Boat financing for individuals
How does a Leasing work?
The principle is simple: the bank owns the boat, and you lease it. At the end of the leasing period, between 5 and 12 years, you become the owner by exercising a symbolic purchase option. The popularity of LOA is explained by the VAT savings it offers.
As long as your boat is outside European waters, the monthly rent invoiced by the bank is tax-free. So you only pay VAT on payments made while your boat is in Europe. In concrete terms, for a long-distance cruise to Polynesia, taking the example of a boat valued at 100 :
| Classic Purchase | Leasing Purchase | ||
| Value excl.VAT | 100 | Value incl.VAT | 100 |
| VAT | 20 | Down Payment excl VAT | 20 |
| 3 first installments | 3 | ||
| Total excl VAT paid in Europe | 23 | ||
| VAT | 4.6 | ||
| Total paid outside Europe | 77 | ||
| Total Price incl VAT | 120 | Total Price exl VAT | 104.6 |
In reality, LOA rents include interest: you don’t save 15%, but the VAT savings will finance a large part of the interest.
LOA or leasing has a second advantage: at any time you can exercise a purchase option to buy your boat back from the bank, or transfer the LOA to someone else with the bank’s agreement. This is very advantageous when it comes to selling your boat, as you provide the future owner with turnkey financing. If you’re selling your boat outside mainland France, we advise you to work with a professional dealer or broker who is in contact with the financing organizations to facilitate the process, including fund transfers and legal formalities. Find out more about our boat sales service
Last but not least, the LOA offers you great flexibility when it comes to financing your boat: depending on the amount you have available for your monthly boat budget, you can negotiate a higher or lower initial contribution and purchase option value, as well as a longer or shorter financing term, so that your monthly rental payments fall within the limits you’ve set yourself.
LOA is therefore particularly well suited to sabbatical-year boating projects, as you can control your budget, as well as suited to rental-management projects, where you can compare the monthly rental payments with the income you will earn from your boat leased with Sail Tahiti.
Other boat financing solutions for individuals
There are other types of boat financing, depending on your country of residence and your tax and asset situation.
The bank can only acquire a boat if it is sold by a company subject to European VAT. If you buy your boat directly imported into Polynesia and are not a French resident, the most common form of financing is the traditional loan. This is particularly the case if you live in Polynesia.
With a conventional loan, you are the owner of the boat, and the financing organization will take out a maritime mortgage. The initial contribution required is generally higher, as the bank wants to protect itself against the risk of non-payment. The term varies from 5 to 15 years. A conventional loan will be more attractive than a LOA if you buy your boat excluding European VAT.
You can also refinance an asset other than your boat, or use it as collateral for a loan to finance the purchase of your boat. This type of financing is common in Anglo-Saxon countries and among boat owners with substantial assets. For example, if you have high-yielding assets (real estate, shares), it’s a good idea to borrow at a lower interest rate than the return on your investments, and to use them as collateral. This solution is frequently used to finance boats under lease management.
For U.S. residents wishing to finance their boat with a loan, the constraint is often that U.S. banks will require the boat to be located in U.S. waters. However, if the boat is included in one of our management programs, specialized American financing organizations will be able to offer financing, as our management guarantees that they know the condition and position of the boat if they so wish. Don’t hesitate to contact us to set up your project.
In conclusion, there are several types of financing available for your boat, whether motor, sailboat or catamaran. You need to study them carefully to find the solutions best suited to your financial situation, your tax situation and your project. You can rely on our team to advise you every step of the way.
A well-thought-out financing
lets you make the most of your boat
Catamaran Excess 11
