Purchasing a vehicle of any type takes a lot of planning and research.
However, when you are looking at a recreational vehicle, you are also looking at something similar to a home loan. The loans are more complicated, so you want to make sure you consider the type of loans available to you. The repayment terms and benefits (if this is your first big loan) will also need to be considered when determining how much money you are looking to receive.
Type of Loan to Select
There are several types of loans available, however, you will want to find a financial institution that offers simple interest loans for recreational vehicles.
The main reason you want to select a simple interest loan is that there are no penalties for prepayments. You will have monthly payments that cover the interest accrued and then a portion of the principal. If you want to pay it off early, you will pay only have to pay interest for the time period you 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. If the financial institution you go to for a loan does not offer this type of loan to you for a recreational vehicle, keep looking.
Bonus: Take advantage of our free RV Loan Calculator to check out your potential loan interest and payments.
Shopping for a Loan
Loan shopping is difficult and you want the best loan possible. However, you will have to have your credit score run every time you fill out an application. The more times institutions run your credit check, the more it can affect your credit, so you should keep this in mind to not fill out multiple applications as needed. Talk to financial institutions to make sure you meet necessary requirements before applying.
After you find the financial institution you want to get your loan from, you will want to look at your debt-to-income ratio and the down payments. When it comes to purchasing recreational vehicles, you will want to put down at least ten percent of the price. The more money you can put down, the better your chance to qualify for the loan. Similarly, your debt-to-income ratio will be evaluated for your ability to qualify for the loan. You want to make sure that your income is much higher than your monthly expenses.
What Terms Apply?
Finally, when you are looking at a loan, you will want to find out what type of recreational vehicles the loan can be applied to. Some places do not offer loans for vehicles that are designed to park permanently or semi-permanently. There are also different rates based on the number of wheels and axles. You will also want to talk to the financial institution about what models and mileage apply for the loan.
Most financial institutions will offer a variety of loans so you can select the one that meets your needs. It is easier when you know more of what you need prior to going in, so you can lead the discussions. As long as you stay within your budget, and get a loan that does not penalize you for paying it off early, you will be able to be on the road in your new mobile home as soon as possible.