How to finance an RV in 5 steps
The amount you borrow, the length of the loan, and the down payment all have an impact on how you finance your RV. Given the wide variety of RV types on the market, you might need anywhere from $ 10,000 to $ 300,000 for your vehicle, with most RVs starting around $ 100,000.
Here are the steps to follow to obtain RV financing:
1. make sure your credit is in good shape
The minimum credit score for a loan varies, but a higher value is always better. A higher credit score means you are more likely to be approved for a low interest loan. It can save you thousands of dollars. Check your credit score online now, and if it’s low, take steps to improve your credit score.
2. Make a budget
Decide how much you want to borrow before you fall in love with an RV. It will help you keep your head and avoid making an emotional decision. Take a look at your monthly budget, factor in the costs of owning an RV – like maintenance and insurance – and decide how much you can easily afford.
3. Save the deposit
Many RV lenders will require a 10% to 20% down payment, so if you don’t have that money in the bank yet, it’s time to start saving. By making a larger down payment, you’ll also be able to qualify for a lower APR and lower your monthly payments.
4. Shop around for the right RV and RV loan.
Outside of buying a house or getting married, financing an RV is one of the biggest purchases you are likely to make in your life. Take the time to find the right vehicle and evaluate lenders to find the best loan rates. Here are the most common RV loan options:
Dealer Recommended Lenders: Your first introduction to RV loans will likely be through a dealer, as they often have existing relationships with banks and credit unions. Once the RV dealer tells you about their preferred lenders, you will need to compare the loan rates of those lenders to those of other lenders.
Bank or credit union: An RV loan from a bank or credit union is secured, which means your RV serves as collateral. For this reason, you can expect the interest rate to be lower than that of an unsecured loan. Generally, RV loans range from 10 to 15 years. Many banks and credit unions will extend this period up to 20 years, which will reduce your monthly payment.
Personal loan: If your credit is high enough, you can get an RV loan at a competitive rate from the best personal lenders. But the biggest advantage of a personal loan is that most personal loans are unsecured. With an unsecured RV loan, the lender does not have the legal right to repossess the RV if you miss payments. Having said that, it is not advisable to take out a loan if you are not sure you can repay it. Also note that your repayment term will likely be shorter than a secured loan and the interest rate will be higher because there is no collateral protecting the lender – hence your monthly payment will likely be higher if you choose this option.
Once you’re ready to buy your RV, stick to your budget. There is only room for maneuver on the price if you allow it. Let dealers know that you are a serious buyer and that you won’t be spending a dime more than you budgeted for. This will help ensure that you can always make your loan payment on time.
5. Sign the loan documents
Now that you’ve done all of the work, you can complete the loan application and provide your lender with the documents they need. You will probably get a decision in a few days. Read the documents carefully before signing to make sure you understand what you are agreeing to.
Alternatives to RV financing
If you imagine yourself living on the road, RV loans aren’t the only option. Here are two more:
To rent: Have you ever dreamed of doing something – like horseback riding around the Grand Canyon, downhill skiing in Vale, or swimming with sharks in Fiji – to find that you really Did you not like the activity after trying it once? RV trips can be like this. If you can’t afford to pay for an RV now, that’s okay. Rent an RV long enough to see what you think of the lifestyle. You can love it, or you can be eternally grateful that you didn’t take the financial leap before experiencing an RV trip for yourself.
Cash: Save your money and buy an RV outright. Paying cash means no monthly payment, no interest charges (or other fees) and more money to put away for a rainy day. If you want to have fun in your RV, why not do it without an added financial burden around your neck? To help you save more effectively, consider opening a separate savings account specifically for your RV fund.
Learning how to finance an RV is an important first step on your journey to life as a road warrior. Now all you need to learn is how to empty the trash system and what to do if you have a flat tire. In the meantime, travel safely.
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