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Are bad credit RV loans something you should consider when your credit score is not up to par for a conventional credit load. Many of us dream of hitting the open road in an RV, but once we take a look at our credit we realize that just might not be possible.
Though your credit score is an important criterion some lenders don’t have a set-in-stone minimum credit score. Some RV loan companies may approve you if you have a large enough down payment or can show that you are low risk and can repay the loan.
So what are some of the best options for someone with less than stellar credit who is interested in financing the purchase of a used or new travel trailer? First off, you need to determine what type of camper your want, your budget, and your RV lifestyle.
Here are some resources we have to help you with choosing an RV type.
The cost of your RV
One of the first things you’ll need to decide is whether you want a towable RV or a motorized one. Towable campers are less expensive than a motorized RV but you’ll need a reliable towing vehicle that can easily tow the camper your have in mind. Motorized RV may require a special license if they weight more than 26,000 lbs.
General RV has a good resource on the different types of RVs. You can read it on their website.
Set your RV budget
In addition to the cost of the RV, you will also need to consider maintenance, insurance, and accessories. The cost of the RV itself will vary depending on the style of RV and whether or not you buy new or used. Here is a breakdown of average Rv cost:
Tent camping trailers: $5,000 to $20,000
Truck campers: $7,000 to $70,000
Travel trailers: $1,500 to $80,000
5th wheels camping trailers: $20,000 to $175,000
Class A motorhomes: $80,000 to $800,000 and up
Class B and C motorhomes: $50,000 to $200,000
If you decide to purchase a used camper than you can expect a huge saving.
Before a lender funds your RV purchase you will need to show proof of insurance. Ask your lender for their insurance requirements than speak with your insurance agent about the options you may have.
You can expect to pay anywhere from $100 a month to as much as $300 per month or higher depending on the year and model of your RV, additional coverage such as damaged personal items, pet in injury coverage, and protection for RV accessories. You will also pay more if you live in your RV full-time.
Best Class A Motorhome Insurance by LendEdu is an excellent resource to learn about RV insurance.
If you don’t have space to park your RV at home you will need to consider the cost of RV storage. Renting an RV storage space can be expensive. For example, a 10′ x 30′ enclosed storage unit can be anywhere from $200 to $400 per month. Shopping around and checking prices, even going as far as negotiating prices, is a good thing to do before you commit to any RV storage space.
When it comes to owning an RV you’ll need to consider maintenance costs. There are many items in an RV that need regular check-up and maintenance such as regular cleaning and lubrication of parts. Your electrical system should be inspected every six months, water heater and A/C system need annual inspections and services to prevent issues.
Also, you need to prepare for when an appliance breaks down or needs to be replaced. Oil changes, gas filter changes and inspecting and cleaning your RV roof are just some of the many maintenance items you need to consider.
It is suggested you set aside $150-$200 per month for maintenance. If you are comfortable as a DIYer then you can save some money otherwise be prepared to pay someone for these services. You can call an RV service department and they should be able to give you a ballpark estimate on what it will cost to maintain your RV.
Make sure you add the cost to your overall RV budget.
If you plan to store your RV during the cold months get an estimate for winterization and de-winterization as well.
Rent Before You Buy
One of the best ways for you to determine if owning an RV is right for you is to rent one. Renting is essentially a test drive of the model and size RV you are interested in. You’ll learn a lot about the RV and about your skills at handling an RV by renting one for several days. We recommend Outdoorsy for your RV rental as they have a huge selection of campers available just about everywhere in the USA.
Getting your RV loan
Before you move forward with your bad credit RV loan know that is is very likely it will cost you more than an RV loan when you have good credit. Those with good credit can expect an interest rate of 3%-5%, however, if your credit is less than stellar you might have to pay as punch as 24% or as high as you state legal limits allow.
RV lenders will use your credit score and credit history to determine whether or not you will be at high risk or low risk for them. They also take into account the type of RV and the age of the RV if you are buying used. All of this is considered and evaluated by the lender to come up with your interest rate.
Negotiate better by getting Pre-Approved
Getting pre-approved may help you negotiate better and land you a better price. With a pre-approval letter, chances are the dealership sales team is going to take you more seriously. There are several online lending sites where you can fill out one application and receive multiple loans offers depending on your credit score and history. Lending Tree is one of those websites.
Consider a bigger down payment
To help reduce their risk RV lenders usually require a 20% downpayment. But did you know you may be able to lower your interest rate by increasing the amount of down payment? Ask your lender if providing a larger downpayment than the typical 20% will lower your interest rate.
A bigger down payment also increases your chances of getting approved for a bad credit RV loan.
Improve your credit
One of the ways to lower your interest rate is to take steps to improve your credit score. Credit scores or FICO range from 300 to 850. The lower your score the more likely, according to statistics, that you will default on your loan. Any credit score below 580 is considered a bad credit score.
Which lenders to go for a bad credit RV loans
There are several types of lenders you can approach about getting approved for a bad credit RV loan. You can try an online lender such as Southeast Financial or My Financing USA. With online lenders, you are no going to get in-person service and the amount you are approved for may be lower than other types of lenders.
You can also try a credit union. You’ll need to be a member of the credit union however joining is usually very simple. Banks and dealership financing are also options you can try.
In-house financing is the “buy here, pay here dealers. Extreme caution is needed if you are going to try in-house financing for your bad credit RV loan. In-house financing typically comes at a high-interest rate and you are limited to their inventory of campers to choose from.
Bad credit RV loans summary
With bad credit, it can be challenging to finance the purchase of an RV. However, if you do you diligently do your research and shop around you just might be able to find RV financing that within your budget.
Bad credit will make the cost of owning an RV higher but should not be a roadblock to you owning and enjoying an RV.