Thinking about buying a horse? While it’s an exciting move, it’s also quite an investment. The average cost of a horse can range from a few hundred dollars to over $50,000, sometimes even more depending on the type of horse you’re buying. Using a horse loan, also called equine financing, can help make this purchase more manageable.
Read on to learn what you need to know about getting a horse loan so you can make an informed decision when welcoming a new horse into your family.
Key Points
• Personal loans are a flexible option for financing horse purchases, offering secured or unsecured options with fixed or variable interest rates.
• Borrowing amounts for horse loans typically range from $1,000 to $100,000, depending on credit score and lender requirements.
• Repayment terms for horse loans generally vary between two to seven years.
• Before committing to a loan, make sure you understand additional costs such as interest, and potential origination fees and late fees.
• Alternative financing options include using savings, renting a horse, sharing ownership, or using a credit card with a 0% introductory APR.
Can You Get a Personal Loan for a Horse?
Personal loans offer a flexible way to borrow money for big ticket items, like paying off high-interest debt, completing a home renovation, or even buying a horse. You can find a personal loan through banks, credit unions, and online lenders.
When you get a personal loan, you receive a lump sum of money and then pay it back in monthly installments, which include interest. There are different types of personal loans. Here are some common ones:
• Secured and unsecured loans: Secured loans are backed by something valuable, like your home or car, while unsecured loans aren’t tied to any assets.
• Fixed-rate and variable-rate loans: Fixed-rate loans have an interest rate that stays the same, while variable-rate loans have an interest rate that can go up or down based on changes in the market.
• Single borrower vs. cosigner loans: With some loans, just one person is responsible for payments. But others allow a cosigner, or someone who agrees to help with payments if needed.
Pros and Cons of a Personal Loan for a Horse
To help you decide if a personal loan is a good option to finance your horse, it’s helpful to look at both the pros and cons.
Pros:
• Personal loans usually have lower interest rates than credit cards. For example, the average rate on a personal loan is around 12.40%, as of October 2024. Meanwhile, the average interest rate on credit cards is closer to 21.76%. This means that unless you qualify for a 0% introductory APR on a credit card, using a personal loan might save you money on interest in the long run.
• You don’t have to touch your savings. A good rule of thumb is to keep three to six months of income saved for emergencies. If buying a horse empties your savings, you could be in a tough spot if an unexpected expense comes up. A personal loan lets you keep your savings safe while still making your purchase.
• Wide range of lending requirements. Since each lender has its own criteria, some may approve a personal loan even if your credit score isn’t the best.
Cons:
• Your debt-to-income ratio will likely go up. Taking on more debt changes the balance between your income and what you owe. Lenders use this debt-to-income ratio (DTI) to decide on your loan approval and interest rate. Most lenders look for a ratio under 36%, so if you make $5,000 a month, your monthly debt should be under $1,800. Some lenders are more flexible, but staying within this limit could improve your chances of getting a competitive rate and terms.
• You’re taking on additional debt. Buying a horse is a major purchase, so make sure you’re able to repay any money you borrow.
• Missing or late payments may harm your credit score. Lenders may report late or missing payments to credit bureaus, and this could make your credit score drop. You may also have to pay a late fee, which can add to your costs — especially if it happens more than once.
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How to Qualify for a Horse Loan
Before applying for a personal loan, here are a few questions to ask yourself:
• How much do you need to borrow?
• What can you afford to pay each month? (A personal loan calculator can help you determine potential monthly payment amounts based on interest rates and terms.)
• How long do you need to pay it back?
Once you have a good idea of what you’re looking for, it’s wise to check your credit score since lenders use it to decide if you qualify. You can get a free copy of your credit report once a week from the major credit bureaus — Equifax, Experian, and TransUnion — at AnnualCreditReport.com. Take a look to make sure everything is accurate, and address any errors you see.
Ready to apply for your equestrian loan? See which lenders offer prequalification, which will give you an idea of the rates and terms you could qualify for before applying. To prequalify, you’ll typically need to provide basic information like your ID, address, income, and employment status.
Each lender has different requirements, so prequalifying with a few different lenders could help you find the best rates and terms. Once you choose a lender, they’ll guide you through the application process. They’ll likely do a hard credit check at this point, which may lower your credit score slightly, but this is usually only temporary.
Once you’re approved, the lender will ask you to sign a loan agreement. If you have any questions, make sure to speak with your lender.
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Tips for Successfully Repaying Your Horse Loan
Bringing your new pony home is a great feeling, but it also means it’s time to start repaying your loan. To streamline the process, here are a few strategies to help you repay the amount you borrowed.
Make a Budget
Setting a budget helps you see where your money is going and how much you’ll have left after each loan payment. Budgeting apps can make this easier by tracking your spending, setting limits, and even creating savings goals.
Set Up Autopay
To ensure you never miss a payment, consider setting up autopay. This way, your loan payment is automatically taken out of your account each month without any extra effort. Some lenders even offer discounts for using autopay.
Combine Your Debts
If you have multiple loans or debts, you might consider combining them into a single loan. This is called debt consolidation, and it involves taking out a separate loan to pay off your debt balances. Consolidating your debt can make paying down debt more manageable.
Make Extra Payments
If you want to pay off your loan faster, you could try making extra payments or switching to biweekly payments. By paying off your loan early, you can potentially save money on interest. But check with your lender to see if there’s a fee for early payoff.
Alternative Financing Options
Horse loans aren’t the only way to finance your purchase. Here are a few other options to consider:
Savings
If you can wait a bit before buying a horse, saving up for this big purchase can be a smart move. First, decide how much you’ll need, then set a timeline for reaching that goal. You may also want to consider setting up automatic transfers, which can help you put your savings on autopilot.
Keeping your money in a separate account, like a high-yield savings account, can also help it grow over time. Just keep in mind that once you have the horse, you’ll still need a budget for ongoing care and maintenance.
Horse Rental
Buying a horse comes with extra costs for things like care, food, and shelter. If you’re not ready for these ongoing expenses, renting a horse could be a better option. This way, you can enjoy riding without the full commitment.
Sharing Ownership
You could also consider sharing ownership with someone you trust and splitting the cost of the purchase and ongoing care of the horse. However, keep in mind that if the co-owner decides to back out of the arrangement, you might be responsible for all the expenses yourself, which could be financially burdensome.
Credit Card
Using a credit card to buy a horse might work if you have a high enough credit limit. But keep in mind, credit cards usually come with high interest rates, so if you can’t pay off the full balance right away, you could end up paying more in interest than with other financing options.
However, if you have good credit, some credit cards offer a 0% introductory APR. This lets you avoid interest — provided you pay off the balance before the introductory period ends. If you can’t pay it off by then, you may face a higher interest rate.
Other Factors to Consider Prior to Buying a Horse
Buying a horse is only the beginning of the costs involved. Depending on where you live, your horse’s needs, and other factors, caring for a horse can average between $8,600 to $26,000 per year.
For starters, horses need regular vet visits, a place to live, food, and lots of daily care. So before buying a four-legged friend, make sure you know your horse’s health history, and you have a reasonable budget set aside for yearly expenses.
Here are a few other important things to keep in mind:
• Lifespan: Horses usually live between 25 and 30 years. Owning one is a long-term commitment that should be carefully considered.
• Time: Horses need plenty of attention each day. If you’re short on time, you might have to hire someone to help care for your horse.
• Training and equipment: Horses need plenty of exercise, which requires pricey equipment like saddles, blankets, bridles, and lead lines.
• Transportation: If you plan to show or travel with your pony, remember that you’ll need a way to transport them, which adds to your ownership costs.
The Takeaway
Taking out a horse loan can be a smart way to finance a new pony. But before signing a loan agreement, it’s important to understand how equine financing works and to compare your options. Also, keep in mind the ongoing costs of horse ownership.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
FAQ
How much can I borrow with a personal loan for a horse?
The amount you can borrow for a horse loan depends on factors like your credit score, your lender, and other financial details like your income. Personal loan amounts usually range from $1,000 to $100,000. Before applying, figure out what you can afford and what you’re likely to qualify for.
What is the typical repayment period for a horse loan?
Repayment terms vary by lender, but you can generally find personal loans with terms between two and seven years. Keep in mind that while longer terms may make the monthly payment more affordable, you may end up paying more in interest than you would with a shorter loan term.
Are there any additional costs associated with a horse loan?
Besides interest, some lenders charge extra fees, like an origination fee, which is usually a percentage of your total loan amount. Lenders might also charge a late fee if you miss a payment, so check with your lender to understand all potential fees.
Photo credit: iStock/AzmanJaka
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