How to go About RV Financing

A Recreational vehicle (RV) means a lot of luxury and adventure and is an excellent investment if you love to travel. If you are a retiree looking to travel conveniently and explore the world, you may think about investing in an RV. As we speak, there are 9 million RVs doing rounds on American roads. Buying an RV is expensive, and almost equivalent to purchasing a house. Like most people, you may not afford to buy in cash, making RV financing an option. Securing a loan to finance your RV, just like any other big purchase, is not easy. You, therefore, need to do some prep work to ensure that your financing efforts go smoothly. 

Think about the kind of RV you need 

For you to settle for the kind of RV that will serve your needs, consider several questions such as why you are buying the RV, for whom, where you plan on travelling, the kind of RV you need, and the features you are looking for. 

The kind of RV you will choose will depend on factors such as your ability to drive, comfort, floor area, parking space, budget, and your camping style. You can go for a smaller RV which is less expensive and easier to park if you do not have a huge family and you do not plan on using it much. If you are on a budget, you can settle for an RV with the features that are most important to you first and slowly customize it with extra features after the purchase. 

Types of RVs

There are numerous types of RVs to consider. The two major types are motorhomes and towables. The difference between a motorhome and a towable is that you can drive a motorhome, but you will need to tow a towable with a separate vehicle. Buying a towable can be as expensive as buying a motorhome, especially if you do not already have a vehicle that can tow an RV. You will need extra money to buy a towing vehicle which can weigh you down financially. Even if you have a towing vehicle, consider how comfortable you will be to drive while towing. 

New vs used RV

You can choose to buy new or used, as per your financial capability. If you are buying a used RV, you will get a much cheaper deal and save lots of money on insurance. However, ensure that the RV comes with maintenance records or you could end up spending more money repairing damages you know nothing about. Further, inspect the RV’s seal, rig, roof, and other parts to ensure that it is roadworthy.

Set a budget

The first step to financing your RV is to have a budget of how much you are willing to spend. An RV can range from $6000 for a used pop-up camper and as high as $500,000 for a high-end RV. Once you take a loan, the repayment period can vary from between 10 to over 20 years. 

While a longer repayment period may be attractive because it is affordable for most, it may not be the best option because 20 years is a long time, and there is no guarantee that your financial situation will remain the same or even get better. Remember that the value of the RV is also depreciating, so if you choose a longer repayment period, you may end up paying the loan long after the car has outlived its usefulness. 

Plan for other costs

Apart from the monthly payments you will be making, you should also budget for other costs such as cable, water, electric, gas, and other utility and maintenance costs. Most lenders will also need proof of insurance before they give you a loan. The insurance coverage you get should base on your lender’s requirements. Include monthly insurance costs in your budget.

Shopping around for the best prices

It may not help to be loyal to a certain dealer or brand. Check out competitors as well as online dealers. Even if you find a price tag that fits your budget, continue with your search. You might just find a better deal. 

When you are negotiating the price, take some serious risks. For example, start as low as half the price. You might be surprised at how much of a price cut you can get. When you are talking to a salesperson, look out for incentives which add real value to your purchase such as free oil changes for a year and not a free pair of seat warmers.

How to land a good financing deal

Apart from buying used RV, shopping around, customizing your RV after purchase, and negotiating with salespeople, below are other ways to get a better deal ad pay less for your RV. 

• Improve your credit score 

If you have a good credit score of 750 and above, you will qualify for a loan with a low interest rate. For a lower credit score, you may have to settle for higher interest rates. If you are not in a hurry to buy an RV, you can improve your credit score first as you plan for your purchase.  

• Start saving for a down payment

Expect to make a down payment of 10% to 20% of the purchase price of your RV. You should, therefore, start saving for it. The bigger the down payment you make, the lower your monthly payments will be, and the shorter time you will take to complete your payments. You could even qualify for a low-interest loan if you pay a higher initial payment. Making a higher down payment also helps you to avoid an upside-down situation where you owe more than the value of the RV. 

• Consider the current RV rates

RV rates keep changing and they mostly shadow of auto loans. If auto loans interest rates are dipping, you can jump on to start financing your RV and save lots of money in interest.

• Wait for the end of season offers

Another strategy you can use to get a good RV deal is to buy at the end of the season. You can find great discounts during the end of season sales. 

Owning an RV is one of the biggest decisions you will ever make. Take your time to choose a suitable RV and do your best to get a good mix of price and quality.