Pre-Qualifying for Boat or Yacht Financing

Starting the boat financing process can be a challenge. Calling brokers for rate quotes over the telephone can sometimes be confusing; so before you make that step it’s best to understand how the process works.

With any large purchase that is financed, customers want to get the best rate available to them and boat and yacht loans are no different. Understanding what you are getting into beforehand is important for ensuring you get the best deal. Calling around to different brokers to feel out the market is a smart idea. This will give you an indication of what boat loan rates the market is currently bearing. However, there are many unforeseen elements that this process does not reveal.

So why is it difficult to get a firm quote over the phone? In order to provide an accurate boat or yacht loan quote it is imperative that the broker understands the nature of the purchase including your credit history and current financial standing via an “underwriting process.” Without submitting a boat loan application though the underwriting process, the broker won’t fully know if or how you qualify for a loan. A reputable broker can only give you an indication based on a range of A+ interest rates that “may” be available to you if you qualify.

So why call different brokers if you can’t get a solid answer? Other than gaining a general idea of what A+ credit customer’s rate is – not much reason at all. So what should one do if they are trying to get a solid quote for a boat loan interest rate? Customers should “pre-qualify” for a boat loan.

Pre-Qualifying for a Boat Loan

Pre-qualifying for a boat loan is a smart choice. Why shop for a boat or yacht without having the financing in place to support your purchase? Pre-qualifying for a loan will create financial structure that will guide you through the purchasing process.

Boat loan brokers that have multiple lending sources will match you with the lender with the best interest rate. Each lender has a unique program and will lend based on a different set of criteria. Thus by employing a reputable boat loan broker, such as SeaDream Marine Financing - www.seadreaminc.com, with multiple lending sources, the broker can match the customer with the appropriate lender and obtain the best market rate.

However, by shopping with multiple brokers you risk damaging your credit score. Brokers that don’t underwrite your deal in house may initiate a process of shopping or “shotgunning” your boat loan application to numerous lending sources in “hopes” of finding a good deal. This may come at a serious cost to you. Every time a lender receives an application, they will run a check on your credit history. Every inquiry will reduce your credit score. Submitting your application haphazardly to multiple brokers that do not offer in-house underwriting may seriously damage your credit.

Therefore it is wise to ask the broker about their process, including if they underwrite their applications, how many lending sources they utilize, and if they are adept at matching your application to the “appropriate” lender in their portfolio via the underwriting process vs. randomly shopping your application to many or all of their lenders.

A quality professional boat loan broker will underwrite the loan and then submit it to the “appropriate” lender for consideration. The lender will then approve the deal and the broker will then call you back with a firm deal that includes a locked interest rate and structure of the financing available to you. You are now officially pre-qualified to shop for the best deal and will have the financing in place to make a strong offer. Once you’ve decided on a boat the broker will then work with you and the selling party to facilitate the deal within the framework of the approval. When you reach this stage it’s just a matter of signing on the bottom line and the boat is yours.

Eric Vaughan is a leading marine finance professional at SeaDream Inc. Boat Loans and Boat Insurance - SeaDream is nationally renowned for its expertise in new and used boat loans, boat refinancing, yacht financing, and boat insurance.