You’ve dreamed of taking to the open road for an adventure without losing the comforts of home. You’ve been researching recreational vehicles (RVs) to suit your style. But before you begin brainstorming vanity plate ideas, make sure you have your finances in order.
You’ll need to determine how much you want to spend while considering other costs, such as ongoing maintenance, insurance, licenses or storage fees. These need to fit your budget. While this part of the process is challenging, it’s necessary so that you can enjoy the road without financial worry. Once you have a budget, you can determine how much you’d like to put toward a down payment if you choose. Knowing this could provide flexibility during the buying and financing process, and ultimately, lower the financed amount and monthly payments.
Your credit score is an important factor in determining the interest rate you receive for the loan. Generally speaking, a lower credit score results in a higher interest rate. Ideally, you should know your credit score before beginning the financing process. If your credit score needs to be improved, you could focus on a variety of factors, including on-time bill payments, amount of debt load and length of credit history.
Loan sources can vary from banks, credit unions or even the RV dealership. The loan type also varies but is typically secured by your titled RV. Generally, the interest rate and monthly payments are fixed allowing you to maintain a predictable monthly payment schedule for the entire life of the loan. Other factors including your debt-to-income ratio (DTI), a calculation which helps lenders determine if you can afford an additional monthly payment, and age of the RV may also come into play when determining the financed amount.
