Private boat owners can raise capital on their craft and cut down on storage and maintenance costs
Only a boat owner knows the unalloyed joy of subduing the deep and irresistible tang of freedom. However, the owner also knows the burden of command and the responsibilities and costs which attach to it like barnacles to a hull.
Leisure boating is, by its nature, seasonal and most owners in the UK will plan to lay their craft up for at least six months of the year. Very few sail their boats on a regular basis even through the active summer season.
Some enterprising boat owners, however, are now taking advantage of personal asset finance, a means of raising substantial temporary capital through a loan which is secured against the value of their vessel.
Once their craft has been independently assessed and a valuation mutually agreed, owners can access up to 60% of the valuation figure for a short-term loan at a nominal interest rate, usually around 4% per month and significantly below other personal loan classes.
The only company in Scotland offering the service, Edinburgh Asset Finance, can store the craft in its own private facility for the duration of the loan period, thus relieving the owner of the imposition of marina or land storage fees, as well as potentially insurance costs.
One client, owner of a large vessel which sustained two permanent crew on a year-round basis, used personal asset finance to support the operation over quiet periods in order to maximise the earning potential of the £150,000 boat in the busy summer period.
Neil Mitchinson (left) Director of Edinburgh Asset Finance, said that the mechanism was particularly fiscally effective for private boat owners. He cited the example of a small business owner who had to pay for materials upfront but was subject to late payment from clients.
He says: “The gentleman employed six people, whose wages he needed to pay. During a cash flow interruption, he put his trailerised boat up against a loan of £8000, on which he paid interest of £400 a month.
“Because of the personal nature of the service, the loan amount was paid to him on the day of enquiry and he was able to pay his staff their wages that night. He has used asset finance twice now, and regards it as a valuable business tool.”
In another example, owners of a specialised racing boat wanted to fund a young sportsperson who needed to travel internationally to compete. They were offered a loan of £14,500 on a valuation of £25,000, but opted only for £8000, on which payments were again £400 a month.
Edinburgh Asset Finance, which has been operating since 2013, is one of the few companies in the UK offering such a tailored loan platform. The nearest English firm, with which it co-operates, is in Harrogate and other providers are in London.
Although so far the firm has dealt mostly with leisure craft, Mr Mitchinson stressed that this type of personal asset finance could be a godsend to commercial vessels, especially if they are out of commission for some reason.
“If a fishing boat skipper, for instance, is incapacitated or unable to fish through illness, he could finance a loan with the vessel as security and relieve himself of the consequent lay-up costs, which can be substantial when no earnings are coming in.
“Personal asset finance is also one of few regulated ways in which individuals can raise capital invisibly, without leaving a fingerprint on their credit record which can have adverse consequences on an individual’s credit rating.”
Edinburgh Asset Finance is regulated by the Financial Conduct Authority.
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