Exploring the countryside in a recreational vehicle is an exciting adventure that many families dream of going on. However, financing a recreational vehicle can seem like a difficult process, one that involves credit checks and hours of planning. If you are willing to prepare ahead of time, then you will find that funding an RV is not as daunting as it sounds, so outlined below is a simple guide on how to fund an RV and start the nomadic lifestyle you have always dreamed of.
Before you even start looking for your dream recreational vehicle, you will need to set a budget. Your budget should be calculated as any vehicle finance budget would be, but it depends on different factors to normal car loans.
You will need to consider whether your RV is more of a leisure holiday option, one that you use every third weekend to camp at a local dam or camping site, or if you will be using it for long road trips across the country while sightseeing. If you need a larger RV then you will need to adjust your budget accordingly. You will also need to think of the overall costs of owning a recreational vehicle, not only the monthly repayments. These costs include petrol, maintenance, insurance rates and the expenses that come with road trips.
Knowing your credit score is the first step to take for any vehicle finance. This will determine how willing the bank is to grant you a loan. Most banks look for credit scores of 640 points to 700 points.
If your credit score is below this, then you will have to settle for much higher interest rates or be able to explain why it is so. With very low credit, you may not qualify for a loan at all. You can find your credit rating online for free, and so there is no reason why you cannot arm yourself with this knowledge before sending in your application to the bank. As the saying goes, forewarned is forearmed, and knowing your credit score prior to applying for vehicle finance can help immensely.
Using a vehicle finance calculator can help to show you your affordability rate, which can help to determine what down payment you are able to offer the bank. Depending on how much you can offer upfront, you may be able to get better terms of repayment and a lower interest rate.
A sound option for a down payment is to offer at least ten percent of the purchase price of the RV that you have found to be perfect for your needs. Not only does this give you a headstart on what you owe but it will also help you to negotiate terms with your bank. Down payments also help banks when approving your loan application, as they will see you as less of a high-risk client.
There is more than one way to finance an RV, you do not have to only look into bank financing. You could consider other options, as listed below.
Financing an RV does not have to be a difficult or daunting process. If you know your credit score ahead of time and have set up a strict budget for yourself, half of the journey is already complete. Banks are more likely to lend to a low-risk profile, so be sure that you have been building your credit rating before your application. Offering a down payment is one way to ensure that you get better monthly repayments but be sure you are able to afford this. Soon enough, you will be riding off into the sunset in your dream RV.
