What are veterinary loans?
Some lenders offer veterinary loans, which are specialised personal loans that are used to pay for vet bills. Other lenders offer general personal loans, which can be used for a range of purposes – including paying vet bills.
People sometimes have to use veterinary financing if they have to suddenly rush their pet to the vet and then get hit with a large bill for which they hadn’t budgeted.
If your cat or dog is in fine health, the last thing you’d expect would be to have to spend thousands of dollars on veterinary care. But you might have no alternative if your beloved pet was hit by a car or suffered some other shock problem. In that case, you might need a veterinary loan to pay your vet bills.
Who offers veterinary loans?
Specialised veterinary loans are offered by a range of personal loan providers, which tend to be non-bank lenders that focus on personal loans. In some cases, the lender will directly pay your vet bill for you; you would then repay this vet loan over several months or years, depending on the length of the loan term.
You can also get general personal loans – which can then be used to pay vet bills – from a wide range of banks and credit unions. In this instance, the lender would probably deposit the money in your account, and you would then pay the vet bill yourself.
How do you take out veterinary loans?
Most lenders will allow you to apply for veterinary loans over the internet. If you take out a personal loan through a bank or credit union, you might also be able to visit a branch.
To take out a veterinary loan, you will usually have to reveal:
- Why you want the loan
- How much you want to borrow
- How long you want the loan to last
- How frequently you want to make repayments
- Your name
- Your contact details
- Your income
- Your assets
- Your liabilities
You will also have to provide identification. This may involve providing one or more of the following:
- Driver’s licence
- Medicare card
Depending on the lender, your personal loan might be approved the same day and the money might arrive in your bank account the next day. Of course, some lenders will take longer to assess veterinary loan applications. It’s also possible that your application might be rejected.
Can people with bad credit take out veterinary loans?
People with bad credit can, in some circumstances, take out veterinary loans. As a general rule, this is how personal loan lenders treat people with good credit and bad credit:
Lenders regard you as a smaller risk
Lenders regard you as a bigger risk
More lenders want to do business with you
Fewer lenders want to do business with you
Lenders take less time to assess your application
Lenders take more time to assess your application
Lenders offer you lower interest rates
Lenders offer you higher interest rates
How do you compare veterinary loans?
There are six main ways to compare veterinary loans, or any other type of personal loan:
1. Interest rate
All things being equal, you’ll find borrowing for vet bills easier if your interest rate is lower rather than higher. But don’t just look at the ‘advertised rate’, which is the headline interest rate. Also look at the ‘comparison rate’, which combines the advertised rate and fees, and therefore will be a more accurate guide of the true cost of the personal loan.
2. Interest type
Do you want your interest rate to be variable or fixed? A variable interest rate might change during the course of your loan – so it might move up or down. A fixed interest rate will not change during the course of your loan. Some personal loan products allow you to choose between interest types, while others offer only one option.
3. Loan term
Another thing to consider when comparing personal loans is the length of the loan term. Stretching out a loan term means your monthly repayments are lower but your total repayments over the life of the loan are higher. For example, imagine you borrow $10,000 at 9.50 per cent. With a two-year loan term, your repayments would be $459 per month and $11,019 over the life of the loan. With a three-year loan term, your monthly repayments would fall to $320 but your total repayments would rise to $11,532.
Don’t forget to look at fees when comparing vet loans. Potential fees include upfront (or establishment) fees, ongoing (or monthly) fees, early exit fees, redraw fees and late payment fees. Fees can significantly alter the whole-of-life cost of the loan.
Some vet loans will require security (or collateral), while others won’t. As a general rule, secured personal loans will have lower interest rates than unsecured personal loans, because lenders regard them as a lower risk.
Another way to compare vet loans is to think about add-on features, such as additional repayments (which means you’re allowed to pay back your loan faster), redraw facilities (which allow you to ‘borrow back’ money you’ve paid off ahead of schedule) and early exits (which means you can close your loan ahead of schedule). Add-on features can make your loan more flexible and help you save money.
What are the pros and cons of veterinary loans?
The biggest positive about veterinary loans is that you can provide your pet with medical care that you might otherwise not be able to afford.
When it comes to borrowing for vet bills, taking out a personal loan might be less costly than using a credit card. That’s because if you can’t pay off the vet bills during the credit card’s interest-free period, you will be hit with interest – and credit card interest is generally higher than personal loan interest.
Another reason that veterinary financing can be better with a personal loan than a credit card is that personal loan providers force you to follow a repayment schedule, whereas credit card providers don’t.
However, veterinary loans also come with negatives. The main drawback with a vet loan – or, indeed, any loan – is that you’re effectively ‘buying’ money. Building up savings is often better, because you get the money at cost price.
Another con of veterinary loans is that you run the risk of damaging your credit score if you’re late with repayments or unable to repay the loan.