There are different kinds of loans you can have that isn’t money. There are those for houses, as well as vehicles. One example is that for Recreational Vehicles or RV’s. RV’s are a great vehicle for long distance travels that offers comfort like you were at home. If you are interested in taking an RV loan, here’s what you need to know.
What are RV Loans?
RV Loans are a type of loan where you can have an RV of your choice that you pay monthly for a specific amount of time. The price and interest rates will rely on your type of loan, the product, and the credit score.
RV Loans vs. Purchasing vs. Rent
There usually are three ways to have an RV. Either you buy, finance, or rent one. But how different are these methods, and which one should you choose?
Purchasing means buying the vehicle in one go. RVs are naturally expensive, with prices ranging from ten thousand to more than a hundred thousand, with some going as far as millions.
If you have the money to buy it, you can purchase it. However, the cost of buying RV does not end there. Maintenance is inevitable when owning a vehicle, and needless to say, there are several things that RV needs for maintenance because it is both a vehicle and a mobile home. Not to mention the fuel to make it run. You need to save a large amount of money from getting and taking care of it.
Financing the RV is also as expensive as buying the RV, but with a higher cost. This is because of the added interest rate, which is added to the vehicle’s monthly payment. The RV, if loaned, will be paid in small portions per month with interest.
If you want to own an RV, but don’t have an adequate amount of money to purchase one immediately, then you may apply for a loan. But, you need to make sure you have enough money to cover for the monthly payment, interest, fuel, and maintenance.
The last option is to rent. RV rentals are the cheapest way to experience an RV. The payment usually costs a few hundred dollars per day that the vehicle is rented, and you will most likely pay for the fuel as an additional fee. This is for those who do not want to own an RV want to experience and go on RV trips. It’s a short term payment and a great trial period if there’s an RV you’ve been eyeing to buy.
Where to get RV Loans
There are several establishments or institutions where you can apply for an RV loan. Examples are banks, credit unions, and online lenders.
Banks are the usual go-to for loans in general. You may opt for your bank since it’s where your money is stored. Depending on what bank you go to, you may be given an incentive to go to the same place for other financial transactions. If your bank does not offer RV loans, it’s best to opt for another way.
Credit Unions are also a good option for taking a loan. It is a non-profit establishment that is tax-free. What’s good about credit unions is that you get to own part of the union when you become a member. Members put their money in the union to fund financial transactions such as loans, which benefits those who apply. If you aren’t part of a credit union, you have to join one. However, before you apply for an enticing credit union, make sure that they offer RV loans.
Online Lenders are a convenient way to apply for RV loans or just loans in general. Transactions mostly happen online and are quick to get approval from. You can apply for a loan in just a few clicks, and the waiting time takes a few days, unlike big institutions where you may have to wait for a week. The rates are also lower since they do not have an additional charge for a physical office.
Types of RV Loans you may get
There are mainly two kinds of loans you can get in general: the secured and unsecured loans. Secured loans are those that require a collateral to be given away if you are no longer able to pay the loan. This collateral refers to an already existing property you have, such as a vehicle, your home, or any other property. Many RV loans are secured loans, where the RV will serve as the collateral. If you cannot continue paying the loan, the RV will be taken away.
Unsecured loans, on the other hand, are loans that do not need collateral. These are only offered to select people with a high credit score because it relies on the fact that borrowers can surely pay back, hence having collateral is unnecessary. However, these may come with higher interest rates, and if you can no longer pay for the loan, your credit score will be at risk.
Things to consider in RV loans
Before you apply to finance an RV, you need to consider several other things. These are the type of RV, your budget, and your credit score.
The first thing you need to think of when you want an RV is what kind of RV are you looking for? Think of a specific brand, or, even better, a specific model. What type of RV do you want? How big should the size be? What home amenities do you want in it? Research the type of RV you want first before anything else.
Your budget is another thing that matters. You may have chosen the RV you want now, but will it fit the budget? When shopping for RV’s, always look at the price tag. Study the loan you will potentially apply for. Look at the monthly payment and its rate, as well as the time frame of the transaction.
Your credit score is another thing that matters when applying for a loan. This helps lenders determine how creditworthy you are and will tell you whether you can get a secured or an unsecured loan. Those with a high credit score, depending on the scoring system used, can select between secured and unsecured, and those with low credit scores are likely to only avail a secured loan.
RV Loans are an excellent option for people who want to own an RV but cannot immediately afford the total price. Keep in mind that having one will require financial stability and budget control. Interested in applying for a loan? Check out My Financing USA RV Loans and other lenders that offer the same loan for more information.
About the Author
Lauren Cordell is a financial advisor and a dedicated travel junkie. She loves recording her travels and has a penchant for distant holidays. When not in travel, she writes about making the best of travel plans.