couple on yacht

A Guide to Finding the Perfect Yacht Finance Solution

Things to know about the yacht finance process before becoming a yacht owner

So you’ve made up your mind. You’re taking the leap and buying that brand-new yacht of your dreams. The next logical step? Considering the various yacht finance options available to you.

In this article, we’ll explore the most common yacht finance challenges faced by prospective yacht owners. As a bonus, we’ve even included a yacht-construction finance option available to Knysna Yacht Company customers who have opted for a new, semi custom KYC catamaran!

Investing in your home on the high seas shouldn't be a cumbersome process. Whether you’ve opted for a production, semi custom or fully custom yacht model, it will very quickly become clear that financing a yacht over such a long production process (12 months on average) can, to put it mildly, be rather costly.

Read on as we explore some crucial aspects of the yacht financing process, and gain more insights on what exactly is involved when it comes to financing a yacht.

#1: Most banks won't loan you money for a new, custom-built yacht

Once you’ve decided to buy a yacht, decide which type of yacht (production, semi custom or fully custom) appeals to you, both personally and financially.

At this point in the process, it’s important for you to know that a custom-built yacht, no matter the degree of customization, will, in most instances, have to be paid for out-of-pocket.

Generally, banks and other financial institutions will only afford customers loans for boats that are 100% completed. If the yacht you’ve opted for is yet to be built and in any way customized, you'll be diving into those savings and will likely receive little to no support in the form of a loan from a financial institution.

If you’ve opted for a fully custom yacht, it can be exceptionally challenging to secure the necessary funding for a vessel that hasn't been constructed yet. In South Africa and many other countries around the world, most banks and financial institutions will simply turn up their noses at a prospective semi custom yacht owner. In many cases, banks may even demand that the vessel you have your eye on be imported to your country before they make any sort of funding available to you.

In short, it can be extremely difficult to secure the necessary funding for a custom yacht that is yet to be built.

yacht in factory


#2: A rent-to-purchase agreement might make yacht finance easier

In some instances, financing a custom-built yacht through a boat builder will include the option of something called a ‘rent to purchase’ agreement (also sometimes referred to as a nautical leasing contract). According to this type of contract or agreement, the vessel is essentially ‘rented’ to the owner for an agreed-upon period of time. Once that period lapses, the customer will have the option of taking complete ownership of the vessel.

yacht on ocean


#3: Securing full yacht finance is possible, but only under certain conditions

The good old full yacht finance option is available to anyone (considering they’ve received the necessary approval) through any traditional bank. However, this yacht financing option is mostly reserved for the purchase of production yachts or any completed custom yacht that is bought second-hand.

However, if you’re after something more personalised and brand new (like a KYC semi custom yacht), this financing option won’t necessarily cut it for you.

man on yacht


#4: KYC can help prospective customers with semi custom yacht financing

So you’re set on a new, semi custom yacht. Good choice! A semi custom yacht is a perfect solution for anyone seeking the customizability of a custom yacht, a speedier delivery – and a more affordable price tag. Going semi custom simply means you’ll kick off your yacht’s design process with a stock hull, deck, and superstructure from an existing series, and work your way up from there.

Here’s even more good news. Armed with a talented team of boat builders and a specialized yacht construction finance option, Knysna Yacht Company offers clients one of the most cost-effective yacht finance options available.

In addition to your upfront deposit of just 10% of your boat's total construction cost, you’ll acquire the services of a competent and experienced boat builder who is ready to work closely with you to create the beautiful, semi custom boat of your dreams.

worker sanding down yacht mold


#5: Introducing KYC's yacht construction finance option

KYC’s yacht construction finance option allows customers full flexibility to pay off construction costs over the yacht’s complete build period. Considering the huge costs associated with building a yacht, this will definitely make paying for your new boat a whole lot easier.

Through this yacht construction finance option, Knysna Yacht Company will finance 90% of your vessel’s entire construction cost, an option that is not offered by the vast majority of banks and financial institutions that offer boat financing to their clients.

It is, however, important to keep in mind that full ownership of a KYC semi custom yacht will only be transferred to you once a bill of sale has been issued. This is so that Knysna Yacht Company can ensure that your custom vessel can easily be listed for resale, in case the transaction falls through for some reason or the other.

Should you opt for KYC’s yacht construction finance option, there will also be a limit to the customization options available for your KYC yacht. This is because a highly customized yacht will be much harder to resell in the event of a failed transaction.

KYC workers in factory


#6: KYC's yacht construction finance option - more customization, less capital outlay

By now it should be clear that financing a semi custom yacht through Knysna Yacht Company’s yacht construction finance option is one of the most cost-effective methods through which to acquire a vessel. Another bonus is that this option also allows for some customization.

This specialised KYC yacht construction finance option will give prospective yacht owners the peace of mind that they’ll be receiving a semi custom yacht built to their exact specifications, completed within a specific timeframe.

Of course, all design considerations relating to your new yacht will also be discussed with your boat builder before initiating your yacht’s construction process.

worker building yacht in factory


#7: KYC's yacht financing process

Here are the steps involved in KYC’s yacht construction financing process, as well as a rough time frame for when down payment instalments are due.

Step 1

You will be required to pay a 10% securing deposit upfront, to kickstart the Builder’s Agreement.

Step 2

Two months into the production of your semi custom yacht, you’ll be required to pay 25% of your yacht’s full construction cost. At this point, KYC’s boat-building team will initiate building and constructing the hull and deck layup, which will include your preferred cabin size as well as the number of cabins you’d like on your boat.

Step 3

Fast forward three more months and another 25% of your yacht’s full construction cost will be payable. At this point, the KYC construction team would have moved on to installing the electrical, plumbing and carpentry elements of your semi custom vessel. This phase also includes ordering the deck-ware, as well as all stainless steel stanchions, posts and engines.

Step 4

Four months later, you will be required to pay another 25% of your boat’s full construction cost. At this stage, KYC will be ordering your yacht’s equipment, including its mast, watermaker, Genset and Garmin.

Step 5

After two more months, you will have to pay another 10% instalment before your boat is launched.

Step 6

Following your yacht's handover, you will only be liable for the remaining 5% of your boat's full construction cost.

custom yacht interior


#8: Yacht financing made easy, the KYC way

With KYC’s yacht construction financing option, it has never been easier (or more cost-effective) to buy your very own, newly built semi custom yacht.

Add to this the benefit of working closely with a team of expert craftspeople in bringing your yacht to life (and becoming a member of the KYC family to boot) and we’re sure you’d agree that KYC’s yacht construction finance option is one to explore to the fullest.

yacht before launch


Got questions? Let's talk yacht financing!

Want to chat to an expert about becoming the owner of an artisan-made, boutique semi custom yacht?

Simply click here to set up an appointment with KYC owner, Grant Boshard. Grant will be happy to fill you in on all the details and answer any further questions you may have.

Here’s to unleashing the voyager in you!

yacht anchored in lagoon

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