The concept of pre-approval is not as widespread as it should be. Though pre-approval is a very useful tool when loans are used for purchasing assets, not everybody knows about it and understands how to use it. When it comes to boat purchases, pre-approval is essential as it lets you shop with ease and comfort knowing that you can close on any deal that presents to you as long as the loan amount is not exceeded. Moreover, it provides you with a better stance when you need to negotiate with the dealership or previous owner.
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Pre-approval: General Concept
When you apply for a loan, the lender reviews your credit score and history, your income, the amount of money you want, the loan term, the resulting monthly payments, your ability to afford those payments and many other variables that affect the loan’s risk and your repayment ability. After those considerations, and provided that the lender is satisfied with the result, you get your approval.
However, this information needs to be checked and usually, long credit verifications are needed. But, when you use the money to purchase an asset that guarantees the loan, the lender will need to review the asset and any legal documentation about it too. Thus, obtaining secured loans is a bit more complicated (in terms of paperwork) than getting regular unsecured loans.
Pre-approval provides you with a binding agreement from the lender that guarantees you approval for the amount and terms stated on the documentation provided that all the information that you offered the lender is true and accurate. Pre-approval works with stated income and sometimes even with stated credit score and history but once the approval process begins, this information will be reviewed and if it does not match the reality, the lender might not approve your loan.
Benefits of Pre-Approval On Boat Loans
Pre approval on boat loans can really be advantageous. For starters, you know beforehand that your loan will be approved and thus you can shop around for your boat with more confidence knowing that you will be able to afford the purchase. Moreover, this will let you avoid the dealership financing and even negotiate the terms of the purchase from a better start point.
Furthermore, you will know beforehand what your limitations are in terms of amount and monthly payments so you can choose a boat that you can actually afford without sacrifices. And since you have a pre approval, the dealers will take you more seriously and work with you to resolve any problems that you may find during the purchase and registration process (if applicable).
Seeking Professional Assistance
The complexity of boat loans requires at least a minimum knowledge of the loan industry. If you are not confident applying for a boat loan on your own, you can always seek the advice of professionals. You can easily find online boat loan brokers willing to help you locate a lender and loan suitable for your needs for a small fee. These brokers can also help you understand the particularities of boat loans and help you avoid unscrupulous lenders and scam artists.