Horse trailer leasing can be beneficial if you take the time to understand the process. There are different types of leasing options available so itís important to know the details of your particular lease agreement.
What is horse trailer leasing?
Horse trailer leasing involves an agreement between you and the equipment owner that enables you to rent the horse trailer to use for a certain length of time during which you pay a low monthly rent. Although you are not the owner, during the horse trailer leasing period you will be responsible for insurance, taxes, maintenance, and other costs of ownership. At the end of the specified lease period, you will have the option to buy the trailer, renew your lease, or return the trailer.
What are the benefits of leasing a horse trailer?
One of the biggest reasons that people choose horse trailer leasing rather than buying is because leasing usually involves lower monthly payments over the course of the lease than purchasing a horse trailer. Another benefit of leasing a horse trailer is that although you may make a larger lease payment during the first month, there is no down payment required for a lease. A lease also gives you the flexibility to actually use the horse trailer you choose and still have the option to upgrade or switch to a different model if it doesnít work for your needs as well as you thought.
What is a Fair Market Value Lease?
A fair market value lease does not have a pre-determined buy out price. When the lease period is over, you have the option of purchasing the horse trailer for its fair market value price or returning the trailer to the dealer. Itís important to remember that during the horse trailer leasing period, you do build any equity in the horse trailer and are simply paying for the use of the trailer. When the lease period is over you will not have paid anything towards the purchase price of the trailer. This type of lease is best if you need to use a trailer for a short period of time with no intent to own.
What is a TRAC lease?
A terminal rental adjustment clause or TRAC lease will work well if you want the benefits of horse trailer leasing but intend to buy it at the end of your lease period. The buyout amount is determined at the start of the lease period and is usually around 10% of the sales price for the horse trailer so make sure that you are setting aside funds so you have these funds available at the end of your lease period. When your lease is up, you can pay the agreed amount to purchase the trailer, trade it in for another model and apply the equity to the new trailer or return the trailer.
There can also be specific tax benefits to leasing a horse trailer versus buying outright. If you plan ahead and pay careful attention to the details, leasing can be a very viable option for meeting your horse trailer needs.