There are many financing options available for RV loans and settling on one can prove difficult. It would be benefit you to consider all of your options before making a final choice.
To make it easier for you, here are the top factors to consider when choosing RV financing:
- Credit Score
Your credit score is essential when making an RV loan as it determines the amount you qualify for and what your interest rate will be. A higher credit score, in most cases, comes with higher loan limits and lower interest rates. This does not mean you will not get any good deals with a lower credit score. Some financial institutions like My Financing USA have loans for both bad and good credit scores.
Most lenders are always changing their interest rates based on the risk of default. Before you agree to get financing, ask for the lender’s provisions and if they are open to changing your interest rates based on changes in your credit score. A change in interest rates when you are already repaying can mess you up.
- Interest Rates
Most lenders charge interest rates of around 4% to 15%.The interest rates depend on different factors like;
- The amount borrowed– the amount of money youborrow is directly proportional to the interest you pay. Borrowing a lot of money means you repay a lot in interest.
- Lender–different lenders have various provisions for RV loans. Talk to several lenders to compare the interest rates. Then settle on the most affordable.
- Down payment– while you can get full financing for an RV purchase, you can also do it with a down payment. A more significant down payment means you will need a lesser amount of loan, hence lower interest rate.
- Loan term– the longer an RV loan repayment period, the more interest you pay. While most banks allow repayment periods of 10 – 15 years, others can go as far as 20 years.
To help you establish the correct interest rate to pay, consider using one of the several RV loan interest rate calculators. These calculators help you determine the monthly payments based on the RV prices, taxes, and down payment.
- Lender
Several financial institutions are willing to finance your RV purchase. All these lenders come with provisions on down payments, interest rates, repayment periods, and other qualifications. Before you agree to deal with any lender, take time to go through all their provisions. You can then compare these terms with those of the other lenders, to settle on the most favorable.
Some of the top lenders for RV loans are;
Online lenders – These are some of the most accessible and more comfortable to apply for loans. Most do not require elaborate qualification procedures.
Banks – Banks have been financing RV purchases since time immemorial. Take time and visit your bank to understand all their provisions for a loan.
Credit Unions–These are financial organizations that serve people from a particular interest group. Credit unions tend to provide loans with lower interest rates and service fees.
Other than the traditional financial institutions, some RV dealers also provide loan options. Be careful before you agree to work with your dealer on such arrangements. Most of these tend to incur high-interest rates and higher processing fees.
The most important thing to look for when choosing a lender is the cost of the loan.
Besides, if you want to use an RV but don’t have that kind of money, you can still opt for renting. Renting is an easy and affordable means of getting the motor home on the road. There are several RV rental dealers to choose from in the USA.
- The Cost of RV
Other than determining the amount of loan you need; the cost of RV is essential in determining whether it is a worthwhile investment. The first consideration when looking at the expense of purchase is whether you want a new or pre-owned RV. These vehicles lose value so fast andpurchasing a brand new RV is only worth it when you are not planning on a resale.
By now, you have already established that some lenders want you to make down payments while others don’t. Whatever the case, consider making a substantial down payment. Failing to make a down payment will mean you end up paying more than the initial cost of the RV.
Bottom Line
Lack of finance is not a reason anymore to miss owning a moving home. Whether you have zero down payment or poor credit score, there are several financing options for you. Take time to compare the different lenders’ terms and settle on the best.
