Going camping in an RV is as American as apple pie. In 2018, Americans bought nearly half a million RVs. That added up to more than $20 billion in revenue for the RV industry.
RVs also appeal to a wide variety of age groups. Both retiring Baby Boomers and people in their 20s and 30s are interested in RVs.
But before you can buy, you need to figure out RV financing. Read on for everything you need to know about paying for your RV.
RV Financing Options
There are two basic types of RV financing: unsecured and secured. An unsecured loan requires a higher credit score. That’s because the agency giving you the loan is taking on more risk.
But with a secured loan, you’re offering up some collateral. If you don’t pay for the loan, then that means the collateral gets taken.
The obvious option for collateral is the RV itself. If you don’t keep up with payments, then it gets repossessed.
If you don’t have amazing credit, you may be more tempted by a secured loan. But it’s worth thinking about a couple of things first.
First, consider the purpose of the RV. If you’re living in it full-time, then maybe you can take out a bigger loan.
But if you’re not going to live in it, you should reconsider going into a lot of debt. You don’t want to be making big payments for something that you only use a few weekends a year.
It’s easy for first-time RV buyers to get sucked into paying for a bigger or more expensive RV than they need.
New vs. Used
Do you want to look for a used RV for sale, or a new RV for sale? That question will help you focus your search.
Talk with your family about a budget, and then stick with it. If you can only afford a used RV for sale under $5,000, then don’t even let yourself look at fancy RVs that just rolled off the assembly line.
If you have more debt, you’re also going to be looking at a higher interest rate. A 5 percent interest rate on an RV is a much better deal than 10 percent.
If you can’t get a single-digit interest rate, reconsider your plans to buy an RV. That sounds drastic, but remember that this should be fun. An RV that you can’t afford isn’t going to feel very, well, recreational.
A large down payment on your RV can also help you pay off your loan faster. A big down payment with a five-year loan term is better than a small down payment and a 10-year loan term.
Of course, paying off a loan faster means you’re paying more every month. Try to find a balance between two extremes.
The Final Word on RV Financing
As summer approaches, campers get eager to hop in an RV and flee civilization. But don’t get in such a hurry that you fail to properly understand your RV financing options.
At Gypsy Road RVs, we’ve got new and used options for every type of buyer. Texas is full of places worth exploring via RV, so contact us today to learn more. You can even apply for credit without leaving your house.