If you’re in the market for a boat, you may be wondering how to get financing. Like many other purchases, it will depend mainly on your credit score. If you have poor or limited credit, making the right choice can seem impossible. However, there are many ways of boat financing with bad credit that will be discussed in this article.
Build up your credit
Because boat financing with bad credit is complex, making sure that your credit history is in good standing when you apply for funding is essential. If you don’t have any past or have outstanding debts on your accounts, this could affect how much money lenders will extend to you. To qualify for financing, the bank will likely require a FICO score of at least 700 and a payment history over 12 months in order from all open and active cards within the last 2-3 years (depending on the bank).
Once you have established some history on existing accounts where payments were made on time every month for more than one year, you can start building up other sources of credit, like personal lines of credit from banks or home equity lines for larger purchases such as boats and houses.
Having a job is important.
Suppose a lender can see that your employment has been consistent for an extended period. In that case, it will be easier for them to trust that you will continue earning an income throughout the loan repayment period.
- Employment history is essential.
- How long have you been employed?
- How much money do you earn?
- Is your employment stable, or are there sudden changes in your income from month to month (or week to week)?
Find the right lender.
To find the right lender, look at the lenders known for working with bad credit. These companies specialise in loans to people with a history of late payments and bankruptcies. In addition to these lenders, you can also consider contacting a bank or credit union in your area. Although they may not offer boat loans specifically, they may be able to refer you to a company that does.
Finally, if you need a different option, remember that there are other ways of financing boats without having a good credit history.
Find a co-signer for your loan.
When you apply for a loan, they want to see that you can cover the monthly payments. If you need more credit history or a high enough income to show that you can be reliable and responsible with your money, they will likely ask that someone else co-sign on loan with you. This person is called a “co-signer.”
This person must have good credit, so their score doesn’t drag yours down too much when applying for loans in the future. They should also be willing to put their name down as co-signers if anything happens down the road (like if a payment is missed). It could get messy if things don’t go according to plan. If no one in your family has good enough credit or wants to co-sign, try asking friends or acquaintances who are trustworthy and financially responsible people who would be willing to do this favour for free. You’ll need them anyway since most banks require two signatures per transaction.
The size of your down payment matters
A larger down payment will make you look more creditworthy, which could help you get a better interest rate on your loan. Your budget and the financing options available through the boat dealer determine the amount you can afford.
If lowering monthly payments isn’t necessarily at the top of your priority list (or if there aren’t any low-down-payment options available), consider keeping things simple by making a modest 5% or 10% deposit when buying a new boat from the dealer.