How Do Lenders Approve Boat Loan Applications - Trident Funding

How Do Lenders Approve Boat Loan Applications

How Do Lenders Approve Boat Loan Applications - Trident Funding

You’ve imagined yourself cruising around the intracoastal, stopping for lunch and cocktails along the way. You can already picture yourself island hopping in the Caribbean, checking out sandbars and watching sea turtles nest. And you can’t wait to teach your kids how to fish. You can almost taste the saltwater spraying you in the face as you rev up the engines and create a monstrous wake. The pinks and oranges of the waterfront sunsets are etched in your mind and you are counting down the days until you can enjoy being out on your very own boat. 

How to Pay for Your Boat 

Before all of those dreams of being out on the water become a reality, you need to find the best way to pay for your boat. Because buying a boat is a big expense. Of course, you can pay cash for your new boat but if you want to save some of that cash and use it for investments, as an emergency fund, or even to pay for ongoing boat expenses, then consider checking out a boat loan instead. This takes some of the financial burden off of you because instead of paying for the entire boat upfront in cash, you merely need a downpayment and can finance the remainder of the cost of the boat. 

For example, if you want to buy a $150,000 boat, you would need $150,000 plus closing costs and insurance etc if you’re paying cash. However, if you get a boat loan approval, you will just need a downpayment, typically between 10 and 30% of the cost of the boat. This means that instead of needing $150,000 plus, you will only need $15,000 to $45,000 plus. 

Before shopping for boats, know your budget. That way you won’t be disappointed if you fall in love with a superyacht and can only afford a cabin cruiser. If you’re not sure how much boat you can afford, then check out a helpful tool: an online boat loan calculator. You can input things like what year the boat is, how much the loan amount is, and what your credit score range is. This tool will help you decide on a budget for your boat. For example, the payment on a $250,000 boat may be a stretch for your budget, but that $200,000 boat might fit within your budget constraints. 

You can also check current boat loan rates online. This nifty tool will tell you what your approximate boat loan interest rate is going to be. It’s based on market rates, your credit score, the loan amount, and the age of the boat. It’s not just the lowest advertised rate; it’s an estimate of the actual rate you will receive based on your personal information including your credit score range and the age of the boat. 

Once you know how much boat you can afford, it’s time to pick out your boat and contact Trident Funding for a boat loan approval. Our industry leading marine financing company has more than three decades of experience and connects you with top lenders and banks that are best for your unique financial situation. We offer financing for new and used boats ranging from $25,000 all the way to $2.5 million. You can finance both recreation boats and vessels for your business. 

Whether you want to buy a small starter deck boat, a used fishing vessel, or a brand new luxurious yacht, Trident Funding can get you pre-approved for a boat loan. They offer competitive boat loan rates and oftentimes you will get instant boat loan approvals. You can easily apply for a boat loan online in just a few minutes and it will be smooth sailing for the entire boat purchase process.  

Boat Loan Approval: The Process 

Similar to buying a house with a mortgage, you can get a boat loan pre-approval. This shows how much boat you’re qualified to purchase and this is also what can help you set your budget. A boat loan pre-approval is more solid than a pre-qualification because the pre-approval has already taken into account your income and credit score. The pre approval shows the boat seller or dealer that you’re a well-qualified and serious boat buyer that is ready to purchase a boat.

Your boat pre-approval generally dictates your boat buying budget. For example, if you’re pre-approved for a $300,000 boat, you may decide to look for boats between $200,000 and $300,000 but you’re probably not going to look at million dollar boats unless you have some serious cash to put down. You don’t necessarily have to purchase a boat at the top of your budget. It’s important that you’re comfortable with the boat loan amount and that you remember to factor in other costs of owning a boat. 

During the boat loan approval process the lender will typically require the following things from the borrower:

  • Identification such as a valid driver’s license
  • Social security number
  • Proof of employment or proof of business ownership
  • Two or more years of tax returns
  • Bank statements 
  • Pay stubs or profit and loss statements 

Keep in mind that each lender has slightly different criteria when going through the boat loan approval process. But you will basically need to convince the lender that you’re a low risk candidate for the loan. You do this by presenting your income, credit score, credit history, and bank statements etc. You will need to give the lender your approval to run your credit. 

The lender will look at your FICO credit score, any collection accounts, your credit history, if you pay bills on time, and things like credit utilization and debt-to-income ratio. They’re looking at your overall financial profile to determine whether or not they think you will make a good loan candidate with a high likelihood of paying the loan back on time. 

Having a high credit score, over 750, increases your chances of boat loan approval, gives you more options in terms of types of loan products, loan amounts, and loan terms, and it also gives you the most competitive interest rate. You can save thousands of dollars, if not more, over the life of the loan, by having a low interest rate. 

Once the lender gives you a boat loan pre-approval, the loan will move through to the underwriting process. You won’t have any direct contact with underwriters. Instead they may ask the lender to request more documentation from you and they may pull your credit score again before you go to closing on the boat. This is not the time to switch careers, quit your job, or make any major purchases. Keep your finances as close to the same as they were when you were approved. Those teak deck chairs and matching cushions look appealing, as do those fancy wakeboards, but wait until you buy your boat to make those purchases. 

During the underwriting process, any inspections may need to be done for the boat and you will need to provide proof of boat insurance. Trident Funding can help you set up inspections and refer you to marine insurance companies. Then it’s time to close on your new boat. You will transfer the title to your name, register the boat, and pay any required taxes. Make sure you have a plan of where you’re going to store the boat before you buy it too. Consider dry and wet storage and indoor and outdoor options based on the type and size boat you have and the weather in the area the boat will be stored in. Now, get out there and live your best boat life!

Boat Loan Approval Tips 

Some tips of the trade so to speak, when it comes to boat loan approvals include:

  • Borrowers with higher credit scores get access to the best rates, terms, and loan products
  • Interest rates typically go down as the loan amount goes up. For example a $1.7 million loan will generally have a lower rate than a $500,000 loan
  • Boat loan terms typically range from 10 to 20 years
  • The longer the term is, the lower your monthly payment, but the more interest you will pay over the entire life of the loan
  • The age, size, and type of boat may affect the loan you qualify for. 

The Wrap Up: Boat Loan Approval

Now you know that you should get a boat loan approval before you start boat shopping and fall in love with a boat that may be out of your price range. Work with a reputable marine financing company like Trident Funding and have all of your documents in order before applying for a boat loan. You will need things like your social security number, identification, pay stubs, and bank statements etc. 

Keep in mind that the higher your credit score, the more competitive your boat loan rate will be and the better the odds of getting approved for a boat loan. The lender will approve your boat loan application based on your credit history, your income, if you can afford the boat, the amount of your down payment, and your overall financial profile. 

Frequently Asked Questions: Boat Loan Approval Odds 

Is it Easy to Get Approved for a Boat Loan?

It depends on who you ask, if it’s easy to get approved for a boat loan. Typically, boat loans are harder to get than auto loans but easier than home mortgages. It will be easy to get a boat loan if you pay your bills on time, have consistent income, can afford a boat, and have a good credit score. 

Conversely, it won’t be easy to get approved for a boat loan if you have a low credit score, negative payment history, or can’t afford to take on any more debt. 

What Are The Boat Loan Approval Odds?

There really aren’t any true boat loan approval odds because the approvals vary based on a number of factors. You may qualify for one boat loan but not another. Or you may qualify for a boat loan if you put down 30% but not if you put down 10%. Things that affect your boat loan approval odds include the loan amount, the age of the boat, your credit score, your payment history, your income, and your overall financial history. Every borrower is different so the type of loan they qualify for should be suited to them. If you’re curious to see if you qualify for a boat loan, apply online and find out if you’re approved within about 48 hours. 

What Would Make You Get Denied for a Boat Loan?

Every lender has different criteria about what factors will affect your approval or denial of a boat loan. Typically, the following will result in a denial for a boat loan:

  • Recent bankruptcy
  • Recent foreclosure
  • Bank fraud or falsifying documents
  • Low credit score
  • Not enough money for a down payment
  • No steady employment history
  • Negative payment history
  • Multiple accounts in collection
  • Short credit history length 
  • No credit history
  • Not being able to show where your income is coming from 
  • High debt-to-income history
  • All your credit cards are maxed out 

Can You Finance a Boat With a 600 Credit Score?

Most lenders want borrowers to have a credit score at least in the mid 600s but yes there are some lenders who will finance you with a 600 credit score. This may mean you would qualify for a less expensive boat, may get a higher interest rate, and the boat loan term may not be as flexible. You may also need to show other things in your favor such as steady employment history, positive payment history, and enough income to afford the boat loan payments. 

Ready to finance the boat or RV of your dreams?

More From The Trident