It is permissible to lend animals and it is recommended to pay in full, giving something better than that which ts owed Sahih Muslim 1601 c
Arabic hadith text
حَدَّثَنَا مُحَمَّدُ بْنُ عَبْدِ اللَّهِ بْنِ نُمَيْرٍ، حَدَّثَنَا أَبِي، حَدَّثَنَا سُفْيَانُ، عَنْ سَلَمَةَ بْنِ كُهَيْلٍ، عَنْ أَبِي سَلَمَةَ، عَنْ أَبِي هُرَيْرَةَ، قَالَ جَاءَ رَجُلٌ يَتَقَاضَى رَسُولَ اللَّهِ صلى الله عليه وسلم بَعِيرًا فَقَالَ "أَعْطُوهُ سِنًّا فَوْقَ سِنِّهِ - وَقَالَ - خَيْرُكُمْ أَحْسَنُكُمْ قَضَاءً "
Translation
Abu Huraira (Allah be pleased with him) reported
There came a person demanding a camel from Allah's Messenger (ﷺ). He (the Holy Prophet) said: Give him (the camel) of that age or of more mature age, and said: Best among you is one who is best in clearing off the debt.