The Different Finance Options Available for a Yacht
If you want to buy a yacht in the UK, you have several finance options to choose from. Each option has its own features, advantages, and disadvantages. Depending on your personal and financial circumstances, you can choose the one that suits you best:
Marine Finance
Marine finance is a form of leasing, where you pay a monthly fee to use the yacht, but you do not own it. The monthly fee is based on the depreciation of the yacht over the lease term, and the residual value at the end of the lease. The residual value is the estimated value of the yacht at the end of the lease, which is agreed upon at the start of the contract.
The advantage of marine finance is that you can enjoy sailing a new yacht without having to pay the full purchase price upfront. You also have lower monthly payments than other finance options, as you are only paying for the depreciation of the yacht.
At the end of the lease, you have three options, you can either:
- Buy the yacht for the residual value
- Sell it to a third party and pay the difference between the sale price and the residual value
- Extend the lease for another term.
Boat Loan
Boat loan is a form of credit, where you pay a deposit and then monthly instalments to buy the Yacht over a fixed period of time. The monthly instalments include both the principal and the interest, and the interest rate is usually fixed. The yacht is the security for the loan, which means that if you fail to make the payments, the lender can repossess the yacht. This is similar to hire purchase, which is a type of asset finance that allows you to own the asset at the end of the contract, after paying a final option to purchase fee.
The advantage of boat loan is that you can own the yacht at the end of the contract, and you can choose the deposit and the duration of the contract to suit your budget. You also have the option to settle the loan early, by paying the outstanding balance and a small fee. The disadvantage is that you have to pay interest on the loan, and you do not own the yacht until you make the final payment.
The final payment is usually the same as the monthly instalment, plus a £10 option to purchase fee. This fee is a legal requirement, and it transfers the ownership of the yacht from the lender to you.
Boat loans and marine finance may have some differences from hire purchase and asset finance, such as:
- The interest rate may vary depending on the type and age of the yacht, the loan amount, the deposit, and the credit history of the borrower.
- The lender may require a marine survey, valuation, and insurance of the yacht before approving the finance.
- The lender may have a lien or charge over the yacht as security for the loan, which means that they can repossess it if the borrower defaults on the payments.
- The borrower may have to register the yacht with the relevant authorities and comply with the maritime laws and regulations.
Hire Purchase with Balloon Payment
Hire purchase with balloon payment is similar to boat loan, but with a twist. Instead of paying equal monthly instalments, you pay lower monthly instalments and a larger final payment, known as the balloon payment. The balloon payment is usually 25% to 50% of the purchase price of the yacht, and it is agreed upon at the start of the contract.
The advantage of hire purchase with balloon payment is that you can have lower monthly payments than boat loan, and still own the yacht at the end of the contract. You also have the option to refinance the balloon payment, or trade in the yacht for a new one.
The disadvantage is that you have to pay more interest than boat loan, and you have to save up for the balloon payment or find another source of finance. The balloon payment is usually the same as the agreed percentage of the purchase price, plus the nominal fee that is added to the final payment. This fee is a legal requirement, and it transfers the ownership of the yacht from the lender to you.
Contract Purchase
Contract purchase is a leasing option, where you pay a deposit and monthly instalments, based on the depreciation and the residual value of the yacht. You do not own the yacht, but you can buy it for the residual value, return it, or part-exchange it at the end of the contract.
Contract purchase has lower monthly payments and less upfront cost than other finance options, but no equity and possible extra charges for exceeding usage limit, or any damage or wear and tear.
At the end of the contract, you have three options. You can either buy the yacht for the residual value, return it to the lender and walk away, or part-exchange it for a new one or use any equity as a deposit.
Personal Contract Purchase (PCP)
PCP is a flexible leasing option, where you pay an initial payment and lower monthly instalments, based on the depreciation and the residual value of the yacht. You can own, return, or part-exchange the yacht at the end of the contract, by paying, avoiding, or using the residual value as a deposit. PCP has lower monthly payments and more options than contract purchase, but higher interest and a large final payment.
Popular Models of Yachts you can Buy on Finance
Now that you have an idea of the different ways to finance a yacht in the UK, you might be wondering what types of yachts you can buy on finance. The good news is that you can find almost any model of yacht on finance, as long as it is within your budget and meets the lender’s criteria.
However, some models are more popular and available than others, depending on the demand, supply, and market trends. Here’s a brief overview:
Model |
Description |
Price Range |
Monthly Payment |
Sunseeker |
Luxury motor yachts, petrol or diesel engines, sleek and sporty design, spacious and elegant interior, leather seats, sunroof, advanced navigation and entertainment features. |
£200,000 to £30,000,000 |
£1,500 to £200,000 |
Princess |
Luxury motor yachts, petrol or diesel engines, F, Y, X, S, V, and R classes, dynamic and versatile performance, sophisticated and modern design, comfortable and luxurious interior, leather seats, panoramic windows, cutting-edge safety and connectivity features. |
£300,000 to £20,000,000 |
£2,000 to £150,000 |
Fairline |
Luxury motor yachts, petrol or diesel engines, Targa and Squadron ranges, agile and smooth performance, stylish and contemporary design, spacious and practical interior, leather seats, retractable roof, advanced safety and infotainment features |
£100,000 to £5,000,000 |
£800 to £40,000 |
Beneteau |
Luxury sailing yachts, diesel engines, Oceanis, First, and Figaro ranges, innovative and efficient performance, elegant and classic design, comfortable and functional interior, leather seats, skylights, advanced safety and navigation features |
£50,000 to £2,000,000 |
£400 to £15,000 |
Additional Costs of Owning a Yacht
Owning a yacht can be a significant financial commitment, so you should carefully plan your budget and compare the different finance options available. You should also consult with a professional yacht broker, who can help you find the best yacht for your needs and negotiate the best deal for you.
At Clifton Private Finance we can help. With over 20 years of experience and access to exclusive lenders and rates, we’ll offer you expert advice, tailored solutions, and a hassle-free service. Contact them today and get your dream yacht on finance.
Besides the purchase price and the finance cost, you should also consider the costs of owning and operating a yacht, which can vary depending on the size, type, and condition of the yacht. Some of the main costs include:
- Mooring fees: You have to pay these fees to dock your yacht at a marina or harbour. They can range from £100 to £10,000 per month, depending on the location, facilities, and availability.
- Maintenance fees: To keep your yacht in good shape and working order, you need to pay these fees. They can include cleaning, painting, servicing, repairing, and replacing parts. They can range from 10% to 15% of the purchase price per year.
- Insurance fees: These fees protect your yacht from damage, theft, or liability. They can depend on the value, age, and usage of the yacht, as well as the coverage and deductible you choose. They can range from 1% to 4% of the purchase price per year.
- Fuel fees: These fees power your yacht, whether it is petrol, diesel, or electricity. They can depend on the size, speed, and efficiency of the yacht, as well as the distance and duration of your trips. They can range from £50 to £5,000 per trip.
- Crew fees: These fees cover the hiring and managing of the crew for your yacht, such as the captain, engineer, chef, and steward. They can depend on the number, qualification, and experience of the crew, as well as the tips and benefits you provide. They can range from £20,000 to £200,000 per year.
What Happens at the End of a Marine Finance Plan?
Marine finance is a type of finance that allows you to use the yacht as an asset for your business or leisure, while paying a fixed monthly fee to the lender. Marine finance can be either a finance lease or an operating lease, depending on whether you want to own the yacht at the end of the term or return it to the lender.
At the end of a marine finance plan, you have different options depending on the type of lease you have chosen. Here are the possible scenarios:
- If you have a finance lease, you can either pay a nominal fee to the lender and own the yacht, sell the yacht to a third party and keep most of the proceeds, or extend the lease for another term at a reduced rate.
- If you have an operating lease, you can either return the yacht to the lender and pay any excess usage or damage charges, buy the yacht from the lender at an agreed price, or swap the yacht for a new one and start a new lease.
The option that you choose will depend on your preferences and circumstances. For example, if you want to own the yacht at the end of the term, you might prefer a finance lease. If you want to have a newer and more efficient yacht, you might prefer an operating lease.
Using a Finance Broker to Help
If you are interested in financing a yacht in the UK, you might want to consider using a finance broker to help you with the process. A finance broker can help you find the best marine finance option for your needs and budget, as well as negotiate the best deal with the lender. A finance broker can also advise you on the different types of marine finance available for buying a yacht, such as flexible terms, low deposits, and bespoke solutions.
At Clifton Private Finance, we have a team of specialist finance brokers who can help you finance a yacht in the UK. We can work with yacht manufacturers and dealers to arrange your yacht finance plan and finalise your purchase. We can also help you finance new, used, or auction-bought yachts, and offer the most competitive marine finance service for you.
To find out more about our finance broker service, don’t hesitate to contact us today.
We offer a free and no-obligation telephone consultation at a time that suits you.