installment/payment sale - buyer income/credit verification requirements

[anni]

Hi,

I have a potential buyer for my horse that was brought to me through an agent. The buyer is proposing an installment sale over the term of one year.

I would like to know what type of financial/personal information is typically requested from the buyer in an installment sale.

I want the buyer to disclose a credit report and proof of income so I can make sure they have sufficient cash flow to afford the monthly payments.

For a conventional loan or line of credit this is standard procedure, but how about in the horse world? If I’m asked to extend a line of credit and act like a financial institution I would like to be able to assess the risk somewhat before selling my horse and potentially having to deal with repo and legal battles in case the buyer is not able to pay.

Does anyone have any experience with installment sales and can offer some advice?

Thanks!

[Highflyer]

In my experience it almost never goes well, and I would not do it unless I was so happy to be rid of the horse that I was willing to eat the potential loss.

[Cherry]

A lot can change in a year! I wouldn’t sell on the installment plan where an animal is concerned. If you can’t afford to buy it outright, then you can’t afford it!

This advice comes from a person who was offered an installment plan when she bought her TB mare, but refused it. It just gets too complicated–especially when you don’t know the other person well. Too much can go wrong… It’s just not worth the hassle…

[phoebetrainer]

No. Not a good idea. What happens if the horse injures itself, what happens if she moves away and just disappears? There are too many ways for this to go wrong.

[RockinHorse]

Why should you act as the financial institution for the buyer? There are banks and credit unions for just that purpose.

[anni]

My trainer is really pushing me to enter into an installment plan agreement --saying that it’s a completely common way of selling a horse in the US. I’m not really comfortable with it and agree that it sounds like a bad idea. That’s when I asked the buyer to show W2 paystubs/income tax returns and a credit check. The buyer’s agent came back with “you have my personal assurance that they (buyer) won’t let you down”. Sounds extremely sketchy. I was just wondering if any of you has done a payment plan and what type of information was expected to be disclosed.

[GaitedGloryRider]

[QUOTE=RockinHorse;8260098]
Why should you act as the financial institution for the buyer? There are banks and credit unions for just that purpose.[/QUOTE]

This.

If they need a loan to purchase the horse they should get it from the bank, not expect you to play banker.

If they cannot get approved for a loan to purchase the horse, well that’s a red flag for you. If their bank won’t take the risk for them why should you?

If you want to take payments (which seems awful risky doing so for someone you don’t know) spreading them out over a year sounds a bit excessive. A month or three maybe with a contract in place to protect both of you.

I sold a horse on payments once. It wasn’t a disaster but I knew the buyer, knew she wasn’t a flake, was firm about the horse needing to paid off within a short amount of time and didn’t let the horse leave my barn until it was completely paid off. Taking payments from a stranger for a year, hoping and praying they don’t lose their job or horse doesn’t get hurt, or they don’t flake on payments or just up and disappear with the horse? Hell no. I don’t care what their credit score is or if they are willing to put their first born up for collateral. I would not take that risk, not my job.

So many ways this could go wrong for you, and so many horror stories out there from other people who have had exactly the same situation happen.

I think it’s insane for someone to expect a private individual and a stranger at that to finance their purchase over the course of a year. Rather ballsy really. I’d simply tell them no, price is $xxxxx and it must be paid up front before you take possession of the horse. Since they are asking for a whole year to make payments I’m guessing this is a fairly expensive horse…if not that is an even bigger red flag!

[GaitedGloryRider]

[QUOTE=anni;8260139]
My trainer is really pushing me to enter into an installment plan agreement --saying that it’s a completely common way of selling a horse in the US. I’m not really comfortable with it and agree that it sounds like a bad idea. That’s when I asked the buyer to show W2 paystubs/income tax returns and a credit check. The buyer’s agent came back with “you have my personal assurance that they (buyer) won’t let you down”. Sounds extremely sketchy. I was just wondering if any of you has done a payment plan and what type of information was expected to be disclosed.[/QUOTE]

Listen to what your gut is telling you and stand up to your trainer. At the end of the day it’s your horse, your decision. The buyer’s agent’s “personal assurance” doesn’t offer you one bit of protection if the seller flakes. It’s just words and nothing more. The fact that they are balking at you wanting to protect your interests tells you something right there.

[Tanyanoel]

The only time I did a payment plan was actually when I was buying a horse, the seller and the buyer (me) were both in he same barn riding with the same trainer and we did I believe a 3-4 month payment plan. There were no credit checks or w-2s requested. Since the horse was still there in the same barn it made more sense and would not have made sense as an option if the horse left the property.

In general however, I would agree with the other posters that this is NOT a normal practice and contains many risks. Even with the best of intentions, a year is a long time and so many factors could arise (loss of job, injured horse) that could complicate the issue of getting all of your payments.

[Onetrickpuppy]

I had one of my horses for sale and several buyers wanted to make payments over the course of one year. I wrote up a contract that stipulated the payment plan and the horse would not leave my property until paid in full. They didn’t like that, and I eventually sold the horse to a buyer overseas who paid full price and in cash. As others here have written, it’s a big PITA and you could come out of it without the money and your horse.

[Beam_Me_Up]

I have never seen/experienced that in the US. Unless it is regional, or discipline specific? Occasionally I have heard of shorter installment plans where the horse stayed with the seller until paid off.

I would definitely avoid this–as others say, job loss, horse injury, anything could make the payments stop. Assume the trainer and agent would be paid up front and not at the end of the term?

[HorsesinHaiti]

Would both your trainer and the other trainer agree to not take ANY commission whatsoever until you are paid in full? Would either one cover the entire cost to you and agree to be the one owed the installments?

If they respond to those ideas by saying / giving you a look that you’re crazy, then they are acting crazy. Even I in Haiti know that this is NOT a common way of selling a horse, for all the risks listed here. the seller can take out a loan using something of theirs for collateral, if they want a loan.

Is it also safe to assume that no one is offering to pay you interest on the de facto loan they want you to make to the seller?

[Flash]

I wouldn’t do it. Really. Don’t do it. If you got a buyer interested, that means there will most likely be other buyers. If they are pressuring you, say you will “keep them in mind but want to wait and see if any other offers come through”

[HungarianHippo]

No way no how. Tell your trainer to loan the client the money-- that should be no problem for her if she’s so certain the client is good for it.

[IndyEquestrian]

I have done payment plans, but we’re talking 60 days max. . . Initial payment, 1 payment 30 days later and the final payment on the 60 day mark. . . I did let the horses go to their new homes, but both of them were going to farms I knew and our sales agreement stipulated that in the event of an injury, illness or even the death of the horse, they still owed the money. Luckily, both went just fine, but I was a little nervous the first time.

I did not require financial statements from the purchasers, but they both offered them. In both cases they also left post dated checks to be cashed on the 30th and 60th days.

Good luck, like everyone says, if you have a bad feeling, don’t do it!

[Chall]

Why is your trainer pushing this? It’s not best for you. She should be representing you.
I’d not do it, and I’d get another trainer.

[arapaloosa_lady]

Paying the horse off over one year sounds more like a lease-to-own type scenario.

And I wouldn’t do it unless you’d be happy selling the horse for the amount you have in hand when the horse transfers to the new owner.

[anni]

Thanks for all your responses. It sounds like I wasn’t unreasonable in requesting additional information from the buyer and their unwillingness to provide that info proves that something is not right here. Summing it up it also doesn’t seem like payment plans are the way to go in the horse selling/buying business – unless there is a personal relationship between buyer and seller and the horse stays at the same barn. Thanks again for all the input!

[Tiffani_B]

I sold a horse on payments that were contracted out for 12 months, but only because I knew the trainer very well. The buyer never missed a payment and paid for the horse in full on time. I had a lawyer write up a contract and she did not get his registration papers until he was paid off, which we show at breed shows so that makes a big difference. I know in disciplines where breed doesn’t matter, papers aren’t worth the paper they’re printed on, so that isn’t always an incentive. The contract also stipulated that if she missed one single payment (I forget how long the grace period was) she forfeited all of the money she had already paid towards him and he returned to me. Essentially it became a lease at that point. The horse was in Georgia and I live in Illinois, so it would have been a hassle to get him back, but I trusted the trainer and like I said, it all worked out perfectly.

[Horse_with_No_Name]

[QUOTE=anni;8260139]
My trainer is really pushing me to enter into an installment plan agreement --saying that it’s a completely common way of selling a horse in the US. I’m not really comfortable with it and agree that it sounds like a bad idea. That’s when I asked the buyer to show W2 paystubs/income tax returns and a credit check. The buyer’s agent came back with “you have my personal assurance that they (buyer) won’t let you down”. Sounds extremely sketchy. I was just wondering if any of you has done a payment plan and what type of information was expected to be disclosed.[/QUOTE]

My bolding. If this is the case then the buyer’s agent can buy the horse and act as bank for the buyer. Problem solved