Nothing beats the feeling of cruising the waters in your own vessel with family and friends over the weekend or whenever you get some time to kill. Whether you love fishing or do it for a living, it spares you from the recurrent costs associated with hiring a boat. This is not to forget that bigger boats make an amazing residence for those who really love water environments or adore living in a boat.
Whichever category you fall in, however, one thing is for sure. Most of these watercraft do not come cheap. For most people, it would take a few years of monthly savings before you finally have enough money to purchase a boat. This is where boat loans come in handy to help you live your dream now as you pay back the borrowed money over time.
Well, the main catch is that like most other loan facilities, boat loans have some qualification criteria. Before getting the loan, your lender will require you to fulfill the specific approval requirements. Approval usually depends on several factors. In this article, we shall cover a few tips you can use to increase the chances of approval when applying for a boat loan.
Understand the Different Types of Boat Loans Available
There are many different types of boat loans that you can choose from depending on the provider and your specific needs. In most cases, the popular boat financing options will depend on whether you are purchasing a new boat or a used boat. Loans for owners who wish to upgrade their boats are also available, as well as refinancing and options for those who need to use their boats as loan collateral. Having a general understanding of boat loans will help you determine the best lender to approach and which facility to choose depending on your needs.
Get Your Credit Report and Score
For most loans, your credit score will be considered before approval. The credit score is documentation of your capability to pay back a loan based on your previous debt repayment records. Before any lender can approve your loan application, they need to be sure that their money will be paid back as agreed. If you have any pre-existing loan, it’s wise to pay it back or regularize payments before applying for the boat loan. If there are any mistakes in your credit report, they will affect your credit score and might decrease your chances of approval. Such errors should be disputed and rectified with the relevant lenders before making your boat loan application.
Go for an Affordable Boat
You know your financial strengths better than anyone else. You, therefore, know what amount you are willing to spare every month as installment for the boat loan without jeopardizing your survival. With that in mind, you need to budget for a boat you can afford. If you have a particular boat you want and the price is not too favorable for you, you can opt into getting a used boat that still looks new. These usually cost much cheaper than the new ones and if you are lucky enough, you might get one which is as good as new. Lenders will be more willing to approve this loan as it is friendlier. If, however, you decide to go with a second-hand vessel, make sure it’s not older than 3 years.
Besides the buying price, take into consideration the operating costs. Assuming you don’t intend to have your boat kept somewhere until the loan is complete, you need to take into account the cost of using the boat, so you are sure that you can manage both the cost of its use and the loan repayment. The lender may also need to know how you plan on handling such issues.
Compare Different Lenders
After you have your credit score and have an idea of what boat you want to purchase, it’s now time to get a lender. Since you know your credit score, it becomes much easier to look at the terms of different lenders and make a decision based on the best offers and the requirements you would meet. This is one of the ways of making sure your loan is approved. While picking a lender, a few factors you will want to consider may include:
- Funding types (earlier discussed)
- Loan term or repayment period
- Interest rates
- Approval requirements
- Terms and conditions (such as down payment amount or consignees)
Be Ready With Your Answers
Sure enough, if you were the lender, you would have a lot of questions before you can trust somebody will pay you back. It’s reflexive that the lender you choose to approach will have several questions for you. It is thus a great idea to be prepared with the appropriate answers right from the start. You can easily get the questions frequently asked by lenders and have the answers for them before the meeting. You will have a smoother process when you are prepared. It is also advisable that you are honest with the answers you give. Your answers will go as far as determining the amount of money they will allow you to borrow, the interest they have on the loans, and the repayment term. If you are ready with your answers you have a better chance of getting the loan approved.
Assure Your Lender
As earlier mentioned, any lender you approach will be most concerned with your ability to pay the loan back with the agreed interest. If you want that loan, you need to show your lender that you are capable of them back as per the agreed time and with the interest agreed upon. The best way to assure them will be to give them proof of the assets in your possession so they are sure that if you default, they can always go after that particular asset and get their money back. Declare assets you have such as home equity, guarantors, a car title in your name, a title deed, or any other asset you may have. If you can prove that you are capable of paying back the loan in time without any difficulties and provide an alternative in case you are unable to pay the loan, then there is a high chance that your loan will be approved.
Boat lovers don’t have to wait many years before they can own their dreams anymore. This is all thanks to the good lenders out there who provide boat financing for purchases, repairs, upgrades, and refinancing. The above few tips will hopefully help you get the loan you need to be approved without much frustration.