Buying a trailer with damaged credit
First time to this forum, so let me say 'hi' from the midwest :)
Question: I would like to buy a horse trailer in the 10K or so range, but need to do so by taking out a loan. I have dented credit due to an ill son a few years ago (and insurance covered very little because it was a psychiatric diagnosis), and now I'm helping another son thru college with loans. How hard is it to get a loan for a trailer? I'm not looking for a high end trailer, just a 3 or 4 horse slant load with a small LQ that's solid and dependable.
I had a really nice 3H GN with a large DR, but had to sell that to pay the college bills last month because we were counting on our son being able to get more financial aid. (It's his first year and we had no idea what to expect and getting financial aid is not easy with dual incomes.) It's not a matter of me being able to afford a monthly payment, cause I make great money, but having the available credit is an issue. We still have three kids at home, so even though my husband and I have stable jobs, we're not rich by any means.
Can anyone share their thoughts? Thanks so much.
You are going to have to check with your lending institution.
I doubt they will consider a horse trailer enough of a necessity item that they will consider it worth the risk without you putting quite a bit down.
Just a thought, but if you make really good money, could you set aside the "payment money" each month and then buy cash?
also - can you find trailers in your area that have what you're looking for (3-4 horse with LQ for under 10k? i know around here that's not possible ime.
good luck! :)
Talk to the owner doing a "contract for deed" I have heard of this more than once when buying a trailer. Sure not everyone is going to do it but all it takes is one :) If you get a tax refund there is your down payment.
When we bought our trailer, we bought it from a dealer. They were able to get us financing thru a credit union. A dealer may work more with one lending institution which helps them get people financing. Definitely check into the credit unions.
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Good luck finding the trailer you mentioned for $10K or less. I see them in the $20K range unless it needs major repair.
The problem with banks and credit unions is that they need collateral. While you many find a trailer you like for 10K, it will prob be more than 4 yrs old. Therefore the 'book' value on it may be much lower, say 5K. The banks will not give you 10K for a trailer that in Their books is only worth 5.
It is far easier to get financing for a newer vehicle/trailer, because if you default, the bank can recoup their money easily.
I know this because I went through the ringer buying my 'new' truck, an '05 chev silverado. No one wanted to finance me, because the vehicle was 'too old'. The price was 15k, but the book value was 7K.
That doesn't mean I could buy it for that price, that is basically the repo price should I default. Not good enough.
They wanted me to buy at least an '07, so it could be its own collateral.
My monthly payments would have been the same, but I would have been paying for 2 years longer, and almost 10K more.
I held out for the '05, but had to go through the dealership and got a poor percentage rate.
It is not easy to get financing on an older model.
Perhaps if you own your home, they may take that into consideration as collateral, with a cosigner.
The other issue (other than value vs. loan) is (which I did not explain well in my previous post) that with a bad credit history banks/credit unions find you to be a risk.
When you buy a car the collateral on the loan is the car. The theory is that you need that car so your are very unlikely to simply stop paying for the car because it means you will lose your car and be with out one. So even though you are a poor credit risk they are willing to loan you the money for a car (for a higher interest rate than someone with good credit) thinking that you will be making the payments.
A horse trailer is a luxury item. Not something you NEED. It is something you want. Something for you to enjoy. Not the top priority when the funds get tight. If you have to decide between paying for your car and your trailer most likely your car will win out.
For this reason most lending institutions will not give a person who has really damaged credit a loan for something like a horse trailer unless the person has enough funds to put a worth while down payment on it. With the larger down payment it is assumed the person will be less likely to default because they have more of an investment of their own monies in the item.
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