If you’re reading this, I assume you’re a fan of the sport of kings – horse racing. The excitement of the races combined with the thrill of the win have got us all hooked. But, like most things in life, it comes with a price. The initial investment into a horse is very high. In 2020, it was reported that the average age of a horse in England was 10.2 years and many had to be put down due to old age. This doesn’t take into account the high number of horses who suffer from serious medical problems which restrict them to a life of leisure instead of competing on the racetrack.
With this in mind, it’s essential that we look into ways of lowering the overall cost of ownership. One way is to consider alternative forms of financing – especially when putting down a large deposit. We spoke to Rachel Morris, Equinox Finance, about the various options available and which one you should look into.
This is probably the most popular choice amongst people looking to purchase a horse. With this option, you essentially buy the horse, and then pay for it over a period of time. The advantage of this is that it’s tax-free upfront. You’re also not tied to the terms of the loan so you have the freedom to choose whether or not to pay it back. The downside is that it’s generally more expensive than other options. Depending on how long you choose the plan, you may also have to pay additional fees such as registration, stabling, and riding lessons. Hire purchase is ideal for people who want to own a horse but don’t have the budget for an outright purchase.
Part exchange is similar to hire purchase in that you’re buying a horse but with the difference that you’re not paying upfront. Instead, you’re trading some of your own property (usually a car) in order to make the purchase. You can’t claim it on your tax returns though so it’s not quite as tax-free as hire purchase. The upside is that you don’t have to fund the entire cost of the horse upfront. The downside is that you need to find someone who will take the other end of the deal – meaning you’ll need to search for a willing seller. It’s also worth noting that if you need to replace your car shortly afterwards, you’ll have to pay for the privilege of doing so.
A leasing agreement is when you pay for something in advance but use it over a period of time. With a leasing agreement, you don’t own the horse – but instead, you’re renting it from the company. The upside is that you don’t have to worry about upfront costs. The downside is that you’re heavily restricted in what you can do with the horse (e.g. you can’t breed or sell it without the company’s consent). You also need to make sure you return the horse in good condition at the end of the agreement – otherwise, you’ll be charged for extra maintenance and repair work. It’s worth noting that most lease agreements have an end date – meaning you’ll need to renew or extend the agreement at the end of the term. This will add additional costs to the lease if you do happen to fall outside the contractually agreed upon period.
This is one of the least commonly used methods for financing a horse – but it’s still a popular choice amongst people who want to own a horse but can’t quite afford it. Under this scenario, you essentially borrow money from a bank or other financial institution in order to make the purchase. You’ll need to provide proof of income and assets – along with a bank reference. If all these documents are satisfactory, the lender may agree to provide you with an unsecured loan. The advantage of this option is that it doesn’t matter whether or not you can pay it back. The downside is that it’s fairly expensive and you’re not exactly sure how much you’ll end up paying back. Many loan forgiveness providers also demand that you agree to pay for additional services such as health insurance and grooming. This can add up – particularly if you’re already paying for these things yourself. It’s also worth noting that some people have found it difficult to qualify for loan forgiveness due to poor credit scores caused by previous credit card usage and mortgage forgeries. In these instances, a personal loan may be the only viable option.
Credit cards are commonly used for buying things online or in retail stores. If you’re looking to purchase a horse, then you can use your credit card to make the purchase in large amounts. This is because credit cards offer a higher purchasing power due to the fact they’re generally accepted everywhere. They also provide a certain level of security in case you do happen to lose your wallet with all your credit cards in it. The downside is that you need to pay for all these purchases in cash on the spot. This of course means you’ll need to have enough cash to make all your payments. The advantage is that they’re widely accepted and most people have them – meaning you’ll likely have no problem acquiring cash. The downside is that you’ll have to pay interest on all these purchases and there’s also a credit card company fee which will be deducted from your total payment at the end.
If you want to purchase a horse but don’t have the money available, then you may need to turn to a private loan company. These loans are essentially unsecured and have a set payment amount with interest rates which can vary. Bear in mind though that private loan companies can be quite restrictive in the assets they allow you to purchase – with most only willing to provide loans for farm animals and equestrian-related equipment. In these instances, a bank may be a better choice. The disadvantage of a private loan is that they’re unsecured which means you may lose all your assets if your house is repossessed. The advantage is that you can get the money you need without needing additional collateral. In most cases, you’ll need to make at least three months’ worth of payments upfront which can be rather costly. The disadvantage is that it can be a lengthy process to get approved for a private loan – meaning you’ll have to sit tight for a while until your application is accepted.
Getting A Loan Is Complicated
If you want to own a horse but don’t have the money available, then it may be best to look into getting a loan. The problem is that getting a loan is complicated – and in most cases, it’s not an easy process. The first step is to contact your bank and request a personal loan application. In most cases, you’ll need to provide proof of income and assets – as well as a bank reference. If all these documents are satisfactory, the bank may agree to provide you with a loan. The advantage of this option is that it doesn’t matter whether or not you can pay it back. The disadvantage is that it’s fairly expensive and there’s no guarantee you’ll be approved for a loan. In most cases, you’ll need to make at least three months’ worth of payments upfront which can be rather costly. The advantage is that it’s not complicated – and in most cases, it’s an easy process to get approved for a loan.
Choosing the right form of financing for your horse is a complicated matter. It’s essential that you understand the pros and cons of each type of agreement before making a decision. Do your research and see what’s on offer – and then choose the one which best suits your needs.