Find out all the information that you need from the credit score needed o buy a boat to the terms of the loans.
Are you wondering what is the needed credit score to buy a boat? Do you have any questions in your mind about loaning for a boat? The information below will give you ideas.
No matter what type of boat you are planning to purchase, there is always an available financing for it. Of course, the amount and interest rate of the loan will highly depend on your credit score history. Here are some of the information that you need to know when it comes to loaning for the boat that you want.
Credit Score Needed to Buy a Boat
The credit score needed to buy a boat is typically anything that is over 700. A credit score of 700 will give you a loan with a low interest rate. People with this credit score shouldn't have any problems when applying for one.
Terms of the Loans
Due to the lifecycle of a boat, the monthly payments are usually small. The lowest can be as low as USD 250 and can last for 20 years. The down payment, on the other hand, will depend on different factors, such as the price of the boat, type, and the age.
Explanation of credit score ranges
It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.
A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.
Bad credit score
People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.
Good credit score
A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.
A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.
An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Boat financing options based on credit score
If you are thinking of getting a boat loan, then you should know that this will come with a bigger interest rate. The reason behind this is because of the rate of the boat itself. Of course, the rate will still depend on the credit standing that you have.
Typical Boat Financing Rate
For people who are planning to get a 10-year loan for USD 15,000, the interest rate would be 6.49%, and your monthly payment dues would be USD 170.25. For higher loans of 20 years with USD 150,000 loan, the rate is, of course, lower at 4.37%, which will make your monthly dues at USD 938.48.
What Affects the Rates
The rates are usually affected by the information that the financing companies require. A typical financing company will need you to submit your credit score. If you have a high credit score, then they will give you lower rates. It will also depend on the make and model of the boat that you desire, plus the state where you are currently living.