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RV Loan: 5 Tips For Financing An RV

Interested in hitting the open road and experiencing the adventures of RV life? Sounds like fun! But first, you probably need to get the financing necessary to make it a reality, right?

At UMe, we meet the needs of our members by offering financing for a variety of RVs (not just the motorhomes that most people think of):

  • Motorhomes
  • Trailers (aka Travel Trailer)
  • Toy Hauler
  • ATV (aka Quads)
  • Boats
  • Jet Skis (aka WaveRunners)

While you likely have familiarity about getting a home loan or vehicle loan, this might be your first time obtaining RV financing. Thankfully, the process isn’t complicated — here are five tips you should keep in mind to make financing an RV simple and straightforward.

 

1. Improve Your Credit Score

First, it’s always a good idea to do what you can to improve your credit score before getting a loan. Even for those with good credit, improving your scores can’t hurt! Many lenders will require a minimum credit score before you can even qualify for an RV loan. They will also review your credit profile for late payments and other negative marks.

So, once you decide you want an RV, give us a call and we can talk about your score and give you ideas on how you can improve it. This might include correcting inaccuracies, building a history of making on-time payments, discontinuing applying for other accounts, decreasing your balances on credit cards, etc.

With a higher credit score, you are more likely to qualify for better loan terms, which can save you heaps on the total purchase price of your RV.

 

2. Set Your Budget

Before you start shopping for RV financing, determine your budget (then stick to it!). Your RV should be a totally enjoyable addition to your life, but it shouldn’t be a burden. Be sure that the budget you set is realistic. You want to consider both your current monthly budget and how much you feel comfortable paying for a new addition, overall.

RV loans can last for over ten years, so think about where your life will be in the next decade or longer. Will you be in a position to afford your monthly payment in a few years? You want to consider that and all other life-change factors when setting your RV budget.

Having this information on-hand will help you when it’s time to start looking for your RV.

 

3. Consider Your Term Length

The length of an RV loan can range, but generally lasts between 10 to 15 years. While your monthly payment will be less expensive, the longer your term, you will also end up paying more in interest over the length of your loan.

Here’s an example.

12 Year Loan: If you get a $35,000 RV and make a $7,000 down payment with a 5.5% interest rate, you will finance $28,350. Your monthly payments will be $269.37, and you will pay a total of $10,089.83 in interest.

15 Year Loan: If you get a $35,000 RV and make a $7,000 down payment with a 5.5% interest rate, you will finance $28,350. Your monthly payments will be $231.64, and you will pay a total of $12,995.77 in interest.

As this example shows, when you extend your term by only three years, you’ll pay almost $3,000 more in interest while only saving less than $40/month! That’s a chunk of change alright!

You want to weigh your options when determining the best RV finance term length. Is it more important for you to save money now or save money in the long term?

 

4. Make a Down Payment

Down payments aren’t always a requirement. However, in general, they’re a good choice to make. When you make a down payment on your RV, you’re reducing how much you have to finance, which makes your monthly payment more affordable. And who doesn’t like “more affordable?!”

Additionally, when you consider the fact that RVs depreciate just like any other vehicle, you want to offset future depreciation with a downpayment, so you’re less likely to find yourself upside down on your loan. This is especially true for new RVs.

Keep in mind that some lenders will finance 100% of the loan. And we do that at UMe of course — but if you can, we still recommend that you make a down payment when you purchase. Alternatively, you can have a plan in place to pay extra toward your principal balance to reduce your RV value to RV loan ratio.

 

5. Always Check With a Lender First

Some RV buyers will use cash or take equity from their homes to make their purchase. While that isn’t, inherently, a wrong choice, you should still first check with a lender to see your options. It doesn’t hurt to ask, right?

Instead of putting a lump sum of cash into a depreciating asset or getting a home equity loan or HELOC, which requires a set of separate fees and more complicated processes, you could just quickly secure an RV loan.

You can get preapproved to see the terms and conditions you qualify for based on your current finances.

 

Use These Financing Tips to Secure a Good RV Loan

If you want an RV loan that fits your life and financial goals, you can benefit from just a little research and financial preparation! This can help you secure an affordable loan with agreeable terms and conditions.

At UMe, our goal is to help you achieve your financial goals, so we don’t want to overwhelm you with high-interest rates, far-reaching approval conditions, unnecessary fees, or subpar service.

Whether you’re just starting to think about getting an RV or you’re ready to apply for a loan and bring your RV home as soon as possible, we are absolutely prepared to help you navigate this journey. Contact us!

 

Learn More About RV Loans

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