What is maritime finance
Maritime finance is a type of finance given for the purpose of maritime related activity such as; purchasing a vessel or purchasing maritime equipment. There are a number of factors to satisfy before you will qualify for maritime finance. In addition to this, there are different types of maritime finance available so it is important to know which finance is the most suitable for your needs. This is primarily why it is advisable to enlist the assistance of a professional consultancy to assist you in understanding all aspects of maritime finance to ensure you get the best possible deal.
For further information on maritime finance, please click on the following link to view our Marine Finance service page.
Maritime finance explained
There are two principle types of maritime finance; conventional and standard financing. Conventional financing involves finance being acquired from a banking institution, and in return the bank has a security interest in the vessel purchased. Standard financing relies wholly on the applicant’s credit history combined with a down payment and a full evaluation of the vessel to be purchased.
Maritime finance is sought by many worldwide however many banking institutions regard supplying maritime financing as extremely high risk and prefer not to engage in such lending activity.
Some maritime finance lenders will require a very good credit rating and other investments such as real estate or cash in order to secure themselves against loss. The method of how a maritime finance lender will operate will depend on the type of lender they are, for example they could be the traditional bank lender or finance company, or they could be a yacht broker.
Maritime finance can not be acquired for; repairs and refitting, insurance or other maritime fees, fuel or start up costs. Furthermore, it is highly unlikely that maritime finance can be sought for the full price of a vessel. Typically a maritime finance lender will supply the applicant with between 60-80% of the value of the vessel.
Maritime finance is expected to be paid back with a specified rate of interest whether it is fixed or variable. The amount is typically required to be paid back between 5-15 years.
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