A bankruptcy will remain on your credit report for 10 years from the filing date. Some lenders want to see re-established credit before they will issue you a loan, while others will not consider you for a loan if a bankruptcy appears on your credit report. You may need to talk to several lenders to find one that will give you a boat loan. You can usually determine this with a telephone call. It should not be necessary to fill out an application. Applications will appear on your credit report as inquires. They will lower your credit score, which will not help you obtain a loan.
Make every effort to improve your credit following a bankruptcy. After a year or two, apply for a secured credit card with a low limit. Pay the balance off in full each month and after six months to a year, request an increase in your limit. With a good payment history, you can probably get the increase without providing additional security. At that point, apply for a gasoline or department store card and work your way up to an unsecured credit card.
If your credit has improved and you have steady income, apply for a boat loan through a local finance company. You will need to show that you have sufficient income to pay any current obligations as well as the monthly payment for your boat. You will also need to show that you have enough income for food, clothing and other necessities, and that you have some cash reserves. Expect to talk to several lenders.
The lender will expect you to provide a substantial down payment. The larger the down payment, the more likely your loan will be approved. Plan on a minimum of 30 percent of the purchase price or the estimated value, whichever is higher. Lenders can provide you with the estimated value.
Your interest rate will be high because you will be considered a high-risk borrower, but the loan will help you establish better credit. A boat loan is an installment loan because it has fixed monthly payments and a fixed term. Credit bureaus like to see a mix of installment and revolving debt on your report. Automobile loans are another way to establish new credit. In most cases, it is easier to qualify for an automobile loan than a boat loan.
- USA.gov. "Credit Reports and Scores." Accessed March 19, 2020.
- Consumer Financial Protection Bureau. "What Is a Credit Score?" Accessed March 19, 2020.
- Fannie Mae. "B3-6-02: Debt-to-Income Ratios (08/07/2019)." Accessed March 19, 2020.
- Consumer Financial Protection Bureau. "Create a Loan Application Packet." Accessed March 19, 2020.
- Office of the Comptroller. "Interagency Statement on Meeting the Credit Needs of Creditworthy Small Business Borrowers." Accessed March 19, 2020.
- Consumer Financial Protection Bureau. "Does a Credit Inquiry Have a Different Impact on My Score if I’m Approved or Denied?" Accessed March 19, 2020.
- Consumer Financial Protection Bureau. "What Is a Debt-to-Income Ratio? Why Is the 43% Debt-to-Income Ratio Important?" Accessed March 19, 2020.
- Federal Trade Commission. "Credit Scores." Accessed March 19, 2020.
- Experian. "What to Do If Your Loan Is Denied." Accessed March 19, 2020.
Phil Altshuler has written award-winning ad copy and sales-training literature since 1965. He is an expert in conventional and sub-prime loans, bankruptcy, mortgage loan modifications and credit. Altshuler was a licensed mortgage broker in California and Arizona, as well as a licensed electrical contractor. He has a Bachelor of Science in electronic engineering from California Polytechnic State University.