In today's market - it seems like everyone is looking for creative ways to finance their endeavors. Well, recently there has been a rush of BIG Boat Buyers searching for "A Yacht Financing Alternative."
Here’s why…
When making a purchase of this magnitude, most individuals will finance a portion of the vessel. Traditional Marine Lending usually requires 20% down or more and full documentation of income and assets. Employment and credit scores are some of the other important driving factors with this type of lending. In other words… the yacht buyer pretty much has to WALK ON WATER to qualify. At best, a yacht buyer will get a fixed rate for up to 20 years with a rate somewhere in the mid 5% range or even higher.
For these reasons, Yacht Buyers have been seeking a Financing Alternative for many years now. They use our "SBLOC – Securities Based Line of Credit" as A Yacht Financing Alternative. When you think about it… it makes perfect sense. There are no strings on the money… you can use it for anything. People use the proceeds for business and personal use. Personal use could be - buying a yacht! Business purposes could be - buying a yacht for business purposes (In other words… Chartering).
Most Marine Lenders DO NOT allow the chartering of a vessel in which they have secured as collateral. This isn't a factor with our "SBLOC" - as the collateral is no longer the vessel.
With the vessel no longer the collateral, the yacht buyer has options as to how they document the vessel and how they want to use the vessel.
There’s another reason why our “SBLOC” is making a “BIG SPLASH In Yacht Financing.” Unlike a margin loan or margin account from a client’s brokerage firm… our “SBLOC” doesn’t report to Credit or Public Records. In fact, credit is never an issue nor do you have to be concerned with a margin call. There’s no employment verification, no other asset verification and no income verification. With our “SBLOC” – clients can leverage up to 99% of their portfolio value without tax liability… it’s because securities are NOT SOLD to make the loan. Our Line of Credit becomes a safe way to tap the assets for short term needs, while protecting them for long term goals… i.e. retirement etc..
So, going back to a Marine Lending scenario, that happened with us not so long ago. The yacht buyer was making a purchase of 1M and trying to get 80% financing… $800,000. The marine lenders were all cutting back on what they would lend. They could only do 65% or $650,000. A real DEAL BREAKER that happens often in the Marine Lending World. This yacht buyer happened to have over 1.4M in a Money Market Savings Account. He had another $250,000 in an Ameritrade account. We converted the MMS account AND the Ameritrade account to U.S Treasuries and then we set-up the “SBLOC” for 1.6M at 2.9% interest only on the amount drawn. Now, he only drew 1M to buy the yacht, but I want to show you something. Even if (let’s say) he did get approval from the Marine Lenders for $800,000 – his monthly payment for 20 years at 5.5% would have been $5,503 / month. With our “SBLOC” – drawing 1M at 2.9% - Mr. Yacht Buyer’s monthly payment IS… $2,416. It’s a substantial savings per month!!!
That’s why our “SBLOC” is making a BIG SPLASH in Yacht Financing. To learn more about how a Securities Based Line of Credit may benefit you or EVEN help you buy a yacht…
Call J. Eggers & Associates today at 239.878.7873
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