You are probably aware that because of the Financial Crisis of 2008 that rocked the country a few years ago, financial organizations have been forced to crack down. Getting a loan is much more difficult than it was a decade ago. If you need a horse trailer for your agricultural operation, you will need to secure a loan as soon as possible so you can get back to work. There are significant changes in the lending industry, and those who would have gotten a fast and easy loan approval just a few years ago is either not being approved or being offered loans with astronomical interest rates.
The Changes in Horse Trailer Financing
Years ago, it was a simple process. You would go in and fill out a quick application to get approved for a horse trailer loan. Those who wanted to buy horse trailers were placed into categories based on different factors, such as their credit score, credit history, and your debt-to-income ratio (DTI). DTI takes your total monthly debt and divides it by your pre-tax income to determine the percentage of your income that goes toward debts each month.
It once was easy for a horse trailer dealer to help the customer through the loan process and get them on the road pulling a new horse trailer. After the Financial Crisis, some lenders stopped offering loans for horse trailers. Those who continued to offer the loans had interest rates that varied significantly from one customer to another. Lenders have cracked down even more in recent times, leaving farmers frustrated because they can’t access the funds that they need to buy horse trailers and other equipment.
Why the Change with Horse Trailer Loans?
Financial institutions view horse trailers as recreational vehicles. Those of you in the agricultural industry know that isn’t an accurate term. Farmers know that a horse trailer is something that you need to get the job done. You know horse trailers can be used to haul much more than horses, such as cattle, goats, sheep, and hogs. Many lenders see a horse trailer as one of the first items that the buyer would discard when facing financial troubles. Banks consider horse trailers to be riskier loan options than home or auto loans. Because of the stricter lending practices, many farmers are suffering because of the inability to secure a loan. Many horse trailer dealers have seen customers with high credit scores get denied funding for a horse trailer.
Things Considered When Applying for a Horse Trailer Loan
The lenders consider several factors when reviewing a horse trailer loan application. Here are some of those factors:
Horse trailer age
Horse trailer cost
Past loan history
Revolving debt – credit cards
Income – W2s, 1099s, or two years of tax returns for those who are self-employed
It is important to document all your self-employment income on your tax returns. This includes any fees for horse boarding, any fees received as a farrier, and payment for selling crops or livestock. If the lender cannot see your income, then they cannot determine if they will get paid. There are lenders who work with all kinds of credit. If you have faced financial difficulty getting a horse trailer loan approved because you have a bad credit score or less than perfect credit history, talk with the team at Colonial Loan. They specialize in offering horse trailer loans in East Tennessee. We work with farmers and understand the importance of having access to a reliable horse trailer and other equipment.