For many professional riders in Australia, purchasing a horse float is essential for the safe transport of horses to competitions, training, and events. However, the upfront cost of a new or custom-built float can be daunting. One solution that many riders turn to is hire purchase financing, a popular option for those who want to spread the cost of their purchase over time while still benefiting from ownership.
What is Hire Purchase?
Hire purchase is a type of financing arrangement where you essentially rent the horse float over a set period with the option to purchase it at the end of the term. During the hire purchase agreement, you make regular payments to the lender, which typically covers the cost of the float, along with interest and any associated fees. While you donât technically own the float until the final payment is made, it is still yours to use as you see fit during the term of the agreement.
Key Features of Horse Float Hire Purchase
1. Flexibility in Repayment Terms
One of the main advantages of hire purchase is the flexibility it offers in repayment terms. Riders can often choose a term that suits their financial situation, with agreements typically ranging from 1 to 5 years. A longer repayment period may result in lower monthly repayments, although it may also mean paying more in interest over time. It's important to balance the term length with your ability to make the repayments comfortably.
2. Ownership at the End of the Term
Unlike leasing options, hire purchase allows you to own the horse float outright once youâve made all the required payments. This makes it an attractive option for riders who want to eventually take full ownership of their float without the burden of a hefty upfront payment. Once the final payment is made, you gain full control of the float, which can then be sold, traded, or kept for long-term use.
3. Tax Benefits for Businesses
For professional riders who operate their own businesses, hire purchase agreements may offer some attractive tax benefits. Depending on your circumstances, you may be able to claim the GST back on your horse float purchase, reducing the effective purchase price. Additionally, the float could be depreciated as a business asset, providing potential deductions for tax purposes. Itâs worth consulting an accountant to understand how these tax benefits might apply to your situation.
Considerations Before Entering a Hire Purchase Agreement
While hire purchase can be an appealing option, there are several important factors to consider before entering into an agreement:
1. Interest Rates and Fees
Interest rates for hire purchase agreements can vary depending on the lender and the term of the loan. As hire purchase is considered a form of credit, lenders typically charge interest on the amount you borrow. The rate will depend on your financial profile, including your credit history. Additionally, there may be application fees, early repayment fees, or other charges associated with the agreement, so itâs important to understand the full cost of financing before committing.
2. Ownership Restrictions
While you have full use of the horse float during the term of the agreement, you technically donât own it until the final payment is made. This means that, in the event of non-payment, the lender could repossess the float. It's essential to ensure that you can meet the repayment obligations before signing up for hire purchase.
3. Loan Term and Monthly Repayments
When choosing a hire purchase agreement, consider how long you will need the float and the impact that the repayment term will have on your finances. Longer terms generally mean smaller monthly repayments but could result in higher interest costs. A shorter term can save you money in interest but will require higher monthly payments, so itâs important to select a loan term that aligns with your financial situation.
Why Consider Hire Purchase for Your Horse Float?
Horse float hire purchase is a great financing option for professional riders who need a float immediately but may not have the capital to make a full purchase. It provides the flexibility to spread the cost over time while allowing you to take ownership of the float at the end of the agreement. With the added benefit of potential tax deductions for business owners, hire purchase can be a smart way to finance a horse float, especially for those running equestrian businesses or competing professionally.
Conclusion
When financing a horse float in Australia, hire purchase offers flexibility, ownership, and potential tax benefits. While itâs important to understand the interest rates, fees, and repayment terms associated with hire purchase, this option can be an effective way for professional riders to spread out the cost of purchasing a float without the need for an upfront lump sum payment. By carefully considering your financial situation and choosing the right loan term, hire purchase could be a key solution in securing the horse float you need for your equestrian business.
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DISCLAIMER
The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.
