Pet Financing: A Complete Guide

Many of us have dreamed about that wonderful moment when we take a loving, happy, four-legged member of our family home. As any pet owner knows, that feeling of joy is unmatched and unrivaled: Pets can bring us years of love, happiness, and a virtually unmatched sense of purpose.

Of course, more than a few things are needed to make that dream a reality, and when you were thinking of owning a loving pet, you probably weren't thinking of interest rates, loan terms, or making monthly payments. In some cases, these terms can be a critical component of taking home the pet of your dream.

For many, saving up to buy the pet of your dreams simply isn't an option. In these instances, puppy financing – a pet loan – can be an ideal solution. When done responsibly, such pay-later options offer installment plans that allow you to budget effectively for your dream pet. However, these installment plans come with some major questions and some real items you need to look out for.

So, what is pet financing? What are its pros and cons, and what do you need to know before you sign the dotted line? Here's a look.

What is Pet Financing?

As the name implies, pet financing operates like any other financing, similar to taking out a loan for a car or a major upgrade of your home. Once you get financing approval, you will be given a loan that you can use to purchase a pet. You will then be expected to make monthly payments per the terms you agreed to when taking out the loan. 

Like any other loan, you have certain legal obligations. A failure to make these payments and uphold your end of the contract terms could damage your credit score - and even repossession of the pet in question. We’ll cover more on these below. 

Pet financing comes with numerous options you can customize to best fit your financial situation. These include:

Pay In 4

Pay in 4 options allow you to borrow money, then make four interest-free payments to pay off the loan's balance. However, if you fail to make one of those payments or are late, you may get hit with interest and late fees. 

These options are only recommended for people who know they will have access to the cash needed to repay the loan in the short term. Their big advantage is getting an interest-free loan, typically for 6-8 weeks. Their disadvantage is that the maximum loan amount is usually lesser, often $1,500 or less. 

Long-Term Financing

Other financing options can be customized to fit your need, with multi-year loans available that will allow you to pay off your balance. The term can be 6-36 months, or even longer. The longer the loan, the higher your interest rate usually goes. These options typically cover higher price points than pay in 4, which can be up to $10,000-$15,000.

Other Options

Of course, pet financing is not the only way that you can access the funding necessary to afford your dream pet. In most cases, you won't be able to use options like layaway plans. However, other options include:

• Use of savings: It is certainly possible to save up enough to afford a pet. The problem is that you may not be able to get the exact pet that you are looking for, if the price exceeds your savings, or you don’t have your savings ready in time. 

• Personal loans: Sometimes, you can take a personal loan from a bank. In these instances, you may wind up paying high interest rates and unavoidable hidden fees.

• Credit cards or pet credit cards: You can use a credit card or open a specific pet credit card. However, you'll have to make regular monthly payments – with no grace period – and pay a potentially unpredictable interest rate. 

• Pet leasing: Pet leasing may be possible, but it is not recommended; it can be highly complicated for ownership rights, and the practice is banned in many states.

Why Would I Finance a Pet?

As you are likely aware, financing a pet is difficult and can have major financial implications for your future. So, why would you consider financing a pet?

Photo by Mikhail Nilov

High initial cost

Pets can be expensive: Pet adoption of a specific breed can cost thousands of dollars, and you may not be able to meet this high cost while affording other ongoing costs. Financing a pet can allow you to treat the cost of buying a pet like any other expensive item, reducing your initial payment and using your savings for other important purposes. 

Immediate availability of puppy

Some prospective pet owners know exactly what pet they want: Be it a Goldendoodle or a Teacup puppy, there are instances when your desired breed or specific puppy becomes available and you want to make an immediate purchase. You may be out of luck if you don't have enough money saved. Pet financing enables you to purchase the animal of your dreams without worrying about someone else getting the pet you want first. 

Preserve savings for emergencies

You may have the money saved up to purchase a pet, but you may want to hold onto that money for later. After all, vet bills, food and supply costs, and other emergencies can get expensive. Furthermore, there will be other ongoing costs, like pet insurance, grooming, and training that you will have to manage. Pet financing can allow you to work with responsible breeders to get your ideal puppy while protecting your savings for later use.

Build credit history

Most people think of taking out a loan as problematic for their credit history. The truth is much more nuanced: Taking out a loan and repaying it in a timely fashion builds positive credit history. This can increase your credit score and make it easier for you to get additional loans, at better interest rates, in the future.

Understanding Interest Rates, Terms, and Fees

Never taken out a loan before? Don't worry; we're here to help! There are a few loan terms you need to understand.

• Annual Percentage Rate (APR): This is the annual interest rate you will pay on the loan. Banks and financial institutions charge an APR so that they make money. The APR may be fixed, meaning it won't change based on outside economic conditions. It may also be variable, meaning the interest rate will change based on economic conditions. You need to know the APR and under what circumstances it may change.

• Fees: Most lenders will charge you fees, including an origination fee (fee to start the paperwork) or an application fee. These fees are normal. However, you need to know what these fees are upfront. A reputable lender will ensure you have all the information in front of you and not spring any fees at the last second. 

• Loan terms: This section outlines how much time you have to pay back the loan and your expected total payment. It also lays out if you have any special options, like a deferred payment (i.e. the option to postpone payments for a some months after disbursement), an early pay-off (i.e. option to pay off loan sooner without penalties), or the option to convert a variable interest rate to a fixed one. 

Finally, you'll need to understand your rights under the contract. For example, what are your ownership rights if you miss a payment or consistently fail to make payments? Under what circumstances could your pet potentially be repossessed based on non-payment? Different states have different regulations, and different financing companies set different expectations. Furthermore, some companies have better reputations when working with customers that defaulted on pet loans.

This is why finding a pet financing company that meets your needs and looks out for your interests is important. Research on the right kind of business is critical…more on that shortly.

What Do I Need To Finance A Pet?

You must approach financing a pet the way you would approach any major financial commitment. Doing so can help protect your budget and ensure you get the best experience with your new family member. 

To that end, here are a few steps you need to take when financing your pet. 

Check your credit score

Any financial institution will run a credit check and pull a credit score. You should know what your credit score is and make sure that it is even possible for you to get a new loan. 

Determine a family budget

No matter what loan you get, you'll need to repay it over time. As such, you should determine the maximum amount you can afford, then compare that to the loan options in front of you. 

Keep in mind that your overall pet budget won't just be limited to your loan repayment. There will be many other costs, including pet food, vet bills, pet insurance, and other supplies. You'll need to ensure you can afford all these costs and save up for a rainy day. 

Search for good offers

There is no shortage of pet financing options available for you, and a variety of these options may appear great on the surface. However, finding a pet loan business that fits your needs requires intensive research. To that end, you'll need to search for the best offers.

Remember that the best possible offers are about much more than low costs. How flexible is the loan company in question? What are the personal stories and reviews of others who have used them? Are there any complaints or investigations against the company you are looking at? 

Answering these questions requires careful research. Don’t be shy to take your time and find the best financing business for you. 

Set up repayment plans

Once you have taken out your loan, you're good to go! However, you must still set up repayment plans that align with your loan repayment terms. In most cases, financing institutions make it easy for you to make payments: All you have to do is set up an autopay plan that automatically withdraws the required amount from your bank. 

You must complete this step. Doing so will ensure you don’t forget about making repayments. Failure to do so means you may miss payments, damage your credit, and have high-interest rates on future loans. 

What Should I Look For in a Pet Financing Plan?

The simple truth is that some pet financing plans are better than others. Here is what you should look for in a pet loan. 

Interest rate

Interest rate matters more than almost any other factor. Higher interest rates mean you will pay more money over the length of the loan. Fortunately, some lenders offer interest-free loans if you repay the loan quickly. You'll also need to determine if the loan rate is fixed or variable and under what circumstances the rate may rise.

Flexible options 

A pet financing program for one set of circumstances may not work for another. For example, as noted above, some payments allow you to take out an interest-free loan in four quarters. For some, this isn't possible. As such, you may need a longer loan term. This means you can repay the loan over a longer period but will likely pay a higher APR. 

Furthermore, a bad credit score can be problematic. Companies will sometimes still lend to you, even if you have a lower credit score. This flexibility can help people who want to take out a loan but may not have the credit score to access traditional financing. 

Transparency

A loan agency should be very upfront with its fees, terms, and interest rates. You should know exactly what you get when you borrow with the lender. All relevant information should be laid out on the company's website, and provided to you in clear documentation.

Finding out if a company is transparent ahead of time can be difficult. Your best bet is to research a company and check out their Google, Trustpilot, or BBB reviews to find personal stories of individuals who have taken out loans. Remember that there will always be at least a few dissatisfied customers: After all, no business – particularly a business that loans money – will make everyone happy. However, you may want to look elsewhere if there are consistent complaints about a company or a high proportion of negative reviews. 

Instant decisions

In some cases, you'll need to know ASAP if you can get the loan. Instant decisions about if you qualify for the loan can help you lock in financing and determine if you need to look elsewhere for the loan. Usually, such instant decisions are done without a hard credit pull, not affecting your credit score. 

Mawoo Pets Offers Comprehensive Pet Financing

At Mawoo Pets, we get it: You want to be able to afford the pet of your dream at an affordable and fair price. We offer transparent, comprehensive pet financing with a series of options for any prospective pet owner. These options range from Pay-in-4 to longer term financing options that support a range of credit histories. 

Want to learn more about Mawoo Pets? Read testimonials from real customers to learn more about their personal stories with us and experiences working with our business. We pride ourselves on working with responsible breeders that practice ethical breeding, protecting owners while ensuring that the puppies we offer for adoption lead long, healthy lives.

Ready to get started? Explore our puppies today.