A few years ago, getting a boat loan was quite easy, but is a difficult to qualify for a boat loan now. It's not impossible, however. Here are a few tips to improve your chance to qualify.
2. Know what's on your credit report. If you find any accounts that you did not open or any amounts that you did not charge, you will need to submit a form to all three credit reporting agencies (Equifax, Experian, and Transunion) to dispute the account or charges, as need be. Each reporting agency may give a different result and may find different accounts. A bank will run all three and so should you.
2. Understand how you FICO score is calculated. A FICO score can be improved by paying your bills on time, reducing your debt, and having ample credit space, especially zero balance accounts. A FICO score is the measurement of your financial stability.
3. Increase the amount that you put down on the loan. By showing that the bank will not be the only one who will commit financially to the loan, you are able to show them that you are more likely to repay it. 20% or more is best.
4. Banks take more than just credit score and income into the criteria they use to assess risk. Previous boat loan experience is a positive, or at least comparable borrowing experience. They will also look into your employment history, previous payment history, and cash reserves.
5. Get ready to prove your financial position. Because a yacht loan lender might end up owning your boat (if you default), they will want to know that you have the income to not only pay back the loan, but also take care of the boat, including maintenance and insurance. You will need to provide proof of YTD earnings, two years of tax returns, and a listing of all investments (including retirement accounts).
6. Know the ratios banks use to pre-qualify individuals. All monthly operating expenses and all debt payments (including mortgage and car payments) should not exceed your 40% of your household's monthly income.
7. Find the right company to represent you. Only a few lending institutions provide boat loans, and most independent brokers will request a loan quote with each of them. This means that having two agents will not help you (and can often hurt your chances of getting a good loan). It is important that you select an agent or brokerage that has a long history of dealing with yacht loan lenders and a good track record of successful loans. Remember, a good broker is your advocate.
2. Know what's on your credit report. If you find any accounts that you did not open or any amounts that you did not charge, you will need to submit a form to all three credit reporting agencies (Equifax, Experian, and Transunion) to dispute the account or charges, as need be. Each reporting agency may give a different result and may find different accounts. A bank will run all three and so should you.
2. Understand how you FICO score is calculated. A FICO score can be improved by paying your bills on time, reducing your debt, and having ample credit space, especially zero balance accounts. A FICO score is the measurement of your financial stability.
3. Increase the amount that you put down on the loan. By showing that the bank will not be the only one who will commit financially to the loan, you are able to show them that you are more likely to repay it. 20% or more is best.
4. Banks take more than just credit score and income into the criteria they use to assess risk. Previous boat loan experience is a positive, or at least comparable borrowing experience. They will also look into your employment history, previous payment history, and cash reserves.
5. Get ready to prove your financial position. Because a yacht loan lender might end up owning your boat (if you default), they will want to know that you have the income to not only pay back the loan, but also take care of the boat, including maintenance and insurance. You will need to provide proof of YTD earnings, two years of tax returns, and a listing of all investments (including retirement accounts).
6. Know the ratios banks use to pre-qualify individuals. All monthly operating expenses and all debt payments (including mortgage and car payments) should not exceed your 40% of your household's monthly income.
7. Find the right company to represent you. Only a few lending institutions provide boat loans, and most independent brokers will request a loan quote with each of them. This means that having two agents will not help you (and can often hurt your chances of getting a good loan). It is important that you select an agent or brokerage that has a long history of dealing with yacht loan lenders and a good track record of successful loans. Remember, a good broker is your advocate.
About the Author:
Now is a tremendous time to buy a boat. There are tremendous opportunities to purchase boats at that represent an great value, or may have been previously unaffordable. Take the time to prepare in advance, get "pre-qualified" for a boat loan so you know that boat financing will not affect your negotiations or timetable to purchase.
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