You’ve found the one.
That perfect trailer for your horses, your tow vehicle, and your hauling needs.
We get it–you just want to hitch it up and hit the road.
But for most buyers, there’s one more hurdle to get through: horse trailer financing.
With nearly two decades in the trailer business and a staff comprised of lifelong horse lovers, Blue Ridge Trailers understands the horse trailer financing process inside out. Thanks to our broker relationships and our experience, we’re able to find competitive pricing options for our trailer customers.
Today, we’re going to share some of our financing insights with you, so you can spend less time with the paperwork and more time enjoying your new trailer.
How Are Horse Trailer Loan Applications Evaluated?
There are a handful of factors any lender will examine and compare right off the bat:
- Your credit score
- Your debt-to-income ratio
- Your income
- Requested loan amount
None of that should come as a surprise. However, things get tricky when lenders start looking at the trailer itself.
Many lenders misunderstand or don’t know how to categorize horse trailers. They assume it’s a discretionary or “luxury” piece of equipment, and they price their loans accordingly.
They don’t realize how well trailers hold their resale value. Unlike cars, which start losing value the minute they leave the lot, quality aluminum trailers hold their value for decades.
That’s why it’s so important to buy from a trailer dealer who has relationships with brokers and lenders in-the-know. Blue Ridge Trailers works with a stable of lenders who understand the nature of trailers and can therefore offer appropriate, competitive financing options. That goes for utility trailers as well as horse trailers.
Horse Trailer Financing Pitfalls to Avoid
A lender who understands the longevity of trailers will give you a longer term to pay off your loan. That results in a lower monthly payment, which is especially helpful for farmers or other people with volatile month-to-month income.
However, we typically advise buyers not to wait the full length of the term to pay off the trailer, in order to avoid building up tons of interest. When you have a good month, you can pay a little more towards your trailer, and start working down the loan faster.
That strategy is not possible with prepayment penalties. As the name implies, prepayment penalties punish you for paying down your loan early. Avoid them or you’ll get locked into significant interest costs.
Not filing jointly:
Do both you and your partner have an income? If you don’t file jointly, you’re unnecessarily weakening your application.
Filing jointly will bring down your debt-to-income ratio, instantly making you a better candidate for a loan.
You should also consider whether you and your partner already have other loans in both names. If you do, but you don’t show your partner’s income on your horse trailer financing application, all those loans will be counted against your income only. It’ll make it look like you’re much less prepared to pay off your loans than you really are.
Ask Your Dealer About Their Lender Relationships
Before you file a loan application, ask your trailer dealer whether they work with loan brokers on behalf of their customers. As noted earlier, a dealer with a stable of knowledgeable brokers will be able to find you a more competitive deal.
You should also ask whether they’ll send your application to multiple brokers (which means multiple credit checks–not ideal).
Instead, Blue Ridge Trailers asks a handful of strategic questions to determine each customer’s situation, and therefore which broker will be best to send their application to. In turn, after running your credit, that broker can pick the optimal lenders to receive your application.
Do You Have Farm Income?
Then you’ll also want a dealer who is Farm Credit approved.
Farm Credit is a national organization that provides loans to people with farm income. Unlike standard lenders, they understand the unique situation of farmers and ranchers, in that income can be variable from one year to the next. They also consider horse trailers, utility trailers, dump trailers, and equipment haulers to be farm equipment–not “luxury” items.
Blue Ridge Trailers is a Farm Credit approved dealer, so we’ve seen firsthand how this different mindset that can result in a much more reasonable loan.
Have more questions about horse trailer financing? Contact Blue Ridge Trailers online or at (434) 985-4151.