How to Finance a RIB
With low-interest rates continuing and COVID-19 nudging people into making the most of holidays at home, the idea of owning a RIB has become more appealing to many more people. The question of how to finance is one of the first questions asked. If you don’t have the cash there are 4 well-trodden paths to obtaining finance:
- Finance through the boat dealer
- A personal loan from a bank (secured against the boat or unsecured)
- A loan from a specialist marine loan provider, such as Promarine Finance
- A further advance or second charge on a home mortgage (not something we recommend)
Normally there will be a range of financing options with variable or fixed rates or a fixed rate with a balloon repayment at the end of the term.
What’s different about marine finance:
- If the loan is secured on your boat rather than unsecured then, assuming the boat valuation is sufficiently high, you’ll be able to borrow more over a longer-term.
- A boat survey is nearly always required for boat marine finance and the buyer always pays. Ordinarily, the boat has to be surveyed out of the water.
- The boat must have comprehensive insurance from an insurer approved by the finance company. The loan provider’s interest will be listed on the policy.
- A marine loan is an unsecured agreement between a lender and borrower. As the loan is not secured against any asset, if you fail to make repayments on the loan, then a court can appoint bailiffs to seize and sell off any assets they believe will settle the outstanding debt.
- A marine mortgage is a loan that is secured on the boat. By giving this added security lenders will normally enable you to borrow a far higher percentage to the value of the boat. If you fail to make repayments the boat will be repossessed.
- Like all finance, if you want to reduce your monthly repayments you need to either increase your deposit, increase the repayment term, or agree to an end-of-term balloon payment.
- New boats are subject to standard rate VAT. There are a few exceptions, the most common ones are where the boats are deemed to be houseboats on fixed moorings and boats that are only to be kept and used in a foreign country.
- Most brokers (like RIBs For Sale) will be happy to point you in the direction of a marine finance company.
- Marine finance is never going to be cheap. Similar to car finance, you are asking a lender to lend money on an asset that is probably depreciating in value and can be stolen or easily damaged.
Once you know roughly how much you have to spend the next steps are:
- Find the RIB you want to buy.
- Work out any other associated expenditure. The main ones will be insurance, moorings, boat storage, and maintenance.
- Look at your finance options and find out how much finance you can raise.
- Agree on the price with the seller and arrange a Sale and Purchase Agreement if relevant. The Royal Yachting Association (RYA) can provide a template for this if required.
- Arrange a third-party survey and valuation of the boat, The finance company will probably recommend a surveyor.
- Once the survey and valuation have been received agree on the final price of the boat and confirm back to the finance provider.
- The finance company will issue the marine mortgage documentation for signature and will liaise directly with the seller to review the boat’s title documentation and VAT status.
- The finance company will contact the insurer to confirm boat insurance is in place and to have the mortgage noted on the policy.
- Finally, the finance company will request final confirmation you wish to complete the purchase and release the funds to the yacht broker.
Popular Marine Finance companies to look at are:
- Promarine Finance
- Pegasus Marine
At RIBs For Sale we have years of experience in the purchase of RIBs. Please pop in and see us or contact us by phone or email.