Do you remember the movie RV with Robin Williams, which came out in 2006? Instead of taking his family on a luxurious vacation, Williams decides to rent an RV, which doesn’t turn out as expected.
He didn’t do the necessary due diligence, and everyone comically suffered throughout the movie. So if you’re thinking about getting an RV to hit the road, that’s great. It’s an excellent vehicle to use for exploring the great outdoors.
However, you’ll to know a few things before you purchase your trailer. Please take a look at our insightful RV financing guide below.
1. Save For a Down Payment
Like most significant purchases, you’ll need to save for a down payment when looking to purchase an RV. Usually, the cost of the down payment is about 10% of the overall vehicle price.
However, you’ll be able to put down more if you can afford it. If the down payment is substantial, you’ll pay a lower rate each month.
2. Set a Budget
Before getting into RV financing, you’ll need to ensure you determine a budget. There are various vehicles out there with eye-catching features. However, by setting a budget, you’ll narrow down your choices to more affordable options.
Also, when determining your budget, consider how the RV payments will affect you long term. Depending on your lender, RV loans last between 10 – 20 years.
Although monthly payments may look affordable now, how will they affect you in the future? Are you prepared for maintenance costs? These are questions you’ll need to consider when setting your budget.
3. Improve Your Credit Score
Getting an RV may be right around the corner. But have you looked at your credit score recently?
Depending on what it is, it could be difficult purchasing an RV. Before approving your RV loan, lenders will look at your:
- Debt to income ratio
- Employment history
- Current income
These are just some of the factors that will affect your credit score. So if you have a low number, you’ll need to improve it. You can do so by:
- Lowering your credit usage
- Making debt payments on time
- Don’t miss payments
- Avoid opening new accounts frequently
By following these suggestions, you’ll improve your credit score and get the RV of your dreams. However, if you’re having trouble improving your score, you can also consider looking at other motorhomes for sale.
4. Consider An RV Loan
Unless you have a large sum of money, you may want to consider taking out an RV loan to purchase your vehicle. There are two types of RV loans:
Unsecured or personal loans offer individuals the flexibility of RV financing without using personal property as collateral. However, these loans will come with higher interest rates since there’s more risk for the lender.
Secured loans will use the RV as collateral to guarantee the loan. So if you can’t make your monthly payments, your vehicle can get repossessed. Also, if you have an excellent credit score, you could land a lower interest rate.
Follow These RV Financing Tips
RV financing can be confusing if you’re purchasing for the first time. However, with our guide above, now you know what to expect when navigating the buying process.
To learn more tips about RV life, feel free to check out our other blog posts.