Horsebox Finance 101: All you need to know
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Horsebox finance can be a very confusing subject, especially when you’re talking about lots of money and the matter of safety of your horse.
We hope this article provided by Kingsgate Equestrian Finance will help explain how it works and what might be best for you.
We will cover;
- Who can get finance?
- How does it work?
- What products are available?
- What information is required?
- What might be best for me?
Who can get Horsebox Finance?
- Anyone can whether you are an individual, trade as a sole trader, partnership or a limited company.
- Don’t be put off if you have been refused finance due to;
- Not on the electoral role
- Bad credit or ccjs
- No previous credit history
Lots of finance companies work in different ways and just because one has said no it is possible for another to say yes.
How does Horsebox Finance work?
Once you have chosen your horsebox to finance, do not worry if it is not the exact model you can use the details to get a finance approval.
Now it is time to approach your chosen finance company with those details and get the finance in place.
Once your finance is approved the company will usually pay the seller directly or with a loan and send the money to you.
You can then collect your horsebox.
Do I need a deposit for Horsebox Finance?
Not necessarily.
On Hire Purchase agreements you need to pay at least the VAT and some lenders ask for a 10% deposit, however some do not.
If you are a business and wanted to lease a horsebox you would just pay a monthly payment, the monthly payments will have vat added on to them.
A part exchange would be classed as a deposit and will be shown on your supplier’s invoice.
If you are taking a loan then you can choose to finance all of the cost of the horsebox or some of it.
What products are available?
- Hire Purchase
This type of agreement means that the horsebox is on your balance sheet if you are a business and becomes an asset. If you are an individual it also becomes an asset and you can claim writing down allowances on the asset against your taxable profits.
Vat is paid upfront, and you own the horsebox immediately.
- Finance Lease
Vat is paid monthly, if you are a business this can be advantageous as it means you don’t have to pay the vat all at once. The horsebox becomes an asset but you only offset the interest element of the monthly payment against tax.
At the end of the agreement, you must sell the horsebox to a third party and pay the finance company a % of the sales proceeds. This would mean that if you sold the horsebox for £100 and the sales proceeds were 10% you pay them £10.
- Operating Lease or PCP (Personal Contract Purchase)
An operating lease will have a residual value or a balloon payment, this is an estimated value given to the horsebox at the end of the term.
For example, with a 7 year agreement means that after 7 years they have estimated the horsebox to be worth X. X could be 40-50% of the original value depending on the age and specification of the horsebox
The monthly payments are offset against tax in a business. This means that if you made £30,000 profit and paid £10,000 in operating lease payments you would only pay tax on the balance of £20,000.
At the end of the agreement, you can usually refinance the residual or balloon payment or trade the horsebox in and settle the balloon payment before entering into a new agreement.
- Loan
The bank or finance company will advance a sum of money to be repaid over a period of time.
The asset belongs to you or your business.
What type of Horsebox Finance is best for me?
That depends on what you want to achieve, below is a list of the most common;
- The lowest monthly payment?
Choose either the longest term or an Operating lease /PCP.
- The least amount of interest?
We would recommend the shortest term you are able to manage. Bearing in mind the shorter the term the higher the monthly payment.
- I want to replace my horsebox regularly?
In that case, choose a product with a guaranteed balloon or future value based on the mileage you will achieve over the term. This means at the end of the term you can hand the horsebox back without penalty.
What sort of information is required?
Its normal for a bank or finance company to ask for the following;
For a Person
- Income details, salary, tax return etc
- Home address to cover 3 years and date of birth
- 3 months most recent bank statements
For a business
- Latest Accounts
- 3 months recent bank statements
- Home address and date
We hope you found the article useful and feel more comfortable getting to grips with how to finance your horsebox.
Happy horsebox hunting …
