Remember if it sounds too good to be true, it probably is.
7. Should I get pre-approval?
It simplifies the process, and may put you in a better negotiating position, if you’ve had your boat loan pre-approved. Be careful shopping around, or applying with too many lenders. Each enquiry can impact your credit score.
8. What about a boat inspection?
It just makes sense to hire an expert to inspect a pre-owned boat so that you are fully informed about its condition. Click here to find a Marine Surveyor near you.
9. Are there extra loan costs?
There can be additional fees on some advertised rates. When comparing loans, always use the comparison rate which takes into account most of the additional costs of a loan. A $10 per month account keeping fee effectively increases your interest rate by in excess of 1.2% on a $10,000 loan. $120 / $10,000 = 1.2%. Be aware of fees and the impact they can have.
10. Can I afford the repayments?
Work out what your monthly repayments will be, including all fees, and make sure it’s within your budget.
The PPSR is a central record of finance interests held against assets. This includes but is not limited to motor vehicles, boats and caravans. Checking the PPSR prior to purchase will alert you to possible loans owing on the boat you are purchasing. This will assist you to ensure all existing loans are finalised during your purchase.