Considering an RV?
RV’s have been a favorite way of travel for Americans since the 50’s. Vacations across the country allow us to get to know our own history and the rich historical events that shaped America. Since the United States is such a large landmass, there are many different climates and ecosystems that are well worth exploring. The pine forests in Texas, the beaches in San Diego and the Badlands in South Dakota are all highly unique. RVs are expensive. Those who can’t afford to buy one may think about renting. However, you may also want to explore RV loans.
There’s another way to obtain an RV without having to pay all cash. RV loans allow you to purchase one when you’re ready to make a commitment, but not ready to come up with the money that’s needed for a single purchase. There are a few things you should know about getting an RV loan before one’s taken out.
Different Lenders Offer Different Types of RV Loans
Getting financing for your RV is easy to do. There are plenty of lenders from many different companies. The first one people tend to go to are the RV dealers themselves. RV dealers offer credit-based loans. Folks tend to go with an RV dealer’s financing option because it is conveniently located on the lot that they’re checking out the RV on. Make sure you keep all your lending options in mind if you’re looking for an RV.
Banks, credit unions and online lenders also offer loans to those looking to finance an RV. RV loans from these types of lenders, especially an established bank, may offer you a better interest rate with less fine print. Those who compare options from multiple lenders often have a better idea of how much this is going to cost and what steps to take.
RV Used as Collateral
In most cases, the RV is used as collateral to ensure that those who cannot pay the loan can give compensation back to the bank. This works in much the same way as an auto loan does. If you can’t pay your auto loan, they’ll repossess your car or truck.
You can keep the RV if you’re missing payments with an unsecured loan. A poor credit score destroys your chance of getting one. An unsecured loan is risky as the interest rates are extremely high; however, you will be able to hang onto your vehicle if there are missed payments.
Qualifying Can Be a Challenge
Qualifying for an RV is not exactly like qualifying for an auto loan. Getting an RV loan is much more difficult. It’s can be as hard as getting a mortgage for a new home. Banks will look at a number of things. First, they’ll check your debt to income ratio. If the amount of debt you’re in greatly outweighs your income, the bank will consider that when deciding if they should grant you a loan.
There are lenders that will give loans to those with rocky credit histories and are in serious debt. They may offer high interest rates and terms that are less favorable.
If you cannot get approved for a full loan, you can borrow a smaller amount and pay for some of the loan in full. This allows those with poor credit or who are afraid of securing a loan the option to get an RV. RV loans can be difficult to get, but almost anyone can take out a small loan.
What’s the Interest?
Those who choose to take out a loan for an RV can end up paying a great deal of interest. Some interest rates come to as little as 4%. Typically, those with high credit scores and income history will see loans for this amount. Those with poorer credit scores could see loans for 14% or more when it comes to interest. The interest rate can also be based on the tenure of the loan. Loans for RVs typically last for 10 to 15 years. If you have poor credit, you may only be able to get shorter loans. They’ll want to see that you can be responsible for paying the money back. This can be done by having you pay at a quicker rate.
Is It Worth It?
It’s up to you when it comes whether getting an RV loan is worth it. Most who qualify have no trouble paying it back. It just isn’t a good idea if you’re having difficulty when it comes to handling the debt you’re already in or have an income that isn’t secure. RV’s are fun, but you can always rent one if you can’t qualify for a loan.