Boat Loan Requirements?

[Aqua_Holic]

Hey guys, long time lurker, first time poster! I've been reading on these forums for a long time now as we are looking into buying our first boat! Hopefully the market chills out by next season so we can make this long time dream a reality! I've been watching the market since last fall and hope to be able to buy something by the time next summer comes around. So I have MANY questions but first things first I wanted to start off with the first most important part to this journey. My question right now is can you guys fill me in on exactly what is required to get a boat loan. I know that's a very open ended question and every persons situation and lender is different obviously but I am curious how boat loans work. Are they more intensive like a home loan or a little easier to acquire like a truck loan? We both have pretty good credit sitting right around 750-760 and will have a couple credit cards paid off by next spring when the time comes around to actually apply for a boat loan so we should be sitting 760+. The MAIN concern I have and main reason for this post is I am wondering if I will need to prove income or not? I read somewhere you have to prove Income records for the last 24 months, and I have also read that its like a truck loan and you wont have to prove income. So I would like to hear your guys input as far as that goes and if you did or didn't have to show income etc.... Im worried because it will be hard for me to prove how much money I have really made over the last 2 years. Just from reading/researching around I have a pretty good idea of what boat we are most likely going to shoot for as we have kind of narrowed it down between 2 or 3, but far from the final decision on that. I am thinking our price range is most likely going to be around 55k-60k (hopefully less) but that's what I'm shooting for as of right now! I don't know if that matters or not. Also outside of the requirements for boat loans, what route did you guys go or do you suggest going when it comes to financing. Do the dealerships offer good low rate options, or would we be better off going through a credit union or bank that I already use for other stuff (house, vehicles etc.) And finally for now, I know the market is kind of crazy and all messed up due to the covid crap but what is a good/bad interest rate when it comes to looking for a boat loan and is it normal to stretch a boat loan out 10-15 years. I never knew that was a thing until my research started earlier this year. I was shocked to learn that boat loans can stretch out 15 sometimes 20 years almost like a house loan.

I hope to hear back on this matter, and I will have a MILLION more questions to toss around here before we actually buy something. Thanks alot for taking the time to read and give your input I greatly appreciate you guys! Alot of great info here on the jetboat forums, I spend hours and hours on here reading trying to learn and read everyone's experiences before I take the long awaited dive into the boating world! Thanks alot guys! ?

 

[turdSAMMICH]

I would think 750+ would be fine for approval, but I'm sure it will affect the rate so the higher the better obviously. I didn't need to prove income like that it was more like a credit card application where I was able to fill out the form and basically put in whatever I wanted. My form asked for annual income in one box. I don't remember if they needed proof of employment as far as a paystub or not, but it was all very easy. I was planning on getting yamaha financing but when I got to the dealer they suggested I could get a better rate if they sent my info through a 3rd party that would send my info out to banks all over to get me the best rate, so that's what I did. I went with a 15 yr loan because the rates weren't that much different and I would rather be flexible with a lower monthly payment that I can pay more towards when I wanted vs having to pay a higher amount every month. Call a dealer in you're area and see how they work and what they suggest. They are always more than helpful with new clients. You can always talk to your bank/credit union and see what they offer without any commitment

 

[Richard Bares]

Very much like a vehicle loan except it can be for a much longer term. At least in my experience (twice now) I have gone to a dealership filled out a loan application and they do the rest. They will run your credit just like a car dealer and say yay or nay. I'm sure you can shop around, I've heard credit unions have the best rates. I was happy with the rate (5%) I got from the dealer, they shopped three different banks for me.
I didn't have to "prove" any income except putting my income on the application.
My first boat I did a 10 year loan and made higher payments to get ahead. I am doing the same thing on my current boat except I took a 15 year loan.

 

[HangOutdoors]

@Aqua_Holic don't get too hung up on scores. Credit Unions tend to give the best rate. My scores are far lower than yours and I am at 3.49% on a 15 year through my credit union. Credit scores are a general measuring stick. Each lending institution has their own criteria. Plus each lending institution looks at different credit scores. There are over 20 different credit scores and your can vary 50 points or more for different ones depending on the scoring algorithms and your personal situation.

If you are a member of a credit union or bank ask them to prequalify/Preapprove you for the amounts you are looking for. If not shop around for a good Credit Union. When you do go shopping for a boat, then you know what your payment and loan amount can be. Also this way you could go new or used very smoothly.

Also if you pay off your credit cards and have no revolving trade lines with a balance you credit scores will drop substantially. If you are hung up on scores, then you need a mix of active installment and revolving credit that is open with a balance. At least one credit card open for more than 12 months reporting a balance of less than 8% of the credit line is optimal.

If you want to learn about it all and how to manipulate your credit scores and what the algorithms are and real world examples, go here and start researching.

Home - myFICO® Forums

 

[ripler]

Remember you can negotiate your loan rates. When I bought my MasterCraft the dealer came back with an interest rate that was actually pretty good. I told the dealer to go back to the bank and tell them that I wanted a certain interest rate and that I would finance through them if they met my rate. They accepted my rate and I financed through them. My credit score is well into the 800s, so I'm not sure if that helped.

 

[mark_m]

Very much like a vehicle loan except it can be for a much longer term. At least in my experience (twice now) I have gone to a dealership filled out a loan application and they do the rest. They will run your credit just like a car dealer and say yay or nay. I'm sure you can shop around, I've heard credit unions have the best rates. I was happy with the rate (5%) I got from the dealer, they shopped three different banks for me.
I didn't have to "prove" any income except putting my income on the application.
My first boat I did a 10 year loan and made higher payments to get ahead. I am doing the same thing on my current boat except I took a 15 year loan.

If you do apply to different lenders, try to bunch the groupings where they pull your credit together in a grouping so you do not get dinged for multiple hard inquiries that can bring down your credit score.

 

[Aqua_Holic]

Awesome! Thanks for all the feedback! Glad to hear its easier like a truck loan. If you guys dont mind sharing, how much did you pay total for your boats as well as what are your monthly payments? .... And how much if any did you put down at time of purchase?....Realistically were probably going to have around 5k to put down if needed and most likely going to be right around the 50k-60k price range.

 

[Aqua_Holic]

If you do apply to different lenders, try to bunch the groupings where they pull your credit together in a grouping so you do not get dinged for multiple hard inquiries that can bring down your credit score.

Great info! I was made aware of this from my credit union last year when I bought a new pickup, the guy I work at the bank told me that you have so many days to have hard inquiries done after the first one is done...instead of a bunch of hard inquiries piled on top of each other, so definitely something to keep in mind, and to not apply or get "preapproved" until the time comes you are actually ready to buy!

 

[anmut]

I go through a credit union - I do not allow dealers a glimpse at my SSN, as they will just pull credit over and over until they "get you the best rate."

 

[HangOutdoors]

I was made aware of this from my credit union last year when I bought a new pickup, the guy I work at the bank told me that you have so many days to have hard inquiries done after the first one is done...instead of a bunch of hard inquiries piled on top of each other, so definitely something to keep in mind, and to not apply or get "preapproved" until the time comes you are actually ready to buy!

This is kind of how it works, please don't be mislead with all the conjecture that is going around and regurgitated.

How it ACTUALLY works is that it is based on the type code that is used when your credit is pulled and different lending institutions can use different codes when they pull your credit. At which point they will not be counted as one Hard Pull. Understand that no where on your credit report does it show "Credit is being pulled for Boat Loan", so technically there is no way to match it up to multiple inquires for the same purchase. Mortgages and home lending are easier in doing this. There are also other codes that may or may not be used and EACH credit bureau handles them differently and some may not allow certain ones.

So.... If it is coded as an installment loan then pulls within 2 weeks should be counted as one. If it is counted as a revolving credit line it won't. Also, it can be coded as a "CFA" Consumer Finance Account. These may or may not be counted as one pull within the time frame. Also, even though your score may not drop if they are coded as one, an algorithm that determines automated approvals and rates will see multiple inquires and depending on how the lending institution how their programs handle that. At which point a recon maybe needed so that a set of human eyes can look at it.

Furthermore, you have 3 of the most used bureaus and a lender may pull 1, 2 or 3 at their own whim or under their guidelines. You need to ask. I have a fairly lengthy post around here somewhere on this whole thing.

Some lenders will do a Soft Pull (Soft Inquiry) to prequalify you which no other lenders will see and it won't affect your credit score. This is the best way to go, since you will get rate and term and what type of documentation will be required. They will eventually do a hard inquiry for final approval and funding.

For the most part what you are told by dealers, is crap, they don't know much about financing, don't trust them. For the most part banks and lending institutions that you talk to their front line lending staff don't know much either or how it all really works, they just spew random stuff that may or may not be true. Underwriters and Finance Managers DO for the most part know how it all works and what is exactly happening and how things will be pulled.

I worked in credit markets, lending and mortgages for many, many years and still work on software that is used in loan determination and underwriting. I see a lot of misinformation and bs being spread around all the time.

In the end it is your credit, your money and your loan. Don't take much of the spin for fact until you can vet it all out.

 

[Mrs. Puff's Teacher's Pet]

My scores are far lower than yours and I am at 3.49% on a 15 year through my credit union.

@HangOutdoors which credit union are you with? And did it require a down payment?

 

[HangOutdoors]

I have moved my loan from the original credit union which was Alliance Catholic Credit Union. I did put down a few thousand but didn't need to. Now I am with Michigan Government and Schools Credit Union. Their rate was better than ACCU and also better than I could get at NFCU - Navy Federal Credit Union. Another strong Credit Union is LMCU here, Lake Michigan Credit Union which I also bank with. Credit Union Rates go up and down all the time depending on their portfolio. When they want more loans they start lowering the rate, and when they are over funded they start raising the rate to offset their risk of what they can absorb. So at anytime rates can fluctuate when the market indicates it shouldn't.

Also, if you are moving funds through your Credit Union and have other products, such as mortgages, cars, credit cards, loans, etc..... You can usually get a better rate. They like to take care of their members. Not sure if ACCU and LMCU loan out of state. I know NFCU does but to become a member they have stricter requirements. Hopefully this info helps.

 

[Aqua_Holic]

Ahhh very good to know!....I currently have my truck loan through Green State Credit Union as well as a separate loan (almost paid off) that I got to consolidate a couple other accounts a couple years ago...They have been very good to me over the years as well as I have never missed a payment with them, so maybe my best bet would be to start off with them when the time comes to buy. I could def throw some money down if needed, but would also be nice to keep that money in savings if possible, always nice to have cash aside if something unexpected pops up.

 

[HangOutdoors]

Yep, sounds like a plan. I would call them and ask what rates and terms they have and make sure they finance out 15 yrs or more. Then from there it is easy to figure out payment on a payment calculator, so you will know and have it in the back of your mind.

Plus, let's be honest, no way to know what new boat sales and inventory are going to be like plus there is talk of large increases. If you can get things situated ahead of time, you then can see if a good deal on a 1 or 2 year old used boat pops up in the winter which could save you some money and you would be ready to take advantage of it.

 

[Aqua_Holic]

Yep, sounds like a plan. I would call them and ask what rates and terms they have and make sure they finance out 15 yrs or more. Then from there it is easy to figure out payment on a payment calculator, so you will know and have it in the back of your mind.

Plus, let's be honest, no way to know what new boat sales and inventory are going to be like plus there is talk of large increases. If you can get things situated ahead of time, you then can see if a good deal on a 1 or 2 year old used boat pops up in the winter which could save you some money and you would be ready to take advantage of it.

Large increase in availability or in PRICE? .....haven't prices already went up enough over the last year or so?!?!? I am hoping the opposite happens and the prices come back down, especially in the used market! I would be perfectly fine with a good used boat with warranty left, but not going to pay over MSRP for a used boat!

 

[HangOutdoors]

That is my point. If you have financing preapproved and know what you are shopping with exactly then you can be poised to take advantage of a good deal and jump on it right away. The large increase will be in new boat price over last year at least that is what is rumored, anywhere from 3% to 15% higher for 2022's, at least that is what has been floating around and what dealers are saying.

 

[Gwade8808]

Large increase in availability or in PRICE? .....haven't prices already went up enough over the last year or so?!?!? I am hoping the opposite happens and the prices come back down, especially in the used market! I would be perfectly fine with a good used boat with warranty left, but not going to pay over MSRP for a used boat!

Hey guys, long time lurker, first time poster! I've been reading on these forums for a long time now as we are looking into buying our first boat! Hopefully the market chills out by next season so we can make this long time dream a reality! I've been watching the market since last fall and hope to be able to buy something by the time next summer comes around. So I have MANY questions but first things first I wanted to start off with the first most important part to this journey. My question right now is can you guys fill me in on exactly what is required to get a boat loan. I know that's a very open ended question and every persons situation and lender is different obviously but I am curious how boat loans work. Are they more intensive like a home loan or a little easier to acquire like a truck loan? We both have pretty good credit sitting right around 750-760 and will have a couple credit cards paid off by next spring when the time comes around to actually apply for a boat loan so we should be sitting 760+. The MAIN concern I have and main reason for this post is I am wondering if I will need to prove income or not? I read somewhere you have to prove Income records for the last 24 months, and I have also read that its like a truck loan and you wont have to prove income. So I would like to hear your guys input as far as that goes and if you did or didn't have to show income etc.... Im worried because it will be hard for me to prove how much money I have really made over the last 2 years. Just from reading/researching around I have a pretty good idea of what boat we are most likely going to shoot for as we have kind of narrowed it down between 2 or 3, but far from the final decision on that. I am thinking our price range is most likely going to be around 55k-60k (hopefully less) but that's what I'm shooting for as of right now! I don't know if that matters or not. Also outside of the requirements for boat loans, what route did you guys go or do you suggest going when it comes to financing. Do the dealerships offer good low rate options, or would we be better off going through a credit union or bank that I already use for other stuff (house, vehicles etc.) And finally for now, I know the market is kind of crazy and all messed up due to the covid crap but what is a good/bad interest rate when it comes to looking for a boat loan and is it normal to stretch a boat loan out 10-15 years. I never knew that was a thing until my research started earlier this year. I was shocked to learn that boat loans can stretch out 15 sometimes 20 years almost like a house loan.

I hope to hear back on this matter, and I will have a MILLION more questions to toss around here before we actually buy something. Thanks alot for taking the time to read and give your input I greatly appreciate you guys! Alot of great info here on the jetboat forums, I spend hours and hours on here reading trying to learn and read everyone's experiences before I take the long awaited dive into the boating world! Thanks alot guys! ?

Congrats on being close to a purchase! There are a ton of variables but I can tell you I just bought a 2015 242 limited S for 40k and financed through vystar credit union. Zero down @ 4.9% for 144 months. My credit score was 751 and they asked for my last pay stub to verify employment and that was it. Granted this is a used, older boat so the rate is higher but from the research I did they seemed to have competative rates (here in FL) and the ability to stretch the term out. The term usually feeds off the year of the boat and amount financed (credit score of course). The more you spend, the longer you can finance it for but may require 5-10% down. Most "banks" wont go past 80 months on a used boat but the credit unions usually do. I just googled boat loan rates for all the local banks and credit unions and stumbled on Vystar. Usually Navy federal and USAA are my go to for loans but Vystar blew them away on rate and term. We were not in the position to purchase new so I'm not sure what the dealer rates and incentives would be. Probably not much as boats are selling faster than they can make them. My only other concern would be what the Fed is going to do with loan rates in general with the inflation/COVID situation. I'm no financial advisor but that would be something I would keep in the back of my mind going forward. Best of luck!

 

[Chatt_Jetsetter]

Ahhh very good to know!....I currently have my truck loan through Green State Credit Union as well as a separate loan (almost paid off) that I got to consolidate a couple other accounts a couple years ago...They have been very good to me over the years as well as I have never missed a payment with them, so maybe my best bet would be to start off with them when the time comes to buy. I could def throw some money down if needed, but would also be nice to keep that money in savings if possible, always nice to have cash aside if something unexpected pops up.

We financed through our local Credit Union. The interest rate depends on the amount financed and if the boat is new or used. We purchased new, and at the time their best rate was 4.25%. We did not need to put money down, and we didn't because unless you're putting a large chunk then it doesn't affect the payment that much, but it does affect the overall amount you pay after finance charges if you pay the entirety of the loan over the 12 years or whatever it is.

Our thought was as this was our first boat, we would probably upgrade in a few years so we went for the lowest interest rate we could get and no money down. We might have secured a slightly better rate shopping around, but like you we have financed all our vehicles and home through this CU over the years and have a good relationship with them.

Best of luck to you guys!

 

[tarponfl]

Suncoast Credit Union has 4% fixed on new and used boat/motor/trailer up to 144 months.
Boat Loans and Financing in Florida | Suncoast Credit Union

 

[GLekter]

That's awesome that you're pursuing your dream of buying a boat. It's true that boat loan requirements can vary depending on the lender, but having a good credit score like you and your partner definitely helps. Some lenders may require income verification, while others may not, so it's always best to speak directly with a lender or mortgage broker in Southport to get a better idea of their specific requirements. When it comes to financing options, it's a good idea to shop around and compare rates from different dealerships, credit unions, and banks. You may find that one offers a better rate than the others. In terms of interest rates, a good rate would be around 4-5%. Don't be too surprised if the loan is stretched out over a longer period of time, similar to a mortgage.