When you’re applying for a boat loan or any finance, whether it’s for a car, caravan or any other item, it’s important to know how the finance industry operates.
It’s clearly very important to the finance company that you’re able to service, i.e. repay the loan, so they make extensive investigations into your credit history before they approve any loan.
They’re normally looking for any history of not paying bills or repayments on time, but credit checks also take into account a huge range of factors, from what income you have through to the assets you own, and whether you are renting or paying off a mortgage.
A “Busy Credit History” Can Negatively Affect Boat Finance Application
There’s one other factor a lot of people are missing which can negatively impact your ability to get a loan and that is where you have put multiple finance applications in to different finance companies over a relatively short period.
At Aussie Boat Loans we of course speak to a lot of people looking to arrange boat finance and many are not aware the process of shopping around (putting in multiple applications) will impact their creditworthiness. In the finance industry this can be seen as ‘over-shopping’ and increases the possibility that you’ll be wrongly identified as a likely default risk. People putting in multiple credit applications, even if they do not end up accepting the credit offer, can be considered to be less creditworthy and research in fact shows they’re more likely to default.
Even if the result is not an outright credit rejection, you can still end up paying a higher interest rate or having to go to a special ‘non-conforming’ lender where you’ll pay a higher interest rate anyway.
If you want to make sure you’re getting the best rate without being caught in the ‘busy recent credit history’ trap, the best thing to do is talk to a broker (like us!), so we can advise you on your options and then put in the one application for the best credit deal for you, rather than multiple applications.
If you do find yourself classified as a having a busy recent credit history, there is only one thing you can do – wait. Depending on the sort of finance you’re looking for this can be anything from three to six months, or longer.
Points To Remember When Applying for Boat Finance
- Every application for finance leaves an impression on the applicant’s credit history.
- Multiply applications in a short period can impact the applicant’s credit worthiness.
- Financiers and banks do not look kindly on applicants with a ‘busy recent credit history’.
- The implications can include receiving a higher interest rate, having to use a non-conforming lender or being declined.
- Time is the only thing that can resolve these issues for an applicant with a busy credit history.
- The best way to avoid tarnishing your credit history is to talk with an expert like the staff at Aussie Boat Loans.
Use the “My Credit File” website to check your credit history.
Image credit: Paul Cunningham