If you have been planning to go on a vacation for quite some time now, there’s a chance that you’ve considered going on an RV trip to the countryside at some point.
If so, you’ve probably also realized that financing an RV is not a simple task.
RVs are luxury vehicles.
Thus, they have a high price.
Knowing this, you have probably already considered getting a loan for your brand new RV.
However, RV loans are stringent, and you need to at least have 650 points in your credit score to be eligible.
Fortunately, there are some lenders out there on the market that offer supposedly “guaranteed” RV financing, even without a credit check.
While that might seem like good news for you, it’s not.
This is because there’s a catch: the APR for such loans are ridiculously high.
And no, unlike what they do in car dealerships, there is no such thing as 0% APR for RVs because they’re considered a luxury.
However, that doesn’t mean that you can’t find ways to ease yourself a little of your RV financing.
Before that, knowing how RV loans work is the first step to understand alternative RV financing.
How do RV loans work?
Just like any other type of loan, you will be committed to paying the loan in a set period until you either default or pay off the full amount of the loan.
Usually, banks and alternative lenders require at least 650 credit score points for you to be qualified to take out a loan.
But this will vary based on what type of loan you will get.
Your credit limit and repayment terms will also be dependent on this.
The RV you’re planning to get will also be considered for the loan, which includes but is not limited to the year and make of the vehicle.
RV loans, like My Financing USA RV loans, can also be categorized into two categories, mainly secured and unsecured.
An unsecured RV loan will not require any collateral but instead will base the loan on your credit score.
This will determine if you will be able to pay the loan In due time.
Usually, you can prequalify on your lenders’ websites to see if you’re eligible for an unsecured loan.
Not only that, but the application online is fast and secured, so you won’t have to worry about anything else.
For a secured loan, it’s the exact opposite.
If the lender deems you not eligible for an unsecured loan, they will offer you a secured loan requiring collateral.
Usually, they require the RV itself to be the collateral instead of your assets and properties.
Secured loans are the most popular of the two since borrowers want to have lower interest rates and better repayment terms.
The only downside to it is that you will potentially lose the RV when you default on the loan.
RV Type Loans
One thing you must do as a smart consumer is to shop around for different RV loans.
You will soon notice that some RV loans are specifically tailored to a particular type of RV.
These are called RV type loans.
Depending on the RV you want to buy, the repayment terms and interest rate will change.
Most banks and alternative lenders have reasonable rates.
However, they tend to get picky when it comes to whether you’re buying a brand new RV or a used one and whether you’re buying it from a private party or in a dealership.
Buying through a dealer is usually the most popular one of the two since lenders tend to give out discounts and promotions, especially if they’re working together with the dealer.
Interest rates tend to go up at a private party, which is why only a few people opt to buy from them, not that there are plenty to go around anyway.
Dealer Loans
Luxury vehicles such as RVs can also be found in dealerships.
And of course, they also tend to be negotiable in interest rates and repayment terms.
This is because of in-house financing.
In in-house financing, dealerships will let the lender do the financing part for them while the dealers find clients for the lenders.
However, all of this can change if you have a low credit score.
Dealership loans are already quite expensive, to begin with, with their bad credit loans having a 20.95% interest rate and 10% for the down payment.
This will even get higher if you have a credit score below 550 points.
Third-Party Loans
If you are willing to go far for better RV interest rates but not willing to take out loans from banks and dealerships, you can seek out third-party loans.
Third-party loans come from alternative lenders that you can mostly find online.
This would also be better if the alternative lender is doing an in house financing with a dealer.
We talked about dealer loans earlier, where you seek out dealerships with in-house financing.
This time, we’ll directly find those alternative lenders.
Yes, dealerships that have in house financing for RVs are better are easier to find than alternative lenders who work with dealerships.
But alternative lenders are much more forgiving when it comes to their rates and repayment terms (that is if they have in-house financing with an RV dealership).
RV dealerships usually don’t run special discounts and promotions all the time.
Takeaway
Let’s face it.
There is no easy way to find an RV loan with a low-interest rate.
This is especially true if you have bad credit.
You may find lenders who are willing to go without a credit check, but they are sure to give you a ridiculously high-interest rate.
That said, the best way to find an RV loan with a low-interest rate is to improve your credit score first before taking out an RV loan.
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