Everyone knows that buying a boat can be expensive, but for some people it will cost even more than they think. The reason is bad credit. If you have late or missed payments, bankruptcy, judgements, tax liens, collections, or other derogatory remarks on your credit report than you may need to take some additional steps to get the best deal on your boat loan. This guide will help watercraft enthusiasts with bad credit understand what they can do to qualify for and get the most out of their aquatic financing options.
How Does Bad Credit Affect Boat Loans?
There are many different ways that a bad credit history can affect your boat loan. The first is that you may not be able to qualify for a loan if your credit is bad enough. This can result in your dream boat slipping away from you, and is something we’ll explain how to avoid.
Bad credit can also increase the interest rates that you are offered for your loan. A higher interest rate can result in thousands of extra dollars to the total cost of your purchase, which means less money to spend on your passion, and higher monthly bills. In fact, the interest rates that some customers with bad credit are offered may even double the cost of the loan over its term.
Given all of these problems and complications, what can an aspiring boat owner with less than perfect credit do?
Boat Loan Options for Bad Credit
There are a few things you can do to help make your boat loan as pain-free as possible. The first step that many recommend is to increase the amount of your down payment. The down payment is the amount you pay toward the boat before you seek financing. Thus, a greater down payment decreases the total amount of the boat loan. Additionally, having more of the down payment can demonstrate to lenders that you are less of a risk than your credit score might indicate, which can result in more favorable interest rates. Finally, having more of a down payment can help lenders feel assured that you have the financial responsibility and means to pay your loan on time.
Another tactic for boat loans with bad credit is to be careful about the craft you want to buy. IT may seem counter-intuitive, but selecting a newer model craft will decrease your interest rate and lower the overall cost of your loan. This is because lenders realize that they can make more of the loan back by selling a newer boat than a used boat, and so there is less risk for the lender if you default.
Finally, if you have bad credit, you may benefit more from a secured loan than an unsecured loan. A secured loan means that you have some kind of collateral, or property, that you will forfeit if you default on the loan. This also reduces the risk that the lender faces in funding your loan, and can help you qualify for the loan as well as helping keep interest rates in check.
Other Options to Consider
If you’ve tried all of the above steps, but still can’t find a loan that works for you, consider looking into peer to peer lending networks. These work with individuals putting up money for loans rather than large financial institutions. There are a few peer-to-peer lending networks that specialize in watercraft, and you might be able to find the loan you’ve been looking for there.
As you can see, there are many steps you can take and tactics you can use to get a boat loan, even if you’ve had credit problems in the past. Follow the steps in this guide and you’ll find yourself enjoying your new boat before you know it!