There’s a sense of liberty and freedom when you are traveling and enjoying the sight around you, which is why it is not surprising that there are individuals who found a liking to RVs or motorhomes.
But let’s be honest about it. Starting a new lifestyle, such as RVing, is expensive. RV purchase, for one, costs a significant amount of money, not to mention the daily living expenses and maintenance of the vehicle. However, with all these drawbacks, there are still people who are interested in getting one. If you are one of these individuals, you might be wondering what you should prepare, how much money should you secure, or if you qualify for an RV financing?
Every inquiry and question regarding requirements to secure a successful RV financing will be answered in this article. Read on and learn more about RV financing basics and what you should prepare to get a great deal and start living a life on the road.
RV Financing Basic Requirements
Like any other financing, like home and car financing, RV financing is not different at all. Lenders, such as banks and private institutions, require interested applicants to submit all the requirements to be approved for their loan.
These set of questions will help you prepare all the requirements for your RV loan.
How Much Money Should You Prepare?
Your budget is the most crucial requirement to secure your RV loan. If you can prepare a budget to secure the 10% downpayment, usually the base amount of any lenders, you can proceed in filing for an RV financing. But it’s best to remember that some financing requires a 20% downpayment, too. The logic still follows that the bigger the down payment, the smaller amount of repayments you’ll have monthly.
You can check RV loans with My Financing USA as they offer flexible payment terms you can negotiate with, as well as what your preferred down payment is. Sometimes, it matters how compromising your chosen lender is with your loan application.
What RV You Should Get?
This is an essential factor as well as this will be the basis of your budget. There are various types of RVs, and they fall into three categories.
Class A as the most expensive one, ranging up to $1 million or more. Class B and C follow, with an estimate of $100,000 to $150,000. Affordable towable conventional travel trailers and truck campers range from $6,000 to $90,000.
You must determine during the early stage of decision making the usage frequency of the vehicle. Are you going to use it on a weekend camping basis only? Or are you planning to be a permanent resident? The answer will determine what type of RV suits your chosen lifestyle.
Where To File An RV Loan?
The striking thing in applying for an RV loan even though it is perceived to be an expensive type of loan is there are a lot of lenders that offer RV financing now. Even more so, applicants with a bad credit score can even be eligible to apply for one.
Usually, lenders require applicants to have a high credit score of at least 600 and up to be approved with an RV loan. This is because applicants will likely get to enjoy better payment terms, benefits, and fast loan approval.
If you are determined to secure an RV loan, it’s better to build up and establish a good credit score now. RV loan takes up to 20 years of repayment, and it’s a big responsibility that many lenders want to be assured of.
What Is The Required Credit Score?
As mentioned before, many lenders will require at least a credit score of 650 to 700. People who have been living for a long time in their RVs emphasize that a good credit score of 750 is excellent for securing a loan.
Like any other loan, credit score has a significant impact on how big the loan amount you will receive. It has something to do with how much your interest rate will be, your qualification, and the term length.
All of these factors are taken into account based on your credit score status. In order to have better odds of financing your dream RV, it is best to establish a good credit score before applying for an RV loan.
RV Financing Necessary Documents
Now you know the basic requirements in securing an RV loan, the next thing you need to do is to familiarize and read all the presented documents carefully during the transaction. Different documents will be presented to you, and these documents will contain specific and detailed information on your loan.
The most common documents that you will encounter are the Bill of Sales or Purchase Agreement from the RV dealership and the Loan Agreement Document from your lender.
After your RV loan is approved, you need to study the loan agreement document carefully. The loan agreement document is by far the most vital document you need to read thoroughly. This contains all the necessary information about your loan, the payment terms, the loan duration, the loan amount you have been granted, and other private and sensitive information.
This agreement also contains grounds and promises made by two parties, the “lender” and the “borrower.” It’s a complex document bound to protect both parties in case there are unnecessary and unprecedented situations that arise over the loan term.
Starting a new lifestyle, such as RVing, is a liberating move that everyone might dream of. But it also entails a lot of responsibility and takes a long process to make it happen. There are requirements that you need to pass and get approved before you finally start living a life on the road.
Moreover, taking out an RV loan is expensive. If you can’t handle the repayment schedule or meet the loan terms, better think twice before you damage your credit score. Living a different lifestyle is intimidating, but if it’s your life’s dream, you can make it happen. Be wise and smart with your decisions.
Lauren is a free-spirited writer who spends most of her time on the road with her RV. She finds solitude constantly being in a different place and watching different sceneries. Now, Lauren stays near the lake and spends her downtime reading books and finishing her other articles.