If you are thinking about buying a yacht, such a project involves a larger investment that is more extravagant than the classic purchase of a house. If you want to finance a yacht to realise your dream, the traditional bank is not a good place to start for this reason. For yacht financing, you must therefore turn to providers who specialise in this type of financing.
What are the advantages of financing a yacht, for whom is yacht financing suitable and what should you look out for? This is exactly what we at Merk & Merk have highlighted for you in this article.
Why consider yacht financing?
Whether it’s a small sailing boat or a luxurious yacht, if you want to set sail with your jewel as a yacht owner, it can make sense to look into the financing of a yacht. Always bear in mind that with a yacht, in addition to the purchase price, you will also incur maintenance costs such as operation, mooring, maintenance and insurance. Plan on paying about 10% of the purchase price each year.
A well thought-out yacht financing gives you financial leeway and a high degree of security. In addition, you can buy a yacht without having to draw on all your reserves.
Especially for private customers, yacht financing offers another advantage: the financing terms can be arranged flexibly. A fixed interest rate, individually plannable instalments, an adjusted term and a possible increased final instalment provide a solid basis for yacht financing, both for new yachts and for used models. A reduction in the instalments when financing a yacht is possible via a capital participation in the purchase price.
In addition, the yacht itself is usually used as collateral for yacht financing. As a rule, no further collateral is required.
Advantages of financing a yacht:
- Room for manoeuvre in structuring the loan
- Flexibility
- Suitable for new or used yachts
- Yacht can serve as collateral
- Economic ownership of the yacht remains
- Fixed interest rate
- Special interim repayments possible
- Contract can be terminated completely
The conditions for yacht financing depend on various factors. These include, for example, the type of boat, price, size and construction. Boats are therefore usually categorised into classes. But condition, age, manufacturer and equipment also play a role. These criteria are especially important if the yacht itself serves as collateral for the financing. When making an enquiry about yacht financing, bear in mind that several weeks may pass.
What should you consider when financing a yacht?
Prepare the yacht financing well. This can make the decision to approve a loan much easier. As with all loans, your creditworthiness and professional activity play a central role. It is also not uncommon for providers to make a financing offer only after certain information has been provided. This is especially important when buying a used yacht. Obtain the following data for yacht financing in advance:
- Manufacturer
- Year of construction
- Type of boat
- purchase price
- Hull number
- Original invoices
- Origin of the seller
- Number of previous owners
- Future berth
Furthermore, questions may arise in advance regarding the use of the yacht. Private individuals who want to finance a yacht usually receive more favourable conditions than those who want to rent it out. Likewise, knowledge of the technology and handling of a yacht can have an influence on the financing. This also applies to the future berth. It can be an exclusion criterion if it is not located in the EU.
When financing a yacht, remember to take out third party liability and fully comprehensive insurance, as well as an entry in the shipping register for yachts over €100,000.
How can you make yacht financing more affordable?
The conditions of a yacht financing can be reduced with the equity capital you bring with you. Furthermore, the shorter the term, the lower the interest rates. Important when financing a yacht: Plan the monthly repayment instalments so that you can continue to cover the annual operating costs. The duration of the yacht financing depends on the loan amount and financial situation.
Financing a yacht for a sensible investment?
Shares, funds, precious metals and real estate are capital investments that most people think of when it comes to building up their own investment assets in times of inflation. But a yacht can also be an attractive investment object that can even yield monthly returns. Among a hitherto still small circle of investors, sailing yachts as well as motor yachts and catamarans with a length of more than 15 metres have become popular investment objects.
You have the option of renting out a yacht after you have bought it. Charter companies take over the complete management. The loan can be repaid with the rental income. After expiry of the charter contract, there is the option of resale, sometimes with a 6.5 % return. In this case, it is important to keep the yacht in a well-kept condition.
Are you interested in financing a yacht? We at Merk & Merk will be happy to support you. We work together with professional providers and advise you on your yacht financing. We can also take care of many other services for you with our yacht management. Please feel free to contact us personally.