Financing Straight Ahead
There are as many reasons for wanting a Recreational Vehicle (RV) as there are makes and models. Some folks dream of adventures on the open road. Others hope to make family vacations more flexible and affordable. It’s not unheard of for couples to completely replace their house or apartment with a spacious RV and live in it year-round.
Whatever your motivation, an RV is a major purchase and a substantial investment. There are three basic types of RV loans you should be aware of before getting too far in your shopping. That way, you can have a pretty good idea which one is likely to make the most sense for you before you buy.
The first sort of camper financing is a traditional New RV Loan. These are offered by many dealerships, and operate in much the same was as a new car or truck loan. You agree to a total price and an interest rate, which are then locked in and broken into a specific period of time – say, 72 months. You pay the same amount at the same time every month until the loan is paid in full. In a traditional loan like this, the RV acts as collateral, just like any other new vehicle would. If you fail to make your payments, the lender has the right to repossess your RV.
The second common type of RV financing is a basic personal loan. The main difference is that a personal loan is unsecured – you’re not using the RV or any other property as collateral for the loan. This is most common when buying a used vehicle, since the value of the RV is more likely to fall below the balance owed on the loan at some point along the way, making it poor collateral. Because it’s unsecured, you may find it more difficult to qualify for this sort of loan. You should also expect higher interest rates. On the other hand, you can use these sorts of camper loans for a much wider variety of things related to your RV – repairs, maintenance, storage, park fees, etc. As personal loans, their use is entirely at your discretion.
Finally, there’s RV financing for bad credit. Structurally, these are simply personal loans for people with lower credit scores or other credit history issues. The reason these are often considered an entirely separate type of loan is their source. Some traditional financial institutions will offer bad credit RV loans, but they’re largely the purview of lenders who specialize in personal loans with poor credit. These lenders will look at your credit history and scores, but are more likely to consider your current situation as well – your job, your reliable income, how long you’ve lived in one place, etc. Too many old-school lenders are looking for reasons to say “no”; these lenders are looking for reasons to say “yes.”
There are likely to be additional fees up front and penalties for late payments may be more severe. Interest rates will almost certainly be higher. On the other hand, if approved, you’ll have that RV in no time. If you’re certain that camper or RV is the way to go, don’t let your past credit mistakes stop you. Shop lenders until you find something you’re happy with, and don’t hesitate to negotiate, even with bad credit RV loans. You’re still the customer and they don’t make anything if they don’t win your business.