Recreational Loan Tips
Whether you’re applying for a motorhome loan, camper loan, horse trailer loan, boat loan or motorcycle loan, it will be a whole lot easier if you have a bit of good advice from the experts.
There are many reasons to apply for recreational lending. It may be your first loan of this nature, or the second or third. In any case, you want to find low-interest rates and repayment terms that fit into your future plans when you finance the purchase of a recreational vehicle. We hope you’ll choose to finance your purchase with a loan from Southeast Financial, but whether you secure a loan with us or not, you can still take advantage of these helpful tips.
Choose Simple-Interest Loans
Any recreational loans that do not come with simple interest should be avoided. A simple-interest loan is one that requires monthly payments until the loan is repaid, without any prepayment penalties. Southeast Financial only offers this type of loan. The monthly payments in a simple-interest loan repay a portion of the accrued interest and a portion of the principal (the amount you borrowed). This will vary based on the amount of the principal still unpaid, the period of time that has passed since the last payment and the interest rate on the loan. If the loan is repaid early, the borrower only has to pay interest for the time period they had the loan out. Other types of loans use standard amortization tables to calculate monthly payments at the beginning of the loan repayment period, and the borrower agrees to pay back the principal and full amount of interest for the entire repayment period, regardless of whether they repay it early.
Don’t Apply for Too Many Loans
Allowing five or 10 financial institutions to run a credit check will lower your credit score. Southeast Financial will run your credit report, but we only contact the best banks that we know will offer you the best rate and terms. In essence we do the shopping for you, so you won’t have to fill out unnecessary applications.
Save for a Down Payment
If you can’t put down at least 10% of the purchase price of the motor home, camper, RV, horse trailer, boat or motorcycle, you may not qualify for a loan. Save up until you have enough for a down payment before applying for a recreational loan.
Think about Debt-to-Income Ratio
Consider your debt-to-income ratio before applying for a motor home loan, camper loan, horse trailer loan, boat loan or motorcycle loan. If your household’s monthly minimum debt payments are very high compared to your monthly gross income, you may not be able to qualify for a loan with low rates and flexible repayment terms. It’s best to wait until you’ve reduced your debt.