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Hire Purchase for Horseboxes
Hire Purchase agreements for horseboxes are technically hire agreements, as the finance company purchase the horsebox and then hire it to you. At the end of the term the final repayment includes an option to purchase fee. This is a small fee, often around £175, which the finance company charge as a final payment.
Once the option to purchase fee has been paid, the ownership of the horsebox passes to you. So if you want to own your horsebox, don’t worry too much about the terminology with a hire purchase, you will always be the owner of the vehicle as long as you pay your monthly repayments in full.
Unlike a lease agreement, a hire purchase agreement deems you to be the registered keeper on the V5 registration document and you are responsible for maintaining, insuring and taxing the horsebox.
The interest rate is fixed so even if interest base rates go up, your payments will not, this will help you budget your finances. The length of the loan agreement is determined at the start of the term and is fixed, generally for 3 to 10 years.
Hire purchase horsebox loans can also be easier to obtain than personal bank loans. The loan is secured against the horsebox, which in turn offers the lender more security. If you stop paying your monthly repayments the lender has the right to repossess the vehicle to recoup their money. This means they are more likely to accept your application in the first place and can be more flexible on the terms and interest rates that they offer.
HORSEBOX LOAN BENEFITS
- Interest rates from 7.9% APR
- Borrow £5,000 upwards
- No deposit required
- 2 – 10 year loan terms
- Trailers and lorries financed
- Quick process to pay out
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Balloon Payments Options for Horseboxes
Horseboxes often carry high sale prices and therefore conventional hire purchase agreements are sometimes unsuitable. If you a wanting to purchase a high value horsebox on a hire purchase agreement you may find that the monthly repayments make the purchase unfeasible. In an effort to reduce monthly repayments you may consider;
putting down a larger deposit
looking to arrange a longer term
or, investigate the option of a balloon payment
Pegasus Finance are always looking to provide affordable horsebox finance and sometimes customers opt for a balloon finance product.
How does a balloon finance product work?
At the start of the term the lender will value the horsebox and then calculate the residual value of the vehicle, (this is a prediction of what the horsebox will be worth at the end of the agreement). The purchaser will pay regular monthly repayments until the end of the term at which time they will need to pay the finance provider the residual value or balloon payment in one lump sum.
Options at the end of the term;
- pay the balloon payment in cash
- sell the horsebox and use these funds to settle the balloon
- refinance the balloon payment. i.e. arrange a new loan agreement to settle the balloon payment
To illustrate the process; if a customer wishes to pay £40,000 for a horsebox, the lender may calculate the residual value or balloon payment to be £15,000. The customer will then pay monthly repayments on the balance £25,000 over the agreed term (often between 3-5 years) and interest payments only on the residual value. At the end of the term the customer pays a lump sum of £15,000 to the lender.
Like a conventional hire purchase agreement you are still free to contact the lender for a settlement figure at any time in case you decide to sell or upgrade your horsebox before the end of the term. You are also eligible to make part settlements so if you find that you have managed to save a few thousand pounds up you will be able to reduce your monthly payment or shorten the term that you have remaining to pay.
