We have put together some useful information that you might find helpful when financing your boat. Whether you are an experienced boater or this is your first boat purchase, the following information is important to consider when financing a boat.
Boat loans are considered to be a luxury loan. Lenders do not consider a boat to be a necessity, therefore the minimum requirements are strict and are not as lenient as an auto loan or a home mortgage. Some general information and qualifying criteria to be met with marine lenders are outlined below.
Get a rate quote before applying - Searching for the best rate on your boat loan doesn't’t require that you submit an application. In fact, your best option is to seek out a qualified boat loan broker like Recreation Finance, Inc. Boat loan brokers can provide multiple rate quotes from a nationwide network of lenders and place you in the best qualified program that fits your needs. You can complete a rate quote request for free by clicking on the following link: Free Boat Loan Rate Quote Request. Or you can call one of BoatingBay.com's qualified loan professionals at 888-470-5997 for a free rate quote or pre-approval before shopping for a boat.
Applying for a boat loan - The structure of the deal and the way the application is submitted to the lender is crucial in obtaining credit approval at the best terms. It is important to note that boat loan brokers like Recreation Finance, Inc will not shotgun your loan application to numerous lenders in hopes of approving your application with a low rate. BoatingBay.com's recommend loan professionals actually place your application with one lender to get you the lowest qualified rate and best program based on your individual profile and needs. It is very important that you do not shop your loan application with several dealers, brokers or banks. Numerous credit inquiries will negatively affect your score and hinder your ability to qualify for an approval. You can complete a loan application by clicking the following link: Online Boat Loan Application or call 888-470-5997 to apply by phone.
Credit Score - As a rule of thumb, most lenders are looking for a minimum credit score of 660. Although, in order to qualify for the best rates available, some lenders have minimum credit score requirements of 700 or better. There are secondary / sub prime lenders available that will consider lower credit scores around 600; however, the rates and terms are usually not as competitive and may require more documentation to qualify for the loan.
Previous Comparable Credit - Lenders will be looking for previous comparable installment history on your credit report. As an example, if you are financing $50,000 on your boat purchase, the underwriter will be looking for comparable (a previous installment loan which is equal to or greater than the newly requested amount) installment trade lines on your credit report to see if you have a favorable history of repaying an installment loan of that amount. Generally the banks are looking for at least 24 months of servicing on a comparable trade line for it to qualify as comparable credit. Also, be sure to mention any previous boat owning experience, since it is always helpful when applying for a boat loan.
Debt to Income Ratio - Most banks are looking for a debt-to-income ratio of 45% or below including the projected payment of the boat you are purchasing. The ratio is computed by taking all of your monthly expenses and dividing them against your monthly income. If you are adding a co applicant, generally both applicants must qualify individually first before the joint application will be approved.
Down payment and loan terms - With recent changes in the credit environment, most lenders are looking for the following down payment requirements; however some lenders do offer no money down programs.
As a basic guideline for down payment terms for a boat:
Loans under $100,000 require a down payment of 10% to 15%
Loans over $100, 000 require a down payment of 15% to 20% 100% financing programs are available; inquire if your loan request qualifies.
As a basic guideline for terms on a boat loan:
$25,000 to $49,999 - Terms up to 15 years
$50,000 to 74,999 - Terms up to 20 years
Loans $75,000 or more - Terms up to 20 years
Survey - A survey may be required by the lender to support the purchase price. The underwriter may determine that the age of the boat and the loan amount deem the survey necessary. Many lenders will approve an application with the stipulation of an acceptable survey report performed by NAMS/SAMS/ACMS certified surveyors. A professional survey is essential in determining the condition of the boat and can uncover information about the boat's condition that you may not have known otherwise. A survey generally costs around $12 to $18 per foot depending on the vessel and is well worth the expense considering it could save you thousands of dollars down the road.
Coast Guard Documentation - Coast Guard Documentation is generally required by lenders for vessels that are approximately 26 feet or larger and is how lenders secure their lien on the vessel at the federal level. Coast Guard Documentation will provide the buyer protection that the vessel will be free and clear of any previous liens when the title is passed on to the buyer.
Paperwork needed for loan approval - A complete loan application is necessary to obtain an approval for all loans. For larger loans, you may be required to provide a personal financial statement and 2 years of current tax returns (including supporting schedules.) This will also ensure you get the best rate possible. Once an approval is received from the bank, contracts will be sent to you for signatures which must be returned and processed for funding.
Interest rate - Rates vary and are determined by your financial and credit history, loan amount requested, age and value of the boat and down payment amount. The recommend boat loan brokers found on BoatingBay.com are committed to providing customers with the lowest qualified rate up front based on your credit profile and loan request; not just a lead in rate to gain your interest and application. Good lenders will not advertise the lowest rate available since this can be misleading for customers. Lenders who advertise low rates use the lowest rate available on a specific loan program to gain a customers interest. In order to receive this rate, your loan request and credit rating must meet certain requirements: most customers are unaware of the requirements and/or do not meet the requirements, and therefore are quoted a higher rate than what is advertised.
You can complete a rate quote request for free by clicking the following link: Free Boat Loan Rate Quote Request. Or you can call one of BoatingBay.com's qualified loan professionals at 888-470-5997 for a free rate quote or pre-approval before shopping for a boat.
General Credit scoring information - There are many factors that determine a good credit profile. Credit scores are determined by a number of factors. A good rule of thumb to consider is to keep all revolving account balances (i.e. credit cards, home equity, and lines of credit) to less than 33% of the available credit line. Creditors view maxed out or high balances as a risk and can hinder an approval for your boat loan. Too many recently opened accounts and credit inquiries can also have a negative effect on your credit score and ability to qualify for a boat loan. Be careful about shopping around with too many lenders or finance companies to compare loan programs. Instead, you should get an idea of what your credit profile is and ask your loan officer about programs available based on that information rather than completing multiple credit applications with multiple dealers or financial institutions. This can negatively affect your credit score and ability to qualify for a boat loan.
BoatingBay.com's recommended lenders DO NOT shop your application with numerous lenders. They will place your application with the lender that you qualify for with the best rate and terms available based on your individual qualifications.
BoatingBay.com recommends Recreation Finance.
For a free boat loan rate quote visit:Recreation-Finance.comor call 888-470-5997 to speak with a qualified loan professionals.
