Owning a boat is a lifelong dream for many coastal Canadians, and if you’re looking into purchasing your first vessel, you’re up for an exciting investment. However, you’ll likely need to secure financing before you can begin taking your boat on the water. Whether you decide to take out a personal loan or apply for boat financing through a lender, it’s important to consider the state of your credit score before starting the process.
Your credit plays a major role in determining whether you’re eligible for a loan or boat financing agreement, and if it’s at an all-time low, you’ll need to take some time to build it back up. Below, we’ll discuss why having a low credit score affects boat loan eligibility, along with a few tips on how to improve your credit and secure your marine vehicle. Keep reading to learn more!
Ways to Finance a Boat
There are a few different ways you can finance a boat. You can arrange for funds through a bank loan, with your boat dealer, or through a reputable lender. Depending on the lender you work with, you’ll be offered a secured or unsecured loan.
Unsecured loans don’t require any collateral, while secured loans use collateral as the backbone of the agreement. If you choose a secured loan and cannot make payments on your boat in a timely manner, the lender is within their rights to repossess it. If you choose an unsecured loan, your interest rates will be higher, as, without any collateral attached to the agreement, the risk for the lender is much higher.
Whether you choose a secure or unsecured loan or another form of financing, having a good credit score is vital to ensuring your qualification. If your credit score is too low, lenders may view you as a high-risk borrower and will not approve your loan. If your loan or financing agreement is approved, you may have very strict terms and higher interest rates attached.
How Your Credit Score Affects Your Boat Loan Eligibility
Your credit score is a representation of your financial health. Outstanding balances, late payment history, debt, and other financial faux pas can cause your score to dip significantly. If you apply for a boat loan with a low score, this displays to lenders that you are less likely to repay the money that you’ve borrowed based on your financial history.
In contrast, a good credit score of 650 or higher makes you a more attractive candidate for lenders, as they are more likely to trust you with a steady repayment schedule. Higher credit scores will also lower the interest rates associated with your loan, saving you money in the long run.
Ways You Can Improve Your Credit Score
If you’re currently looking at a low score on your recent credit report, there are several things you can do to build it back up and secure your dream boat! Some ways to improve your credit score include:
Pay your bills on time: While this may seem simple, paying your bills on time is a surefire way to improve your overall credit and prove your reliability when making scheduled payments.
Pay off your credit card: One of the biggest impacts on your credit score is the balance on your credit card. Do your best to keep it low based on your credit limit, and avoid adding any extra charges to your card while you work to pay it off.
Fix errors on your credit report: Sometimes creditors will make mistakes on your credit report, which can, unfortunately, lower your score. If your score appears uncharacteristically low, review your past and current reports thoroughly and dispute any errors with your credit bureau.
Limit hard inquiries on your account: Every time you apply for a line of credit, a hard check will be performed on your credit report, lowering your score temporarily. Space out your applications over a few months to prevent your score from dipping long-term.
Choose AutoLoan Hub for Hassle-Free Boat Financing
Once your credit score is back up to snuff, you can begin the search for your boat and secure a loan from a reputable lender. At AutoLoan Hub, we offer a streamlined loan application process that is completely hassle-free. Contact us to learn more about obtaining boat financing.
