Yacht Financing

Your neighbour Jim is selling that sweet yacht that you have been drooling over for over a year. It's a big step but you can afford it. You have wanted this yacht since he first took you out in it. Okay so at this point you would think about financing the yacht. Yacht financing is fraught with potholes that you may miss in the excitement of your purchase. Some of them are obvious but there is a lot of other detail involved in buying a yacht and sometimes things get missed.

If you were about to make any major purchase, you would check out 3 or 4 sources. Yacht financing is the same. With the competition in the yacht financing field, there are deals to be had. You have to know what you want before you go in. Will the term be 15 or 20 years? What is the interest rate? What fees are involved? Is there a pre-payment clause or penalty? These are just some of the questions you should ask.

20% is the usual amount of down payment that is required in a yacht financing contract. Their maximum term is usually 20 years. Each yacht financing lender has their own terms, but this gives us more options to maximize the contract to our liking. There are other forces at work like your credit score and the actual yacht you are purchasing. Inquire at your local lenders for sure but out-of-state contracts can work. Also you can deal on the internet but obviously you will want to research any company on the internet thoroughly. Until you are comfortable with whom you are dealing with, give them no personal information and don't pay anything.

Unfortunately it is common that yacht financiers require you to deal with the insurance company that they specify. This can cost you lots of money. Normal market savings aren't available on the insurance. There may be other financing alternatives such as family or credit lines that would allow you to use the insurance company you wanted.

Another consideration is the deductibility of interest charges on the finance contract. Depending on the original usage of the yacht and whether its living quarters contain a sleeping area, a kitchen and toilet, the finance charges and other acquisition costs may be tax deductible. With all the amenities, your yacht is a tax deduction as a second home.

Be aware that you may have to get your yacht documented by the Coast Guard of the U.S. It depends on the type of yacht mortgage you obtain. You should also know that this can take some time and there will be additional costs. The Coast Guard documentation lets the lender to place a mortgage on the yacht, giving them a more secure loan position. If the yacht you are looking at purchasing has its own USCG documents, there will be a fee to transfer the yacht report to your name. This allows the lender to verify that there are no liens on the yacht.

The process of getting a yacht loan can be extremely difficult, timely and frustrating but if you do your due-diligence and know what your main goal is, you can save thousands of dollars.

Article Source: http://www.diyarticlelibrary.com

The author Clark A. DeBelle was raised on a yacht. He has been around them all his life. He is a Coast Guard Master with an instructional certificate. Check out what he has to say at Luxury Yacht World

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