Many people wish they could take off on the open road and visit new places without the traveling and hassle of finding accomodations in every city. According to research, millions of households in the US own a recreational vehicle or a motorhome. However, a motor home can become expensive than a house. Since many people do not have the cash to buy a motorhome, they turn to motor home loans and other financing options. Here are four things you can do to finance a motorhome.
- Dealership. Most motorhome and RV dealers offer on-site financing, which works just like car dealerships. You can qualify for a loan rate as low as 4 %, but it depends on your credit and type of vehicle you want. You can choose between a long term and a short kind of loan. However, short-term investments have lower rates than the former.
- Bank or Credit Union Loans. Compared to a dealership, banks and credit unions offer better deals. However, you cannot just apply for a car loan. You have to apply for a recreational loan or specialty loan. The lending criteria are often more strict than for a car loan since motorhomes are luxury vehicles. If you have good credit and stable income, you can qualify for a loan with an interest rate as low as 3% and a repayment period of up to 20 years.
- Personal loans. You can choose to apply for a personal loan if your credit or income limits you from getting a recreational loan or going for a dealership. You can access a personal loan through your bank or other financial institutions. Some lenders work with borrowers with credit scores as low as 580. As a result, personal loans are easily accessible compared to other forms of financing. However, personal loans have their downsides. Most lenders set a maximum of how much you can borrow. The maximum amount may not be enough to cover your motorhome purchase. The repayment period is also shorter compared to other types of loans. The most significant disadvantage is that the interest rate is as high as 35%. Make sure you compare offers from several personal loan lenders to get the best rates.
- Save for a down payment. With all the financing options available, you will need to save for a large down payment. Most down payments are about 10% of the total purchase price. The more down payment you pay, the less monthly payments you will make. This strategy will help you make your motorhome more available. You may also qualify for a better interest rate if you pay a large down payment.
If you are thinking of buying a motorhome, it is crucial that you start by setting up a budget. A set amount will help you stay within your means so that you are realistic when you are at motorhome finance. Think about the whole cost instead of the monthly payments, which may seem affordable.