How to Improve your Chances to Qualify for a Boat Loan

1.Two years ago getting a boat loan was substantially easier than it is now, however is is not impossible to get one now. Following these seven tips should increase your chances at qualifying and getting your dream yacht.

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. Put at least 30% down. By putting down a larger down payment, you show a bank that you have a financial commitment to the purchase and also have “skin in the game.” If you are able to put more than 20% down, you might even be able to negotiate better rates.

4. Know your history. A bank will look at your credit score, and commitment to the loan by looking at the amount of your down payment, but they will also consider the rest of your history, including employment history, loan payment history, cash reserves, and the size of any previous loans. Banks hardly lend a significantly larger loan than the other loans you may have had in the past.

5. Gather your financial documents. In order to qualify for a loan, a lender will want to verify that you have the means to both pay back the loan and take care of the boat, including maintenance, insurance, dockage, and fuel, while you own it. In order to prove your financial status, you will need to provide the lender with two years of tax returns, current year to date income, and a balance sheet of current investments, cash, stocks, annuities, IRA’s, 401k’s, etc. Also, remember that many lenders will require you to insure the boat until you have paid off the loan, even if your state does not require insurance.

6. Know the debt to income rations that banks use to qualify loans. Banks do not usually loan to anyone who’s debt and expenses exceed 40% of their income.

7. Choose the right representative. A yacht loan broker is an independent advocate that can connect you with every bank that provides boat loans (not all do), the criteria you should use when choosing your broker should be if they have a long standing, strong relationship with the banks.

Now is a exceptional time to buy a yacht. There are ample opportunities to purchase yachts at that represent an exceptional value, or may have been previously unaffordable. Take the time to prepare in advance, get “pre-qualified” for a yacht loan so you know that financing will not affect your negotiations or timetable to purchase.

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