Boat Loan Basics - Overview
July 31, 2015
I have said this before and I will say this again. Recreational loans are a different type of animal in the financing world. We work and speak with home and auto lenders and customers all the time. They appear to be able to find a lender to obtain a loan for almost anyone. This is very far from true in boat, yacht, and RV loans. These are by far the most difficult. That being said, if you have good credit, income and value, there is definitely money available.
This is going to be an overview of what you need to obtain any type of recreational loan. It can be a boat loan, yacht loan, aircraft loan, trailer or RV loan. Think of obtaining a boat loan as a puzzle. You need all the pieces to make it work. Some pieces may be bent but they must all be there.
Here are what most lenders look at when reviewing a boat loan application:
1. Credit Score - most lenders are looking for 700+ and sub-prime below 680
2. Credit History - you must have at least 4 to 5 established tradelines
3. Debt to Income - you should be below 40%
4. Job stability - looking for at least 2 years
5. Boat Age and Value - must value out in www.nadaguides.com (low retail) or www.bucvalu.com.
6. Living accomodations - would like to be 2 years plus and no live aboards
I will get into all of these in detail in further posts.
Each recreational lender has their own policies and procedures. You must fall within these to obtain a loan.
Here is a short example of a call I had today. I had a borrower who had a credit score above 800 who rents an apartment and was looking to buy a 2012 Skeeter ZX 22 for $47,500. He makes over $50,000 a year and only has some credit card debt. He has always paid cash for his cars and has never owned a home. He meets all the conditions above except credit history. He does not have what they call "comparable credit". He has never borrowed this much money and has no history showing that he will make that kind of payment. Most banks want to see this history especially on a boat loan. We could not get him approved at any of the national lenders.
More to come.....
Thanks for reading and please feel free to give me a call at 954-847-1521 with any questions.
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