Most cost-effective way to arrange payment?

[Bluewaters2812]

Can anyone advise on what the most practical and cost effective way would be to buy a boat. I am really looking for advice on how to get British Pounds into the purchase, ie: Is it best to open a bank account in whichever country the purchase takes place and transfer the funds into that bank account and then effect the purchase or is it best to simply pay the seller by direct bank transfer from British Pounds (a British Bank account) into whichever bank account and currency they require?

Any actual experience will be appreciated, thanks.

[goboatingnow]

It depends, you could foreign currency hedge, if you know what you are doing, It does provide the advantage of a fixed exchange rate. The drawback being in most cases you must make the trade and that doesnt suit if you dont go ahead with the deal. I only did it in one case, where I was committed to a stage basis build payment schedule. All others were just interbank transfers or in one case I physically handed over a bank draft. ( but most will still wait for that to be cleared, so it has no advantageous over money transfer).

You will find in practice you cannot easily open a foreign bank account unless you are a resident. SO really just setup an interbank money transfer, its easy to do

If you can get the buyer to agree your currency choice. some will and some will not. Otherwise for big sums seek good forex deals

[boatman61]

I've also gone the Bank Draft route and GBN's right... its slow clearing... a straight forward on-line transfers the easiest and fastest...
Just make sure you warn your bank manager in advance on the sum and location... avoids a last minute panic at both ends..

[Kenomac]

Specify in the purchase agreement the currency you intend to use. British pounds in your case; then the buyer needs to keep an eye on the exchange rate. Remember as the buyer, you're in the driver's seat in today's buyer's market.

Then a bank wire transfer when the deal is finalized. In our case, our broker went one step further and wouldn't transfer any funds overseas until we were in possession of the yacht.

[Bluewaters2812]

Thanks for the info folks. It seems that a bank transfer might be the most cost effective way to go and the simplest.

[Boulter]

hi:

To avoid the skewering on the foreign exchange, consider something called in Canada "Norbert's gambit".

With stock trades costing $10 these days, the basic idea is to find something, stock or ETF, that is listed on your home currency exchange, and an exchange of the currency to which you wish to convert. Then you buy in the home currency on the home exchange, and sell short within seconds on the foreign exchange. Call the broker and have them transfer the long position to the short account and Bob's your uncle. Get the job done for 0.1% or so instead of the most generous bank rate of around 2%.

Boulter

[goboatingnow]

Originally Posted by Ship2210

Thanks for the info folks. It seems that a bank transfer might be the most cost effective way to go and the simplest.

Now you can do most of this online with an iPhone app anyway.

Dave

[Bluewaters2812]

Originally Posted by Boulter

hi:

To avoid the skewering on the foreign exchange, consider something called in Canada "Norbert's gambit".

With stock trades costing $10 these days, the basic idea is to find something, stock or ETF, that is listed on your home currency exchange, and an exchange of the currency to which you wish to convert. Then you buy in the home currency on the home exchange, and sell short within seconds on the foreign exchange. Call the broker and have them transfer the long position to the short account and Bob's your uncle. Get the job done for 0.1% or so instead of the most generous bank rate of around 2%.

Boulter

Thanks but I am not too sure about the level of risk involved?

[carstenb]

You could also just ask your bank to issue you a cashiers check for the amount in british pounds. Make sure your purchase agreement specifies the purchase price in pounds. Then ask your bank what local banks at the point of boat purchase they have as a correspondence bank. When you pick up the boat, hand the seller the cashiers check. The local correspondence bank will cash it immediately for the seller.

Otherwise, contact a local lawyer, pay him some amount of money to put the purchase price in an escrow account and when you finish the deal he pays the seller.

[Bluewaters2812]

Originally Posted by carstenb

You could also just ask your bank to issue you a cashiers check for the amount in british pounds. Make sure your purchase agreement specifies the purchase price in pounds. Then ask your bank what local banks at the point of boat purchase they have as a correspondence bank. When you pick up the boat, hand the seller the cashiers check. The local correspondence bank will cash it immediately for the seller.

Otherwise, contact a local lawyer, pay him some amount of money to put the purchase price in an escrow account and when you finish the deal he pays the seller.

Thanks, I think the Escrow account is probably the way to go or if I have no concerns with the boat I am buying I can simply do a bank transfer.

[Boulter]

Originally Posted by Ship2210

Thanks but I am not too sure about the level of risk involved?

That's why it is called Norbert's gambit, not Norbert's sure thing

Actually these days for $US $Can dollar conversions there are currency ETFs that remove the risk of using an arbitrary stock as the intermediary vehicle. No idea on the existence of British pound equivalent.

Boulter

[goboatingnow]

Originally Posted by carstenb

You could also just ask your bank to issue you a cashiers check for the amount in british pounds. Make sure your purchase agreement specifies the purchase price in pounds. Then ask your bank what local banks at the point of boat purchase they have as a correspondence bank. When you pick up the boat, hand the seller the cashiers check. The local correspondence bank will cash it immediately for the seller.

Otherwise, contact a local lawyer, pay him some amount of money to put the purchase price in an escrow account and when you finish the deal he pays the seller.

Unfortunately most buyers will not accept a cashiers check until it clears and most banks will not release funds against one until it clears too much fraud I'm afraid. ( or as they are known to us , bankers draft).


You will do well to get the currency changed to pounds. I've never managed to get the seller to shift currency. There are too many costs and there's the risk of exchange rate movement. They want the agreed sum. Better just haggle a good deal

ESCROW is one way, I don't like it when dealing with foreign brokers and clients. It can be difficult to set up and it's often just a broker client account. Many foreign jurisdictions have different interpretations of just exactly what a ESCROW is

Settle the contract then EFT it , get their IBAN details etc. in my case I physically wait and take possession of the boat, once your ( or their ) bank confirms the transfer. EFT is by far the cheapest way especially in Europe. Farther afield you need to proceed carefully.

Escrow only really works when both parties are in the same jurisdiction. ( which is why you see it often in the US).

Pay the deposit then eft. Since you will transfer the balance of the money at the very last opportunity I don't see ESCROW being much help.

If you are registering under Part 1 UK make sure you get a deflaging cert. that can often mean a considerable delay. In some cases I've held a small balance until I received it.


Dave

[Bluewaters2812]

Originally Posted by goboatingnow

Unfortunately most buyers will not accept a cashiers check until it clears and most banks will not release funds against one until it clears too much fraud I'm afraid. ( or as they are known to us , bankers draft).


You will do well to get the currency changed to pounds. I've never managed to get the seller to shift currency. There are too many costs and there's the risk of exchange rate movement. They want the agreed sum. Better just haggle a good deal

ESCROW is one way, I don't like it when dealing with foreign brokers and clients. It can be difficult to set up and it's often just a broker client account. Many foreign jurisdictions have different interpretations of just exactly what a ESCROW is

Settle the contract then EFT it , get their IBAN details etc. in my case I physically wait and take possession of the boat, once your ( or their ) bank confirms the transfer. EFT is by far the cheapest way especially in Europe. Farther afield you need to proceed carefully.

Escrow only really works when both parties are in the same jurisdiction. ( which is why you see it often in the US).

Pay the deposit then eft. Since you will transfer the balance of the money at the very last opportunity I don't see ESCROW being much help.

If you are registering under Part 1 UK make sure you get a deflaging cert. that can often mean a considerable delay. In some cases I've held a small balance until I received it.


Dave

Thanks for that info. I definitely won't be registering under a UK flag but will bear all said in mind.