5 Steps to Boat Loan Success

If you dream of setting sail on crystal blue water, crave the mist of salty sea water on your face, and have a stockpile of SPF 50 sitting in your home, it might be time to buy a boat.

Unlike celebrities, most of us don’t have the means to go out and buy one on the spot. That doesn’t mean you still can’t get one, though.

Making a few simple adjustments and preparations can help you find affordable boat loans in no time at all. Here’s where to start:

Check your credit

As you probably know from your mortgage or car loan, your credit score is one of the first things lenders will look at when deciding whether to approve or deny your application — that applies to boats, as well. Now, before you apply, is the best time to ensure it’s as good as it can be.

First, check your score with all three major credit bureaus: Experian, TransUnion, and Equifax. You can check with each bureau once a year for free, but most credit cards offer a complimentary check as well.

Though minimum credit scores vary depending on the type of loan you want, count on a minimum score of 500. For optimal interest rates, however, you should aim for 620 and above. Those with a credit score above 700 shouldn’t have any problem being approved.

If you’re looking to improve your credit score, start by following a budget, paying bills on time, and paying off any debt.

Lower your debt-to-income ratio

Your debt-to-income ratio is the biggest determining factor in your credit score. Lowering it is the simplest way to improve your FICO score and get the best boat loan.

You don’t have to do it immediately, but you can take certain steps to pay it off quicker and with as little interest as possible. Many money experts recommend the snowball method, in which you rank all of your debt in order of interest rate, from highest to lowest and then prioritize the debt with the highest interest rate, while still paying the minimum on all of your debts, in order to pay less over time.

You could also consider asking for a raise or opening another credit card, if necessary.

Get prequalified

As with other loans, getting prequalified for a boat loan can help you sail smoothly into your dream rig. Speak with your preferred lender to find out what documents and information you need to get prequalified.

Buy the best boat for you

Once you have your finances in check and have been prequalified for a loan, you can take final steps toward buying yourself a boat.

Start by deciding what you want to use your boat for. Will you be taking large groups to sea, or will you just need enough space for you and few friends? Will you be fishing? If so, in freshwater or saltwater? Do you have a need for speed, or will boating be one of your leisurely activities?

Once you’ve answered those questions, begin to peruse online and in-person boat sellers to find a price point and start shopping. Perhaps even check out a boat show in your area to see the best options.

Find the right insurance

And, finally, once you’ve purchased the perfect boat and found the payment plan that works best for you, you’ll need to start thinking about protecting your new boat.

Just like your vehicle and your home, you want to make sure you’re protected in case of an emergency or accident. A good boat policy covers you for liability if someone is injured on your craft and gives you the choice between replacement cost or cash value in a total loss. It should also let you pause your coverage when you’re not using the boat.

Keep in mind, however, that if you’re towing your boat using your vehicle, your auto policy is what would cover any accidents.

There are a lot of moving parts in boat insurance, find a bank that will shop multiple carriers to find coverage that works for you, so that you can enjoy your time on the water with peace of mind, knowing your boat is protected.