Highly Experienced In Show Animal Matters

The risks of selling a horse on installment payments

It seems almost every purchase can be made with installment payments nowadays, including the sale of a horse. While not preferable, there are times when selling a horse on installment payments seems a necessary evil in order to ride out a slow business period.

Financing for equines

An installment payment arrangement allows the buyer to purchase the horse through a series of payments. The payments can extend for several months or even years for high dollar sales. There is not a standard arrangement and sellers will have different requirements including requiring a large portion of the purchase price as a down payment or waiting to transfer registration papers until after receiving the final installment.

The risks a seller takes

The risk a seller takes when offering a buyer financing is that the buyer may not make payments faithfully and honor their obligations. Unlike a bank or other financial institution, a seller cannot protect him or herself by requiring a credit check or ask for full financial disclosure since many horse sales take place between relative strangers moments after meeting.

In addition to the buyer failing to make payments, sellers risk the horse becoming injured, ill or even dying before the purchase is finalized. The buyer also faces the risk of significant legal fees while attempting to collect payment or repossess the horse.

Seller protection tactics

If you plan on selling a horse on installment payments there are a few steps you can take to mitigate the risks.

  • Have a written sale agreement: While an oral agreement is legally binding, a written sale agreement is much easier to prove and enforce. The agreement should lay out the terms of the purchase, the payment schedule, the risk of loss and what will happen if the buyer fails to fulfill their financial duty.
  • Be proactive about collection: Asking for money is never comfortable, but you can start with a polite inquiry about late or missed payments. If you want to be compensated you may have to ask for the money, no matter how unreasonable it seems.
  • Do not allow the horse to leave the property until paid for: This is advantageous in that it eliminates the need for repossession while ensuring the horse is properly cared for. If a buyer cannot afford to purchase the horse it begs the question of how they will afford to pay for the horse’s basic care and upkeep.
  • Do not transfer registration paperwork until the horse is paid for: If the horse is registered, do not transfer the registration until the final payment has been received. This protects your registration rights and prevents the buyer from attempting to profit from the horse before fully owning the animal.

You have invested time and money into the raising and care of your horses and fair compensation for the sale of the animal should go without saying, but a buyer might not feel the same way. If you are willing to offer financing to a buyer and function akin to a lending company, than act like a bank and protect yourself from an ill-fated investment.

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