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Should You Take Out a Personal Loan for Your Horse?

Most horse enthusiasts that ride either full time or even just occasionally have thought about owning a horse.  What could be better than taking care of your own horse and having a horse that is truly your own? You can even let others ride your horse and use your horse as another source of income.

Whatever the case might be, horses are an expensive investment with many costs: the corral space they need, food, equipment, and their medical health.

If you thought about purchasing a horse and don’t have enough cash, you might be considering a personal loan.  A personal loan can give you the cash necessary to buy your horse and you would pay the bank or institution a monthly payment amount plus the interest rate.

If you are thinking about getting a personal loan to purchase your horse, below are a few tips to help.

  1. Consider Your Financial Situation

Before you apply for a loan, you need to think about your financial situation and if it does make sense to use a personal loan for your horse.  How much money will you need?

If you borrow more money than you can afford than you will default on the loan which will come with serious fees and repercussions.   You could then even lose your horse.

  1. Speak to Many Lenders

It’s important to not only understand the amount of money you need, but you should understand the different kind of loans that are available.   Each lender has different interest rates, terms, loan amounts, fees, and discounts.

There are even lenders who deal specifically with helping horse owners purchase their horse.  By comparing lenders, you can also educate yourself and get a sense of what it is you are looking for in a loan as well get the best deal possible.

  1. What You Need When Applying for a Loan

If you decide to take out a personal loan for your horse, you will need to have a passport, utility bills, proof of citizenship, and copies of your tax returns, W-2s, and/or 1099s for the last two years, as well as any statement of any debts such as a mortgage payment.

If you are self-employed, you will need at least a year of bank statements, profit and loss statements, and copies of your most recent tax returns in order to check your income.

Most lenders want you to have a credit score of at least 640 and a debt to income ratio around 40%.  The debt to income ratio measures your income after all expenses are paid each month.

Is a credit card better than a personal loan to purchase a horse?

Credit cards and personal loans both have their pros and cons.

A personal loan will usually have a lower interest rate than a credit card.  But, if you want to pay off the loan early for your horse, there is usually a prepayment penalty.  And once you decide on a specific loan payment, it can’t be changed once you have already received the cash.

If you are considering using a personal loan to purchase a horse, the best thing you can do is to speak to multiple lenders and see if a personal loan makes sense for you and your situation.

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