In order to be able to qualify for an RV loan in the first place, you need to first save up a big enough down payment of in excess of 10% of the total cost of the RV. In addition to this, you must also have a good credit score.
As a very minimum, your credit score should be somewhere between 660 and 700. This number does vary from lender to lender, but any less than this and you may have difficulty financing the purchase of an RV.
For those individuals who have poor credit and are either unable to obtain an RV loan or can do so with poor interest rates, they are able to ask someone to co sign the loan agreement for them. Most lenders allow for a co signer, although some of them do not.
RV Loan Terms
The terms of an RV loan are very similar to the ones for regular automobile loans, although the actual numbers considered are different. Loan amounts for RVs range from $5,000 or lower up to as much as $500,000 and even more. The duration ranges between 10 and 20 years.
Knowing what make and model of RV that you intend to purchase will help you in doing this, as you will know exactly how much money you need to save as a down payment. This is also information that the lender will require.
Armed with this information you are then able to fully and accurately compare the various loan offerings that companies are providing and, thus, be able to apply for the one that suits you and your financial situation the best.
For RV loans, the interest rates tend to be slightly higher than those for regular automobile loans. Although they depend on various different factors, they typically range from anywhere between 3.99 % and 7.99 %, although some are as high as 10 %.
Before being able to purchase an RV, you must first have insurance in place, as lenders will only give you a loan if you meet this requirement. It is important that when you take out the insurance cover, that it meets all of the specifications that are required by the lender.
With the cost of insuring the vehicle adding to your monthly costs in addition to that of the loan, it is important that you budget accordingly. Changing the amount that you borrow and the length of time that you do so can drastically alter the cost of your monthly payments.
As well as insurance, it is also worth considering taking out RV extended warranty on the vehicle that lasts five years or longer. For more information on getting the best rates on your RV loan, check out this guide.
Six Tips in RV Loans
Now that you know everything that is involved in qualifying for RV financing you can begin the 6 practical steps of in the process of completing your application for finance. The first one of these is setting your budget.
1. Setting Your Budget
You should start by reviewing your own finances so that you know what you can afford and then take a look at the RV market to see which makes and models of vehicles fall within your budget. RVs can range in price from $10,000 at the cheapest and $300,000 at the most expensive end of the price scale. In addition to knowing your budget, you also need to consider how much money you are able to put against the vehicle as down payment for it. Something else that you need to consider is how much you can afford to pay each and every month in installments back to the lender.
2. Deciding Your Down Payment
When it comes to making a down payment for an RV, you need to be putting down at least 10 % of the total value of the vehicle. In fact, some credit unions and banks actually require that you put down a payment of 20 % of the total value of the RV. Making as large a down payment as possible is ideal, as it will work to lower the annual percentage rate (APR) of the loan, meaning that you pay less interest on it, thus saving you money in the long run.
3. Reviewing Your Credit Score
In order to be approved for an RV loan, you must have a good credit score. Not only will this get your application approved, but it will also help you in getting a lower interest rate. It is for these reasons that you should check out your credit score and do everything that you can to improve it before you submit your loan application.
4. Deciding The Type Of Loan
With RV loans being underwritten as personal type loans, they come as either unsecured or secured. With a secured loan, the interest rates are much lower and there are less requirements in place in order for you to qualify for one. With an unsecured loan, the interest rate is somewhat higher if you have a credit score that is not at the higher end of the scale. However, because the loan is not secured against your RV, you do not risk losing it should you struggle to pay it all back.
5. Comparing Lenders
When being provided with different offers from various lenders, it is important that you consider ones from both credit unions and banks equally. By doing this, you get a good idea of what interest rates are available and, thus, which lender you should go with.
6. Negotiating The Interest Rate
Before agreeing to any loan, you should always try and haggle with the lender a bit. They expect for this to happen and so have some leeway that they can afford to you. You should do this by going in with what you would like and see how they respond and what they come back with. You can then work the situation from there.