Before you can enjoy the freedom that comes from owning a boat, you must consider your purchase as a significant expense. One of the best ways to finance this purchase is through a boat loan. This process, however, raises several questions like, “How do lenders approve boat loan applications?” Let’s explore what you need to know to ensure your application goes through without any trouble.

Your Budget

How do you plan on paying for your boat? Paying cash may seem like the obvious choice, but remember that there is more to buying a boat than what is on the price tag. In other words, if you plan to purchase a boat outright with cash, you will need to cover the price tag, plus taxes, closing costs, insurance, and any other fees that could amount to double the initial cost.


That is why boat loans are popular options for procuring a boat.


As such, you must first determine your budget. Consider the size vessel you need, its intended purpose, and how many crew members you need to operate it. An online boat loan calculator can determine the loan amount that fits within your budget. It’s best if you also researched the current boat loan rates, so you can estimate what the interest rate on your loan will be. Remember that a boat loan will typically require a down payment of between 10% and 30% of the cost of the boat.

The Process of Boat Loan Approval

The Process of Boat Loan Approval

Next, it’s time to shop for a boat and select a lender. Many lenders are available, and choosing one that meets the borrower’s unique financial situation is essential.

Once a lender has been selected, you can then apply for a pre-approval boat loan. The pre-approval takes into account the borrower’s income and credit score and demonstrates to the boat seller or dealer that the borrower is a well-qualified and serious boat buyer. This is a more solid indication of how much the borrower can purchase than a pre-qualification.


The lender then requests information from you. This information includes identification, such as a valid driver’s license, social security number, proof of employment or business ownership, two or more years of tax returns, bank statements, and pay stubs or profit and loss statements. Lenders will look at the borrower’s FICO credit score, credit history, whether bills are paid on time, credit utilization, and debt-to-income ratio. This information determines whether the borrower is a low-risk candidate for the loan.


Once it has been declared that you are a low-risk candidate, your lender may decide to approve the application.


Is It Easy to Get Approved for a Boat Loan?

Getting approved for a boat loan is not necessarily easy, but it’s possible if you have a solid financial standing and good credit history. Here are some tips to ensure that your lender approves your application:


  • Know your credit score: Your credit score is an essential factor that lenders use to determine your creditworthiness. Most lenders want a FICO score of at least 680, but others will want 700 or higher, especially if you plan on buying a more expensive yacht. Before applying for a boat loan, it’s a good idea to check your credit score and address any errors or issues that may negatively impact your creditworthiness.
  • Build a strong credit history: Making regular payments on time, keeping your credit utilization low, and avoiding late payments and defaults can help you build a strong credit history and improve your credit score. This can make it easier to get approved for a boat loan.
  • Have a steady income: A steady income and a stable employment history can demonstrate to lenders that you can make regular loan payments.
  • Save for a down payment: Saving for a down payment can show lenders that you are invested in the purchase and are less likely to default on the loan.
  • Keep debt-to-income ratio low: Lenders also consider your debt-to-income ratio, which is the amount of debt you have compared to your income. Keeping your debt-to-income ratio low can increase your chances of getting loan approval.
  • Shop around for lenders: Not all lenders offer the same rates and terms, so it’s a good idea to shop around and compare offers from multiple lenders to find the best deal for you.


What Might Cause a Lender to Deny a Boat Loan Application?

Lenders have their own criteria that factor into whether you are approved or denied. Some of the factors that lead into a denial include:


  • Incomplete or inaccurate application
  • Insufficient income
  • Poor credit score
  • Evidence or history of fraud
  • Recent foreclosure or bankruptcy
  • Lack of steady employment
  • Not enough funds for a down payment
  • High debt-to-income ratio
  • Zero credit history
  • Accounts in collections
  • Credit cards maxed out
  • Lack of collateral for secured loans
  • Length of time at your current address is too short


Looking to Finance Your Dream Boat?

Atlantic Horizon Capital can help you find a boat loan that fits your financial profile.

With the right preparation and a solid financial profile, borrowers can enjoy a smooth sailing boat loan approval process. Lenders approve boat loan applications by viewing your credit history, among other factors. If you are seen as a low-risk candidate, they will approve your application. Don’t forget to contact Atlantic Horizon Capital at 609-365-1540 to learn more about our available boat loans or check our pre-approval process. Or, if you are ready, begin your online application for a boat loan today.

Recommended Posts