7 Ways to Improve your Chances to Qualify for a Boat Loan
Tuesday, December 1, 2009
By Justin Metzger
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. Check your credit score with all three agencies: Equifax, Experian, and Transunion (Each agency will give you a different score, and may even find different accounts). It is important that you run each one and check for accounts that you did not open or charges that you did not generate. If you find any you will need to dispute them with all three agencies.
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 some "skin in the game." Lenders like to see that you have financial motivation to keep from defaulting on the loan. By putting down 20%, the bank sees that you have a motivation to keep repaying the loan, and if you are able to put down more than 20% many times lenders will be able to give you better terms.
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. 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 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. Find a broker that you can trust and who has good relationships with banks. Having more than one agent or broker does not help you get a better loan, as most brokers can deal with all the banks that provide yacht loans (there are only a few). The main criteria you should use when determining a boat loan broker is your ability to trust them and their relationship with the banks.
2. Check your credit score with all three agencies: Equifax, Experian, and Transunion (Each agency will give you a different score, and may even find different accounts). It is important that you run each one and check for accounts that you did not open or charges that you did not generate. If you find any you will need to dispute them with all three agencies.
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 some "skin in the game." Lenders like to see that you have financial motivation to keep from defaulting on the loan. By putting down 20%, the bank sees that you have a motivation to keep repaying the loan, and if you are able to put down more than 20% many times lenders will be able to give you better terms.
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. 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 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. Find a broker that you can trust and who has good relationships with banks. Having more than one agent or broker does not help you get a better loan, as most brokers can deal with all the banks that provide yacht loans (there are only a few). The main criteria you should use when determining a boat loan broker is your ability to trust them and their relationship with the banks.
About the Author:
Now is a tremendous time to buy a boat. There are tremendous opportunities to purchase boats at that represent an tremendous 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.
Posted byBertie at 6:59 AM
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