Starting the boat financing process can be a challenge. Calling lenders 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 interest rate available and boat loans are no different. It’s best to understand what you are getting yourself into beforehand. Calling different lenders to feel out the market is a smart idea. This will give you an indication of current boat loan interest rates. However, there are many unforeseen elements that this process does not reveal.
You will find that without much information, a lender cannot give you an accurate quote. 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 is it difficult to get a firm quote over the phone? It is imperative that the lender 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 boat loan.
So why call different lenders if you can’t get a solid answer? Other than gaining a general idea of what A+ credit customers will qualify for – not much good at all. That being the case; what should one do if they are trying to get a solid boat loan interest rate? Customers should “pre-qualify” for a boat loan. Pre-qualifying for a boat loan is a smart choice. Why shop for a boat without having the financing in place to support your purchase? Pre-qualifying for a boat 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 program that offers best interest rate. Each lender has a unique program and will lend based on a different set of criteria. Thus, by employing a reputable broker 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 do not 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 hard 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 internally, 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 broker will underwrite the boat loan and then submit it to the “appropriate” lender for consideration. The lender will then approve the deal and broker will 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. Once you’ve reached this stage it’s just a matter of signing on the bottom line and the boat is yours.