An RV can make a fine addition to your lifestyle, but it can also be quite expensive to buy. With prices ranging from $10,000 to a little over $1,000,000, even an outdated, secondhand RV model will usually need financing to fund its purchase.
And it doesn’t help that there are thousands of financing services to choose from, further complicating matters.
When searching for an RV loan, you must do a lot of research and consider every important factor before making any decision. From setting a budget to analyzing your credit score, here are four important factors to consider when shopping for RV loans at My Financing USA.
1. Your budget
Before you begin your search for the perfect RV to buy, it is imperative that you first determine how much money you can get from your RV financing.
Setting a realistic budget will not only help you avoid overspending, but it will also help you buy the RV you need, rather than one which contains several flashy features or amenities that you might not even need.
When setting a budget for your financing, always consider other expenses you will incur in the long run, like gas, monthly repayments of your loan, maintenance costs, and upgrades This will help you avoid defaulting on your loan, and your credit report will thank you.
The moment any brand new vehicle gets an owner, it starts depreciating significantly with time.
What this means is that when you buy a new RV and later decide to sell it, you will sell it at a great loss (possibly at a 30% loss), despite how well you might have handled the vehicle when you owned it. Although the case is quite different with used RVs.
Since used RVs have already depreciated greatly, you can buy one at a cheaper price. And, though you will still lose some money on resale, you won’t lose as much money as you would have lost if you had bought a brand new RV instead.
3. Your credit score
Your credit score will play a vital role in determining whether or not you will get approved for an RV loan. And if you successfully secure a loan, it will also determine the loan’s interest rates.
Simply put, the higher your credit score, the higher your chances of securing a loan, and the lower the interest rates. Therefore, you want to ensure that your credit score is 750 or higher. A lower credit score might attract higher interest rates, which could make it difficult for you to repay the loan.
4. Loan length
The length of your RV loan will depend on several factors, three of which are the price of the RV, your credit score, and your preferred loan term. While most dealerships offer loan terms ranging from five to ten years, nothing stops you from requesting a longer loan term.
Have in mind, however, that while longer loan terms demand smaller monthly payments, you will usually spend more money due to the interest you will have to pay over the years.
On the other hand, choosing a shorter loan term may attract higher monthly payments—but it will also help you repay your RV loan in as little time as possible.