Sailing the sea is an excellent idea until you decide to get a boat. Even though rental services are available, riding your boat is no other joy. However, boat finance is not an easy procedure, as you need to fulfil multiple criteria.
This article will help you get some clarity on the basics to qualify for a boat loan. Thus, if you plan an aquatic vacation, hold on and read about financing a boat.
3 Options for boat finance
Even though boat loans are not a cakewalk, the procedure is not so complicated. This is because you get three basic options to finance your boat.
These options are:
- Dealer financing: This is one of the simplest ways to finance a boat because you need to communicate with a dealer directly. Additionally, it does not involve financing criteria, and you can easily avail of a flexible financing option through a dealer. Many people prefer dealer financing because it is a quick and seamless option.
- Secured loan: A typical bank or financing organisation loan with proper paperwork. Since it is a secured loan, you must pledge the boat as collateral until you repay it. If you want a consistent option, this is the best one.
- Unsecured loan: While there is no collateral in an unsecured loan, it is essential that you fulfil the maximum criteria for getting the finance. The process may involve a bank, a financing organisation, or a virtual party that provides credit card loans. However, the downside of this option is that you might have to pay a high-interest amount due to a lack of collateral.
Keeping the above options in mind, many people choose unsecured loans as a standard method for financing their boats. Hence, the following section explains the essential criteria for getting an unsecured loan.
Essential criteria to qualify for a boat loan
The criteria for qualification vary from one lender to the other. However, it depends on the regulations, affiliation, and the type of loan you opt for. Below are some of the essential criteria that will help you qualify for a boat finance option:
- ID proof: You must have proper identity proof to apply for a boat loan. This is one of the essential criteria that may remove some hurdles from your way. So, if you don’t have proper documents, it is high time to register for them.
- Good credit score: An unsecured loan heavily relies on your credit history. This is one of the significant factors that determine the risk involved in the lending procedure. Thus, you might get disqualified for the loan if you have a bad credit history or poor score.
- Sufficient income: You might have a chance to get away with a bad credit score by showing proof of sufficient income. This is because many new credit card users are capable of repaying, but they find it hard to keep up with their credit scores. Hence, proof of income is an excellent way to build trust with the lender.
Apart from the factors mentioned above, there are other checkpoints like debt-to-income ratio, credit history consistency, and an active bank account. Therefore, having your boat may be fun but also costs a lot of money and effort.
Make sure you are financially stable with a consistent record before you aspire to have your boat. In addition, talking to multiple lenders and comparing the interest rates will help you decide.
Author Name – Carmela Cahtillo