auction re speedboat

Well, perhaps I am not a 'sophisticated investor', but what I mean is, this boat is new or almost new, is a one-off design, and presumably has had a lot of investment to bring it about. Is the developer of this design connected to the person now seeking a 'loan'? I do not know, but even if not, this is still a highly unusual product with an uncertain resale value. If others are happy to put their cash into this, so be it. I find it 'weird', which is about as sophisticated as I get!

However a sophisticated investor one might think one is, considering the basics is vital. I have had a small investment in this loan, but kaya 's thoughts echo my own, especially the resale value. If any auction were lucky enough to find the right person at the right time it could work well, but it is uncertain.
On a more positive note I might ask how much more expensive it might be for the owner to take this loan. It will free up some cash. The boat is insured and stored by FS(probably expensive overheads). Interest paid can be defrayed against tax.  I don't have the figures to hand but it might make the logic of using FS to borrow on single, high-value items more understandable. Certainly the net cost is probably a lot less than the headline rate and could indicate the firm resolve to redeem the pledge. It does seem to make more sense of the borrowers perspective.

I don't follow the above logic.  If the borrower is an individual owner, rather than a company trying to use the boat as part of its business, AIUI they would not get any tax relief on the interest they pay.  FS publish their interest rates to borrowers, and those start at 4.7%/month for small loans (£500-£1000).  The rate decreases for larger loans, and the lowest published rate is 2.4% for loans of £50-100k, but even that 'low' rate is double what is being paid to FS investors.  This loan, being larger still, would likely have a lower rate, but it's still going to be significant, and there's also a footnote on FS's rate chart that says "Additional storage fees may be applied to loans secured aganst [sic] art and motor vehicles" which I would expect to apply to this loan.

The bottom line is that I think FS loans are not cheap for borrowers, but they do provide an opportunity to raise cash quickly against a illiquid asset, which a mainstream bank probably wouldn't want to touch.  Where FS allow a loan with a LTV of 70%, it wouldn't surprise me if some borrowers choose to borrow from FS as an alternative to selling the item.  If they can manage to produce the money to redeem the item, great.  But if not, they'll have 'sold' the item very quickly at a price not too far below what could be raised in a quick sale, and with none of the uncertainty a sale would produce.

In this case, the LTV for the ultimate £450k loan is thought to be below 60%, so we should expect the borrower to want to repay the loan, but unique items such as this are very hard to value and probably hard to sell as well, so who knows what the borrower might be thinking.

On a separate issue, I note that the website page for this loan says "Date Ending: 16/12/2014".  Have fundingsecure given any clue as to what will happen next, considering the loan was only 72% funded by that date?  Will the date be extended?  Will underwriters be brought in to fund the remaining 28% of the initial loan?  (Actually, without a secondary market anyone brought in to complete the funding wouldn't actually be underwriting, they'd be investing.)  And what are the implications for the other £200k the borrower wants?

The latter rather than the former, may we suppose?

It looks like ours. Hope ours is still in dry dock, but the loan mentions that it can take to water. Should be insured, because it was on a test run.

www.dailymail.co.uk/news/article-3079695/Dramatic-moment-speedboat-test-run-hits-buoy-flips-leaving-teenager-life-threatening-injuries.html

Also see South Today 13th May 18:30 when loaded on bbc iplayer.

Sympathy and best wishes for those injured of course.

If this is the same one, all reports would indicate that FS got the initial valuation correct in this instance. No aboriginal art connotations.

I guess the statement "Very Good Condition" probably no longer applies. The person who put in £50k into the loan must be particularly concerned that the 'loss payable' clause in FS's favour was included and that the insurance is still extant.  I guess the comment that it would not take to the water until close to the end of loan term was either somewhat inaccurate or is now unnecessarily cautious as it certainly won't be taking to the water close to the end of the loan term (although it will be taking in water).