Purchasing a yacht is a significant investment, often associated with ultra-high-net-worth (UHNW) individuals who also own other luxury assets such as private jets and classic cars. While many buyers have the means to purchase outright, financing a yacht can offer strategic benefits - from liquidity preservation to tax efficiency. However, choosing the right financing partner is critical.
In this article, we compare two popular approaches: working with traditional banks versus financing institutions that specialise in luxury assets.
The Two Main Players in Yacht Financing
1. Traditional Banks
Traditional banks offer yacht loans under their private banking or wealth management divisions. Their financing terms are often structured similarly to real estate or automotive loans, although less common.
Pros:
· Lower interest rates: Generally offer competitive rates, especially for long-standing clients.
· Reputation and security: Trusted financial institutions with robust compliance and regulatory standards.
· Integrated services: Some banks offer bundled services for private banking, estate planning, and asset management.
Cons:
· Longer approval process: Due diligence and internal procedures can result in delays.
· Stringent requirements: Banks often request full documentation, personal guarantees, and high collateral coverage.
· Limited flexibility: Less adaptability to unique asset classes or unconventional ownership structures such as offshore entities or yacht leasing setups.
Luxury Asset Financing Institutions
These are boutique lenders or specialised finance companies focusing on high-value assets. They often work exclusively with UHNW clients and their advisors, offering tailored lending solutions for yachts, aircraft, art, and classic cars.
Pros:
· Faster approval times: These firms often understand the urgency of closing luxury transactions and can respond quickly.
· Flexible terms: Willing to accommodate complex ownership structures, including SPVs, offshore entities, or charter revenue models.
· Multi-asset leverage: Some allow cross-collateralisation of other luxury assets to secure better terms or higher loan values.
· Relationship-based: Operate with a more personalised approach, less rigid than institutional banks.
Cons:
· Higher interest rates: Flexibility and speed come at a premium.
· Limited regulation: Some may lack the institutional safety net or reputational backing of major banks.
· Smaller scale: Fewer financing products or long-term fixed-rate structures may be available.
Key Considerations When Choosing a Yacht Finance Partner
1. Speed vs Cost: If time-to-close is critical (e.g., securing a limited-availability build slot or seasonal charter opportunity), a luxury finance institution may be more suitable despite higher rates.
2. Ownership Structure: If your yacht will be registered under a corporate or offshore structure — for tax or operational reasons - not all traditional banks may support this setup.
3. Relationship Depth: For clients with an existing private banking relationship, banks may be more flexible on terms. Conversely, first-time yacht buyers may find luxury finance firms more welcoming.
4. Asset Diversity: Some financing institutions can bundle all luxury assets into a single credit line, offering portfolio-based leverage for liquidity flexibility.
Final Thoughts: Tailoring the Finance to the Lifestyle
Whether you're acquiring a 30m motor yacht or a 50m superyacht, the ideal financing partner should understand both the asset and the lifestyle it supports. Traditional banks remain a solid option for those prioritising rate and regulatory strength. Meanwhile, financing institutions tailored to UHNW clientele offer unmatched agility and personalised service - particularly valuable for those with varied luxury portfolios.
Considering a yacht purchase or refinancing?
Our team at UNICO Yachting collaborates with a trusted network of both global banks and luxury finance specialists to secure optimal financing terms tailored to your needs.
Contact us today for a confidential consultation.
Disclaimer: The information provided in this article is for general guidance only and does not constitute financial advice. We recommend consulting with a qualified professional to assess your specific situation.
