Millions of people all over the world own a recreational vehicle. Converting an RV into a comfortable mobile home will help you to travel the world in style. You can purchase your rig with personal loans or RV financing options instead of emptying your savings.
An RV can cost around $10,000 to over a million dollars. RV loans are different from auto loans because RVs are perceived as a luxury, and involves a large purchase. Lenders also expect you to add interest as you pay back the loan.
This guide is your ticket to applying for an RV loan successfully.
1. Set up a budget
RVers have access to financing whether they are planning to buy a used or brand new rig. Be realistic about the amount you can afford before shopping. Whatever you set aside shouldn’t affect your daily expenses.
The size of a motorhome or camper will determine its price tag to a great extent. However, you shouldn’t trade the comfort of your family for anything because you’re looking for a cost-effective option. Remember the factor in other costs such as maintenance, insurance, storage, and repairs.
2. Determine the type of loan you want
The major types of RV loans include secured and unsecured loans. Smaller RVs loans are unsecured and similar to personal loans.
On the other hand, larger RV loans are secured. A lender will repossess your RV if you fail to make payments for this type of loan. Most times, the RV will serve as collateral for the loan.
3. Check your credit score
Lenders are interested in your financial health. They usually request some information such as the mileage, age, and valve of your preferred RV. Without mincing words, a good credit score is the key to getting the best financing rates.
It’s easy to obtain a copy of your credit score from an accredited agency. Taking this step rarely attracts any fees, and you can get a copy every year.
A low credit score shouldn’t stop you from applying for RV financing. The best thing is to put a plan in place to improve it.
4. Make a down payment
It’s common for RV financing companies to ask for a down payment when you apply for an RV loan. This can be around 10-20% of the real price. Some of the perks of making a high down payment include a lower interest rate and monthly payments.
Do your due diligence to know if certain hidden fees exist.
5. Weigh your options
Shopping around helps to save money and avoid costly mistakes. A simple internet search will reveal several RV financing specialists near you. The next thing is to get quotes from trustworthy three lenders and compare their offers. Endeavor to learn about their loan terms too.
Research the current price of your dream rig to have a clear idea of what to expect. Leveraging your negotiation skills can help you slash off up to 30% of the initial price. Once you’ve chosen your lender, you will need to fill an application form online, and the entire process is really fast.