An RV can be financed by a loan or leasing agreement.
There are quite a few options you could select from when it comes to RV financing, and these options includes car loans, dealer financing or personal loans. It is such a huge decision-making process when it comes to buying or purchasing an asset, therefore knowing the best financing option for you when purchasing an RV will save you quite a whole lot of stress. I advise you check through several banks, RV dealership and also RV financing companies for their rate and then pick the preferable one.
What is an RV loan?
Same as other vehicles, RVs can also be purchased on loan. These RV loans are basically some long-term financing options that can be used for camper, travel trailer and motorhome purchase. Generally, the estimated price of RV ranges between $10,000 to $500,000; the amenity-rich motorhomes can be even more expensive than that. So, it is good to look for some reliable financing options that can save you from unbearable financial burden in the long run.
You can find a number of lenders in the market that are ready to offer RV loans on reasonable interest rates. You can check out some options online or look for the credit union and other RV dealerships in the area. Note that, the RV itself works as collateral for the loan applications; hence, there is no need to look for any other collateral option to get secure financing option.
The RV loans repayment terms may vary somewhere between 10 to 15 years. However, financial institutions are even ready to stretch out the loan term up to 20 years. Should you finance and are loans deductible.
Current interest rates for RV loans:
If you have excellent credit history, it is possible to get RV financing with low-interest rate; somewhere around 4%. However, people who have a poor credit score, below 580, may face some difficulties in getting their loans approved. Even if it gets approved, the rates can be as high as up to 25%. Those with a weak credit score are advised to prepare for paying higher down payment while buying a new RV. Otherwise, you can also take some time to improve your credit score.
How to finance your RV?
When you are interested in buying RV or camper at a reasonable price, while saving more on interest rates, it is better to follow expert advice while making a purchase. Below we have listed a few tips to finance your RV with ease:
Set your budget:
As we already said, RVs come with extensive price tags. If we look at the lower side, the towable pop-up campers are available with a lower price tag of $5000; whereas the highest range for feature-rich RVs can go up to $500,000. So, before you initiate a purchase, it is important to set your budget.
It is better to list out your requirements; both smaller and larger RVs have their own pros and cons. If you prefer to move out with family and friends, you may need to invest in a larger RV. Also, you need to look for the repayment options. They may vary from 10 to 20 years; however, it is better to confirm all terms and conditions from your selected financial institution. Usually, the 10-year loan plans come with higher monthly payment burden; whereas the extended 20-years repayment plan may put a lesser monthly burden. While planning your budget, you should also consider additional expenses such as insurance, camping, storage fee, utility costs, gas and maintenance costs as well.
Choose the type of loan:
Once you have decided about the down payment and are clear about credit score; it is time to look for the loan options in the market. Generally, there are two common loan options for RV; you can either go ahead with secured vehicle loan or choose an unsecured personal loan. In case of secured vehicle loan, it is possible to get lower interest rates and these loans are easier to get with a reasonable credit score. At the same time, the unsecured personal loans require fast funding and pre-qualification. But with this type of loan, your RV may get into possession risk due to any delay in the repayment.
While making a decision about the loan, it is even better to check offers available from different lenders. You can check different credit unions, banks and the online financing companies. When you shop with the best loan deals, you are likely to save more money on your purchase. You should also negotiate for the best offers so that you can lock a profitable deal online.
Factors That Determines Financing an RV
There are quite some factors that determine how an RV is financed, and these factors help you to narrow down your options on financing a brand new RV or a used one. Some of these factors are:
Most of the RV companies ask for at least 10% of the actual price in the form of down payment; however, many others may even ask for 20%. Larger down payment can help you reduce the interest rate and monthly repayment amount as well. Moreover, you may find it easier to qualify for the loan as well.
Some of the commonly available loan interest rate plans vary between 4% to 25%; however, the condition may be highly affected by your credit score.
It is better to check your credit score online so that you can expect low-interest rate options. The credit score above 700 is likely to assure the best offers. In case if your credit score is low at present, you can wait for a few months to purchase your RV and in the meanwhile, work on improvement of your credit score.
Current rates: another factor is the current interest rate on loans for financing an RV. The interest rates on these loans are not fixed, they vary from time to time, sometimes the rates are high, sometimes fair and sometimes low and favorable. This rate fluctuation is mainly affected by market forces. Are you aware that we have an RV loan? Well if you are not aware of that, I will enlighten you a little about RV loans. RV loans are more favorable in financing RV because they have better interest rates when compared to auto loans in general. So are you feeling that an auto loan cannot finance the RV that you desire? Then take a huge step and opt out for RV loans.
Credit score: This is another influential factor that determines to finance your RV. Most times your interest rate depends solely on your credit score. You might want to ask what a credit score is. A credit score is an expression in numerical form, and it is gotten based on the credit files of an individual. You can either have a good credit score or a bad credit score. A good credit score helps you incur a low-interest rate on your loan repayments, while a bad credit score does not necessarily mean you get to have to pay a high interest rate. All that is needed to do if you have a bad credit score is finding a person that can help you get the lowest possible interest rate for your low credit score.
Ways You Can Finance Your RV
RV financing can be done in two different ways, you can either finance your RV through a 3rd party which can also be a bank, or your RV can be financed using a dealer.
Financing Your RV through A Third Party (Bank)
Financing an RV through the bank has an added advantage, and do you know what it is? Financing an RV through a bank is the fact that there is no middle person whatsoever in your deal, you take the step yourself and finalize your conclusion with the bank if it is favorable to you, with the bank you get a straight interest rate without any additional fees usually added by dealers. Not that financing through a bank does not have its one downsides, some of which are the fact that with the bank you are not liable to any further negotiation on price or interest rates because it is fixed, financing with the bank is more like a take it or leave it deal. Also, another downside financing an RV through a bank is that you do not enjoy any form of leniency regarding breach of contract or default in loan repayment.
Financing Your RV Using a Dealer
Financing your RV using a dealer can be quite tricky and risky at times, but you know what they say life is all about taking risks. Choosing to financing with a dealer, make sure you thoroughly and carefully make findings about the dealer you are choosing to get into contract with, find out about his history, work ratings, feedbacks, referrals he has had in the past, you may even have a chit chat with the dealers previous customers to see their view and level of satisfaction with the dealer’s services.
This might seem way too overboard, but you need to put all findings on the check before proceeding to a contract with such dealer. Choosing a dealer RV financing also has its own advantages, financing an RV through a dealer is more convenient and fast because in most cases the dealer does all the necessary things such as finding a good rate for your credit score and the likes and he presents you with the few he thinks might be best for you and that will be needed from you is choosing the offer you prefer most or the offer that aligns with your budget. Another advantage is there is an avenue for negotiations when it comes to financing through a dealer, and you get to cut down rates and negotiate the price you can afford without wasting time with all the bank processes.
Some dealers might be able to offer you some really low debt financing through sales and promotions. There are also some disadvantages about this financing way, one of which is the fact that the rates you get from a dealer might not be a competitive rate therefore that might reduce your payment options and APR. All in all, only pick this option if you believe the dealer can deliver just what you want.
Few Hints on Financing a New or Used RV
There are some tips or hints that can help you in carefully planning RV finance options. Opting out to finance an RV makes the purchase more affordable. Financing an RV is more like buying or purchasing a landed property through a mortgage. Although RVs are quite different from landed property, with RV the depreciation starts immediately it has been drive off from the purchase point. So it is mandatory to be careful in not only purchasing an RV but also choosing a financing option. Here are some hints you should definitely keep abreast when opting out for an option to finance an RV.
Set a budget: setting an RV is very important when choosing a finance option, picking out a price range of the type of RV you can afford to purchase. When I am talking about choosing a budget, I am certainly not referring to considering the monthly repayment cost but the overall cost of the RV. If you choose to look at the monthly payment, you would actually get carried away forgetting RV loans are spread over ten to twenty years.
Pick out the best rate: this is another important thing to note, check through for all available interest rate and choose the best rate for you, don’t just at the first rate you see. Scan through a lot of rates and compared as you shout note that the rates fluctuate.
Develop your credit score: it is more advisable to work on your credit score so as to increase it before opting out for purchasing an RV. Your credit score determines the type of loans you are qualified for, the interest rate, the term and flexibility of the loan and it sometimes shows if you qualify for any loan type. Well, I think having a credit score of about 600 and above gets you a good interest rate and great RV loans.
Save up for the initial down payments: another hint is saving up just enough for your RV purchase down payment if you make a high down payment hence your monthly repayment is reduced with even a lower interest rate. Saving a large down payments saves you a lot ranging from monthly payments down to interest rate. With large down payments you tend to repay your loans even faster. You can’t save a lot without planning ahead more reason budgeting is important.
When purchasing an RV, do I have to incur some other costs apart from the initial cost price?
Yes, there are other costs to be incurred apart from the purchase price. Most people tend to assume that all that is needed to do in purchasing RV is just to make the payment and drive away, but the reverse is the case. When planning your RV financing, there is some cost you would have to add to your budget when planning and that cost are listed as follows:
Maintenance cost: purchasing a new RV does not just end when you paid the necessary down payment and fixed your loan options. After all this, you are to plan your monthly and yearly budget with the fees you would set aside for maintaining your RV. You can’t have a vehicle and not service it except you would want to lose such a vehicle in no time, so maintenance cost is really important when it comes to owning an RV.
Cost of Fueling Your RV:
It does not matter if you choose a gas or diesel vehicle, what matter is also budget the cost of refilling the vehicle. You should expect to spend some sizeable amount of money on gas monthly depending on how you often you make use of your recreational vehicle.
Storage fees during off seasons usually amount to hundreds or even thousands of dollar depending on the place you reside. So it is advisable to have this also planned out or budgeted to avoid falling short in certain areas.
Fees Incurred On Parking
You can’t have a vehicle and expect not to pay for parking except if you have storage space for your RV. I would say owning an RV is more than it seems and that is why it is a decision that should be taken cautiously.
Although several options can help you in financing your RV purchase but cannot necessarily cover all the fees listed earlier, now let’s get to financing RV in full details.
Time to buy your RV?
When you are ready to buy an RV, it is good to check your credit score first so that you can be aware of possible interest rates. Accordingly, you can set your budget while estimating the down payment and monthly repayments as well. Make sure you invest in a good RV that can serve the essential needs of your family. It should be comfy, spacious and easy to manage as well.
Check out different lenders online and shortlist the best loan option for your purchase. Complete the formalities by submitting essential documents and consult the RV seller for essential details as well. Note that when you add some luxury items to the RV, the price may automatically increase. So, you have to be more careful about what you are going to buy.
It is also important to check for the insurance options in the market. Usually, the RV sellers can help you to link to best insurance companies in the area. Make sure you make an informed decision about your extensive purchase.
How to Make Application for an RV Loan
Applying for an RV loan is quite simple and easy than it seems, to be able to apply for this loan you must be a citizen of the United States of age eighteen and above. To be eligible for this loan it is required you have a high credit rating and provide necessary financial details on request. Some documents are to be presented when taking up an RV loan or when you want to take up an RV finance option. The following documents will be requested:
• Proof of income and necessary employment information
• your social security number and a valid identity card
• all necessary personal details about yourself
You should also note that there are things you should avoid when taking up an RV loan. Some of which are not engaging in price negotiation before jumping at an offer, not carefully weighing and comparing several finance options before selecting one, taking up a loan amount you can barely afford and finally taking up an RV loan without getting to know your credit score. Financing an RV is a huge step, and it should not be taken with levity.
In conclusion, an RV financing option is to be considered after comparing several offers and interest rates. Most people do not carry bags of cash to purchase an RV, it is mostly a process, but it is important that the RV loan taken is what you can afford to avoid been on the losing end or to prevent having to cut down on your cost of living because you have taken so much loan than you can afford.
Good luck on getting an RV loan and also choosing the best financing option for you. Have any question? Kindly drop them in the comment session.