21 Jan, 2021

Assets in the Spotlight - Leisure

Finance for fun. Continuing Nodifi’s ‘Assets in the Spotlight’ series, this time the focus is on leisure vehicles.

If you’re not up to speed on the series, make sure to check out our motor vehicle finance and truck finance guides.

Key Takeaways

  • Leisure vehicle finance covers a wide range of assets

  • Rates start from as low as 4.45%

  • As with car loans, borrower profiles affect rates and loan amounts

  • Leisure vehicle finance can be written as secured or unsecured

  • Varying documentation is required dependent on the asset

Leisure vehicles in a nutshell

It’s easy to forget just how many leisure vehicles are available to consumers. The list is longer than some people realise:

  • Boats (trailered and moored)

  • Jet Skis

  • Campervans/motorhomes

  • Caravans  / camper trailers

  • Motorbikes - dirt & road (registered and unregistered)

  • ATVs

  • Golf carts

Finance for leisure vehicles is competitive. The majority of consumers looking for a leisure vehicle are employed and asset-backed - the rates reflect this.

As most lenders don’t provide leisure vehicle finance products to unemployed consumers, rates can rise if your client is not employed.

Firstly, the all-important rates

Just like other financial products, low rates favour clients with stronger profiles and increase with risk. Most consumer leisure vehicle loans start from as low as 4.45%.

Here’s a quick breakdown:

  • Boats: Rates from 4.79%

  • Jet Skis: Rates from 4.79%

  • Caravans: Rates from 4.45%

  • Campervans/motorhomes: Rates from 4.45%

  • Camper trailers: Rates from 4.45%

  • Motorbikes - dirt & road: Rates from 5.6%

  • ATVs / Golf carts: Rates from 4.79%

The Nodifi platform provides finance options on a large range of obscure leisure assets. For more information about leisure vehicle finance specific to your client, contact your Nodifi relationship manager - we’re always happy to help.

Common rates per client profile

  • Asset backed / high & stable income / excellent credit score (700+): 4.45% - 5%
  • Asset backed / stable income / average credit score (550): 5% - 11%
  • Renting / part-time work / low credit score (400 and below): 7% - 14%+

Note that leisure vehicles are diverse and subsequently attract many different scenarios.

How much can my client borrow?

Amounts are based on borrower profile and capacity to repay the loan. Different lenders specialise in different borrowers and different assets.

Nodifi can finance leisure vehicles as low as $5,000. Maximum lends are commonly capped at $500,000. However, ‘the sky's the limit’ for suitable borrower profiles.

Secured vs unsecured

Similarly to motor vehicle finance, leisure vehicles finance products come as both secured and unsecured.

Unsecured loans or personal loans that are not tied to the asset typically have a higher interest rate as these products carry more risk for lenders.

Secured asset loans give lenders the option to repossess the asset in the event that the borrower can’t or won’t repay the loan.

Common reasons why some borrowers may prefer an unsecured leisure loan:

  • It’s a ‘classic’. Sometimes assets are considered too old for a secured finance product. Although policies differ from lender to lender, the maximum age at the end of a secured loan term for an asset is usually 20 years.

  • A restoration project. Restoring boats, caravans and motorbikes is big business in Australia, becoming a popular hobby in recent years (especially in the last 12 months). Some leisure assets that are unroadworthy, unseaworthy or unregistered may be suited to unsecured finance options.

  • Room for modifications. Some borrowers require additional funds to modify their leisure vehicles. For example upholstery or additional seating, paintwork or caravan amenity upgrades. These modifications can be costly and some borrowers may want to include them in the loan amount. Secured asset finance only covers the actual purchase price.

Things to be wary of

  • Certificate of Currency: Leisure assets with secured loans need to be insured. The lender must be listed as an interested party. To prove this, insurance companies need to provide a Certificate of Currency.

  • New or Used: Nodifi is able to offer finance on new or used leisure assets. Note that private sale used vehicles require different documentation, for example, the seller’s bank details and registration papers.

  • Engine Hours: Boats and jet skis have engine hour readings. These details are often required, especially for used assets.

  • Registration: Powered boats and caravans require registration in Australia. Some smaller unregistered crafts, such as sailboats have serial numbers which are often required for finance. If the asset is new, the borrower will need to pay for registration, typically not included in the finance amount.

  • Sea & Roadworthy Documents: These are typically required for secured watercraft, caravan, camper trailer and motorhomes.

  • Stamp Duty: Like registration costs, the borrower will need to pay this expense out of their pocket as it’s typically not included in the finance amount.

Documents and information

In addition to the documents listed above, your client will need to provide standard documents required for finance. Although they vary per lender, these typically include:

  • Leisure asset details: Registration / serial number, engine hours, condition, year, make and model.

  • Identification: Driver’s licence, proof of age or passport plus Medicare care.

  • Employment / Income: Length of employment, name & location of employer, additional income - e.g., rental income or Centrelink

  • Residence: Address, time at address, mortgage repayments or rental history. If a borrower has lived at an address for less than a year, previous addresses are often required.

  • Credit file: A credit file is needed to view credit history.

  • Monthly net income vs expenses: Some clients have additional sources of income, such as rental or board income. You’ll need to know your client’s finances including, monthly income and expenses (general living costs and any other loans and bills). Partner income is often taken into account as it can lower living expenses and increase capacity to repay a loan.

  • Privacy consent: As per all finance application, this form is required.

Settlement and payment times

Nodifi aims to offer turnaround times as short as one business day. However, more complex lending situations require additional documentation and some back-and-forthing, which can extend this period.

Depending on the financial product, sale type (dealer or private) and asset, your client or the seller of the vehicle will receive funds shortly after settlement. Times vary depending on their banking institution.

Leisure vehicle finance in summary

These kinds of assets make great additions to any broker’s financial product list. As the range of leisure vehicles is wide just like the range of borrower profiles out there, circumstances and outcomes can vary.

Fortunately, Nodifi is here to help. Start by submitting a scenario or if you’re unsure, contact your relationship manager.

Apply Today

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