Bottomry

DEFINITION of 'Bottomry'

When the owner of a ship borrows money and uses the ship itself (referring to the ship's bottom or keel) as collateral. If the ship is lost during the course of the voyage then the creditor will lose on the loan; if the ship survives, the lender will receive the principal plus interest.

BREAKING DOWN 'Bottomry'

The interest received by the lender on a bottomry loan is referred to as "maritime interest", and can be higher than the legal rate of interest. Unlike a typical loan in which the borrower is liable for the debt at all times, a bottomry contract makes the lender liable for the loan because it will not receive money if the ship is lost.

RELATED TERMS
  1. Both-To-Blame Collision Clause

    Part of the Ocean Marine Insurance policy that states that if ...
  2. Assailing Thieves

    Individuals who are not members of a ship's crew who steal a ...
  3. Maritime Law

    A body of laws, conventions and treaties that governs international ...
  4. Transloading

    Transferring goods from one mode of transportation to another ...
  5. Inchmaree Clause

    A clause found in maritime insurance policies which provides ...
  6. Book To Ship Ratio

    The demand-supply ratio of the amount that is recorded in the ...
Related Articles
  1. Personal Finance

    Is Free Shipping Worth It?

    Should you buy more just so you can save on shipping?
  2. Markets

    Major Companies That Lose Money On Shipping (AMZN)

    We look at some of the big companies in the home delivery business that have high shipping costs and how they mitigate this.
  3. Markets

    Bulk Shipping Companies Struggle As Markets Soften

    The "soft" dry bulk shipping market that confronts shipping companies is a result of lower demand from China, and an excessive amount of bulk ships.
  4. Personal Finance

    7 Tips For Avoiding Shipping Costs When Shopping Online

    Before clicking on that purchase, make sure you're getting the best deal possible.
  5. Personal Finance

    Amazon’s Minimum Purchase Increase Alienates Shoppers (AMZN)

    Amazon’s increased spend for free shipping from $35 to $49 will increase Prime members but cost the company occasional shoppers.
  6. Personal Finance

    Shipping Container Homes: The Costs and Benefits

    Homes made from storage containers are environmentally friendly and can cost a fraction of a traditional home.
  7. Investing

    What are the Five C's of Credit?

    The five C’s of credit are what banks and other lenders evaluate about a potential borrower when making a lending decision. The five C’s are Character, Capacity, Capital, Collateral and Conditions. ...
  8. Investing

    What Does a Lender Do?

    A lender provides funds to another with the expectation those funds will be repaid with interest.
  9. Personal Finance

    Comparing Online And In-Store Prices

    While every retailer is different, there are several factors that affect where you'll get a better deal.
  10. Personal Finance

    Cruise Ship Health Check: What to Know Before You Set Sail

    Cruise-travel health tips that can save money, discomfort, worry – and maybe even your life.
RELATED FAQS
  1. What are the legal regulations on delivery duty paid?

    Understand the legal requirements for delivery duty paid, as well as how responsibilities can shift between buyers and sellers ... Read Answer >>
  2. What is the difference between secured and unsecured debts?

    Learn the differences between secured and unsecured debt; discover how banks buffer risks associated with each type of loan ... Read Answer >>
  3. What is the difference between a fixed annual percentage rate (APR) and a variable ...

    Fixed ARP and variable APR loans operate differently but serve the same purpose: to collect interest from a borrower so the ... Read Answer >>
  4. What is the difference between asset-based lending and asset financing?

    In the most common usage, the terms "asset-based lending" and "asset financing" refer to the same thing. Asset-based lending ... Read Answer >>
  5. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  6. What is PMI, and does everyone need to pay it?

    Also known as "Primary Mortgage Insurance," PMI is the lenders (banks) protection in the event that you default on your primary ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center