Sharing a boat or caravan with friends or family: how the finance works

Why share finance is usually unsecured

With a standard boat or caravan loan, the vessel or van is usually the lender's security. When you're buying only part of it, lenders generally won't accept that share as security. That's why a share is commonly funded with an unsecured personal loan, where the loan isn't tied to the asset.

Unsecured loans typically carry higher rates than secured loans, and lenders set their own minimum and maximum loan amounts. As always, approval depends on your income, expenses and credit history.

What the loan might cover

Depending on the arrangement, finance for a share might cover your buy-in amount and, in some cases, your contribution to first-year costs such as registration, insurance, mooring or storage. For commercial schemes with an annual membership fee rather than a buy-in, a short-term loan may be an option.

Agree the rules before you buy

Sharing works best when everyone is clear from the start. Before anyone hands over money, agree in writing on:

• Each person's share and how usage will be divided
• Who is the registered owner
• How running costs, repairs and upgrades are split
• Insurance, including who arranges it and who is covered to use it
• What happens if someone wants to sell their share or can't keep paying
• How the proceeds are divided if the boat or van is sold

Don't forget the practical side

Anyone skippering a boat needs the right licence, and anyone towing a caravan needs a suitable vehicle and the skills to tow safely. Even though a lender won't require insurance on an unsecured loan, insuring the boat or van is generally sensible, because you'd still owe the loan if it were damaged or stolen.

General information only

This article is general information only. It does not take your personal circumstances into account and is not personal credit, legal, tax or financial advice. Consider getting legal advice on any co-ownership agreement. All finance is subject to lender assessment and approval, and rates and fees depend on the lender and your circumstances.

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