One of the most well known superyacht financing companies, Ciris Capital, has just released information on their latest service; Yachtnote, seller finance services. In the following article Remco Immink, one of the directors of Ciris Capital, explains more about this new service.
By Remco Immink
Seller finance is when the seller of a yacht allows the buyer to pay back part of the purchase price over time. It is not a new form of financing: In fact, seller finance is the oldest form of lending between individuals.
The benefits of seller finance are clear:
• Faster price agreement between buyer and seller
• Less negotiating pressure on the transaction
• Expedites possible sale transaction
• Substantial part of the sale proceeds are in liquidities
• Monthly money flow from the granted loan
• Interesting returns on the granted loan
• Short turnaround time and quick realisation of the sale transaction
Unlike a ‘bargain and sale’ transaction, taking on a loan comes with a long-term relationship. This is why it is extremely important that any seller finance agreement is professionally set up. And that is where YachtNote comes in.
YachtNote is the sole dedicated expert in the field of servicing yacht seller finance transactions, providing the seller of the yacht with a range of risk management services.
In our vision, the ideal transaction would look something like this…
A seller and a buyer come to a sales and purchase agreement. The buyer is prepared to pay 50% of the agreed purchase agreement in cash. The seller is prepared to give the buyer (subject to approval) a loan for the remaining 50% for a term of 60 months, an agreed interest rate, and an arrangement fee. Securities will be a first priority mortgage on the yacht and the personal guarantee of the buyer.
YachtNote will carry out a thorough credit check on the buyer and advise the seller whether or not the risk is acceptable, and whether to ask for additional securities. Based on our advice and input, the seller will take the final decision whether or not to continue.
If the buyer is accepted by the seller for the loan, YachtNote will take care of and produce the loan documentation and ensure that all necessary documents and securities are in place. As soon as all conditions are fulfilled the contract can be signed and the yacht delivered to the new owner. During the term of the loan YachtNote will manage and monitor the contract and securities. The end result is a transaction that saves all the involved parties a great deal of time and money.