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Improving Your Chances to Qualify for a Boat Loan

Todays Date: July 17, 2018

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.

1. Run your credit, with all three agencies. As Equifax, Experian, and Transunion may all come up with different results. You want to check to make sure that all the information is correct and that you opened every account that appears. If you find one that you didn’t open, you will need to submit forms to all three to dispute the creation of the accounts or the charges.

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. Understand the way that a bank looks at your history. Yes, a bank looks at credit scores and your down payment percentage, but they will also look into your job stability, cash reserves, previous payment history, and borrowing experience. This means that you should not expect a loan dramatically larger than anything you have gotten at before.

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. 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.

Now is a great 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 gather your documents, 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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