The art of financing your boat

Purchasing a boat is a matter of passion, but one in which reason must prevail when it comes to finding the best financing solution to make your project a reality. There is very little in the way of statistics on yacht credit in France, but one thing is certain: it is the simplest and surest way of financing the boat of your dreams. Below you will find a brief reminder of the existing solutions.

The loan : traditional financing

-  The consumer loan can be granted by most banks in France. The advantage is that it is relatively cheap, but it is essentially reserved for those who wish to buy small sailing or motor yachts. It can be used, of course, to buy either new or used boats.
 
- The yacht loan proposed by a specialised credit institution. The market is shared by five companies: CGI, Bail Azur, Cetelem, PSkipper and BPA. Their rates are very similar and it is essentially the network of agents that differentiates them. The largest of them, CGI, holds no less than 35% of the credit contracts in France. Next come PSkipper (25%) and Cetelem (15%). The large market share of CGI is largely explained by a special partnership signed between the lender and the Bénèteau and Jeanneau groups.
 
- The law remains clear, however. You are perfectly free to go and see the banking institution of your choice and to turn down the offers of the bank which has a partnership with the builder you have chosen. This is all the more important in that they will not necessarily propose the solution that is best-suited to your particular situation. The right credit institution is the one which is ready to listen to you, the one that will know how to adapt to your financial situation and make sure that your investment is not transformed into a burden on your finances.

As a rule, for the traditional loans in the world of yachting, the instalments are spread over two to eight years for a used boat and as many as ten years for a new one. A down-payment of 20% of the total purchase amount is also standard practice.

Invest without tying your hands

The other possible financing product is the lease with purchase option. This is a form of fixed-term rental (3 to 12 years) which gives the lessee the immediate use of the new boat (sailing or motor yacht) of their choice with the possibility of becoming the owner on payment of a price agreed in advance (the purchase option). Accessible to all private individuals, this solution boasts advantages that are far from negligible.
The lease with purchase option offers certain tax breaks concerning VAT. If the boat is fitted out in the first category, the VAT applied to the credit instalments is subject to a reduction of 50%. If the boat is in the second category, the reduction is 40%, it is 15% in the third category and 10% in the fourth.
 
Under certain conditions, this exemption makes it possible to reach a total cost of financing that is close to the initial purchase price of the boat including VAT.

- This system leaves you quite free to choose your boat without the financing coming into play in your negotiation with the dealer.
 
The duration of the lease with purchase option can vary between a minimum of 36 months (three years) and a maximum of 144 months (twelve years). As its name indicates, throughout the duration of the lease, you are only the lessee of the boat. The credit institution remains the owner and transfers the boat to you at the end of the lease. You can become the owner of the boat as early as the end of the first year, however, by bringing the end of the contract forward.
 
Leasing with a purchase option also allows you to make early repayment and therefore bring forward the end of the lease. In the lease with purchase option solution, the down-payment can vary between 25 and 50%. If the initial down-payment is 40%, it represents the first instalment and the deposit covering the final purchase value. The shorter the lease and the larger the down-payment, the closer the total cost of the financing will be to the sale price of the boat, just like with a normal loan.
 
So which is right for you, lease with purchase option or traditional bank loan? Each case is different. Working on the basis of equal down-payments and instalments, it is the lease with purchase option that will generally prove to be most interesting for sea-going yachts. Conversely, for yachts for use in coastal waters, it is the traditional loan which will generally have the edge. However, it is only after a complete study of the assets of the future owner and their situation in terms of finances and taxation, that various personalised solutions will be put forward.