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How to choose the financing solution adapted to your project?

by Stanislas Desmarest

Cash purchase? Traditional credit? Rent-to-own (RTO)? Band of Boats will explain your options, and then it’s up to you to decide!

After several months of careful searching online and around the docks, you’ve finally found a rare gem! To your delight, the boat you’ve been longing for has come into view. You’ve seen the boat in person, taken it out for sea trials, negotiated a price… Your criteria have been met and you are ready to buy. With a signed purchase agreement in hand, now you just have to decide on a financing solution: Cash purchase? Traditional credit? Rent-to-own (RTO)?
Band of Boats will explain your options, and then it’s up to you to decide!

CASH PURCHASES

If you have the necessary funds on hand, making a cash purchase may be the best way to go. Once the purchase price has been paid in full, you’ll have 100% ownership of the boat and won’t have to worry about financing anymore. Keeping track of your spending is easier and you have a handle on your budget. However, if you are buying your boat from an individual, take care to secure your transaction with a CashSentinel contract. This allows you to make a secure payment and ensure compliance with both parties’ commitments (in particular, the description and condition of the boat) for the 6-month period following the transaction.

CONSUMER CREDIT

Above a certain purchase price, we advise you to approach a financial institution to obtain a boat loan. You can get a traditional consumer loan from most banks in France. Such loans are affordable but are generally subject to a ceiling. Therefore, they are best suited to the purchase of new or used light sailboats or small motor boats.

SPECIALIZED BOAT LOANS

If your seafaring aspirations take you into a higher price range, it would be best to deal with an institution that specializes in boat loans. The market includes several big names, including SGB Finance and CGI Finance, among others. Boat loans offer a number of advantages, whether you are buying a new or a used boat. For one thing, down payments can vary. You can play around with loan calculators to find the best plan for your budget. Upon taking out the loan (1), you become the owner of your boat, and your monthly payments may be adjustable (higher or lower) as needed. Your financial situation is clear and you can calmly enjoy your boat. When purchasing a small vessel for coastal use, if you have a modest budget or are buying a used boat, a boat loan remains the ideal solution.

RENT-TO-OWN

Finally, the last option available to you is RTO (rent-to-own) (1). The financial institution buys the boat on your behalf and rents it to you for a predetermined length of time. At the end of the contract, you can acquire the boat. It is important to note that an RTO agreement can only be entered into for new or used boats subject to VAT (2). Compared with a cash purchase or boat loan, the primary advantage of RTO is that VAT is reduced to 10%, provided that your boat is authorized to navigate offshore (beyond the coastal area).

You can also transfer your outstanding RTO agreement if you sell your boat. However, the residual value of the RTO (total amount remaining due, including taxes) must be greater than one-quarter of the sale price agreed with the new buyer. If that is not the case, the RTO is settled in full and the buyer chooses a traditional boat loan. The RTO transfer is subject to a financing agreement.

DON’T FORGET…

With so many options available, don’t forget to take the additional costs of boat ownership into account. These perennial and, unfortunately, unavoidable expenses include port rental, fuel, and insurance. Also, your calculations should include a budget to cover any repairs or work on your boat.

To help you with your decision, Band of Boats invites you to use this boat financing calculator.
(1) subject to approval by the lending institution.
(2) According to current tax regulations.