A few years ago in Australia, it was pretty easy to get a boat loan – lenders had no trouble approving loans since boat sale of both new and used boats was steady. Unfortunately with the collapse of the credit market, the situation is now different. These days, if you are looking for loan approval in order to buy a boat, almost any lender will demand a steady credit score and proof that you have paid your monthly instalments for previous purchases on time. If you have fulfilled these two conditions you should have no trouble getting a loan from any Australian lender. On the other hand, if you have bad credit or bad payment history, your chances of getting a loan decrease significantly. In addition, you will have more trouble obtaining a loan for a used boat since those lenders tend to avoid giving loans for such things.
However, if you manage to clean up your credit as much as possible, and search hard, you can find a lender who is willing to give you a loan, even if you have a bad credit history. Generally speaking, banks usually want a credit score above 620 for boat financing, but if you can’t fulfil those criteria, you should seek out lending companies that specialize in sub-prime marine loans (with a credit score that is above 620 you can qualify for “Prime” boat financing).
Therefore, you should decide what kind of boat you want and after that clean up your credit report in order to raise your score – especially if you are in the zone or just below 620. Now if you can’t bring your score to this number it still won’t be impossible for you to qualify for a loan. There are actually lenders who will approve of the loan even if your credit score is around 520, but you will have to be prepared to face a much higher interest rate.
There is another difference. If you are qualified for a prime boat loan you will be offered a payment program that goes from 15 to 20 years and a loan that is possible to go over $100,000. On the other hand, bad credit boat loans run from 10 to 12 years, and the loan will not be over 60,000$. Find a boat or a yacht broker either in person or online – although it is much better if you can meet him in person. Find the largest boat brokerage in your area and talk to the manager; explain to him your situation and he will provide you with a boat broker (bear in mind that this service is free of charge).
Make an offer on a boat and then write a formal letter with the help of your boat broker- you can’t buy a boat without it. Also, you need to prepare yourself for a couple of rejections because of your bad credit but, eventually, you will be able to find a lender. Another thing when writing an offer make sure that you put a sort of refundable deposit- it is around 10% of the offering price although this thing is negotiable. Once you find a willing lender make sure that you have a good explanation for your bad credit history. It can really help your chances if you have proof of divorce for example or any other unexpected event that was responsible for unplanned expenses.
Once you have managed to get approval from the seller, get someone to test the boat and see whether it is seaworthy in order to obtain insurance for the vessel. You should be able to find an Australian marine surveyor online who will test drive it; in order to make sure that everything works fine. Once that is finished, he will provide you with a written evaluation of the boat, as well as its market value, which is the paperwork required in order to get boat insurance.
When all of that is done, you can finally make your purchase and enjoy your new sea vehicle, or a sea house which is money well spent if you are living near the Australian beach and you are in the need of a summer house.