What Is a Pet Loan?

·6 min read

Owning a pet comes with many expenses, including adoption or purchase fees, comfort necessities and medical care.

The initial and ongoing costs of pet ownership can add up, especially if you have to address a medical emergency that might cost thousands of dollars. If you don't have the cash to cover pet expenses, you might consider pet financing.

"It is important to understand the costs associated with owning a pet before adopting and choosing a pet that best fits your lifestyle," says Dr. Carolyn R. Brown, a veterinarian and senior medical director of community medicine at the American Society for the Prevention of Cruelty to Animals. "Owning a pet does require some financial planning, but bringing a pet into your home adds incomparable joy."

What Are Pet Loans?

Pet loans are personal loans you can use for pet expenses. They are typically available from banks, credit unions or online lenders. Some lenders market pet loans as a specific product, but they work like any other personal loan.

Personal loans are unsecured installment loans usually ranging from $1,000 to $100,000, paid back over two to five years. Your loan amount and interest rate will be based on your income, credit history and credit score. Usually a FICO score of at least 700 is ideal.

How Much Does It Cost to Own a Pet?

The financial effect of owning a pet varies. You could own a low-maintenance pair of birds or a large dog that needs expensive food and has health problems that require ongoing care.

It's safe to estimate that you'll spend about $1,100 to $2,000 within the first year of owning a new pet, says Brown.

"This estimate may include medical fees such as spay/neuter, supplies like a collar and leash, food, toys, bedding, a crate, litter, and additional costs including behavior support," she says. "Because every pet is an individual, costs will vary depending on your pet's age and specific needs."

[Read: Best Personal Loans.]

But basic costs can pale in comparison with emergency pet expenses. The largest financial hit for pet owners is usually unexpected and occurs when a pet needs advanced veterinary care for a health condition, injury or an accident.

While you might not consider a pet loan for expected ongoing costs, an emergency could trigger a need for pet financing. For example, you might need to finance pet surgery or cancer treatment, which could cost thousands of dollars.

While some pet owners might wonder how much they're willing to spend to take care of their pet -- especially if that pet is older -- it's not an easy decision when you have hours or minutes to decide what to do.

"A pet is a family member; you love your pet," says Eve Kaplan, a certified financial planner who is founder and owner of Kaplan Financial Advisors in Berkeley Heights, New Jersey. As most people wouldn't debate the merits of essential surgery for a child or other family member, many feel the same about their pets. "It's easy to say you have to hold the line at some point. It's hard to do that in practice."

Is a Pet Loan a Good Idea?

A pet loan can prevent financial catastrophe. If you don't have cash on hand and can't or don't want to run up a huge bill on your credit card, a personal loan can be a good choice. You can secure a loan quickly online with a good interest rate if your credit score and income are high enough.

But consider whether you can actually afford to pay off the loan. Realize that making a snap decision to take out a loan could cause major financial distress for months and years to come.

"Before taking out a personal loan, it's important to look at your finances and monthly expenses to understand what you can realistically afford to pay every month," says Rod Griffin, senior director of consumer education and advocacy at credit bureau Experian. "Taking on a personal loan without a clear plan of how you will pay back that debt can cause serious damage to your financial health."

Know how much you're borrowing, your interest rate, monthly payment and how long you have to pay off the loan.

"It's important to remember that credit can be a financial tool, while debt is a financial problem," Griffin says. "Taking out a personal loan for a major expense without a plan for how you will pay back that debt is never a good idea and can cause long-term damage to your financial health."

[Read: Best Debt Consolidation Loans.]

Are There Alternatives to Pet Loans?

Loans aren't the only option for managing pet expenses. Pet insurance, an emergency fund and credit cards are some other ways to cover pet costs, both planned and unexpected.

Pet insurance

Pet insurance that covers routine checkups, illnesses and emergencies is one way to prepare for major, unanticipated expenses. Expect to pay an annual accident and illness premium of about $550 for dogs and $350 for cats.

"If the cost of an emergency veterinary visit or serious illness would be a financial strain, consider investing in pet health insurance while your pet is healthy," Brown says.

Veterinary payment plans

You might find a better deal directly with the veterinarian's practice if you can work out a payment plan that costs less overall than a personal loan.

Low-interest credit card

A low-interest credit card could offer 0% interest on purchases for several months to a year. You could charge pet expenses to the card now and pay it off over time. Make sure to set aside money to pay down the card each month, just as you would with an installment loan, to avoid paying interest when the bonus period is over.

Emergency savings

Another option is to build an emergency fund to address unexpected expenses, Kaplan says. The rule of thumb is for an emergency fund to cover three to six months of nondiscretionary expenses.

[Read: Best Home Equity Loans.]

Home equity line of credit

If you already have a home equity line of credit, it might be easiest to cover the bill right away and pay it off at an interest rate that's likely lower than a personal loan. But be careful drawing from your home equity unless you're sure you can pay it off.

"Always keep in mind that with a HELOC, your home is the loan collateral," Griffin says.

Seek help

Many organizations -- locally and nationally -- offer help to pet owners in a time of need.

"More than 21 million pets are living in poverty with their owners nationwide. When these pets become ill or get injured, their families have limited options to help them," Brown says. "The ASPCA is one of many organizations working to provide more affordable and accessible veterinary care to keep pets healthy and safe at home with their owners."

It's a good idea for pet owners to consider the possibility of a major medical emergency well before it happens. Whether you take that time to build your emergency fund, buy pet insurance and/or talk with other family members about end-of-life care, that preparation could help when you're faced with a difficult decision.

"It's very hard to say no when your pet's life is on the line," Kaplan says.