More and more people are heading for the open road on vacations and for many, this means purchasing an RV. While a recreational vehicle can be a lot of fun for your family, you want to make it as affordable as possible. When you come to your dealership, you should have a few things in mind. Here are the mistakes many people make when taking out RV loans.
- Buying the Wrong Condition
The condition is a key concept in buying an RV. Getting a new RV certainly seems more desirable, but with value depreciation at 20% the second after you drive it off the lot and roughly 10% per year after that, it can be a bit daunting to think of putting that much money in something that will usually only go down in value. However, buying a used RV can come with its challenges too. Sure, you get a lower price point, but you will also have to worry about more repairs, aesthetic improvements, and more time spent sending it to the body shop, potentially spending more money on the used RV than if you purchased a new one.
- Not Doing the Legwork
No one wants to buy a luxury vehicle or trailer like an RV to feel like a chore. But a little research can save you a lot of heartaches (and money) down the road. You don’t want to purchase an RV and then, a few months after using it, you find out that there is a leaking problem in the piping. You go online and do some after-the-fact research and discover that other RVers have had the same problem with the model that you are now stuck with. What do you do now? Sell it at a loss? Spend money on lengthy repairs? So much can be fixed by doing your homework beforehand.
When you buy a car, you “kick the tires;” take it on test drives, sit in it, look over all the bells and whistles. When you buy a house, you go through a home-inspection period and probably take multiple trips to look at the house yourself.
Buying an RV is that mid-way point between buying a car and a house. So, you should consider it as an investment to do twice as much work when researching.
- Not checking your credit score
Just like when applying for a best rate personal loan, consumers should first check their credit rating. In general, 640 and over is considered a good credit score. With a lower score, such as 600 or even around 550, you still may qualify for a personal loan, but you’ll pay more overall. Interest rates may vary between states, but borrowers with bad credit can expect to get rates of up to 24%, which is significantly higher than the rates offered to those with scores of at least 640.
- Owing More on an RV Than It’s Worth
Like any vehicle, RVs depreciate by a huge margin when you drive them off our lot. Because of this, you could fall into the trap of owing more on your loan than you would get back if you traded it in. To avoid this money pit, you should make as large a down payment on the vehicle as possible when you buy it. This will leave you owing less over time and you should be able to make a profit towards a new one when you trade it in.
- Figuring Price
No one likes dealing with the numbers of buying an RV. Adding up percentages and interest rates on financing, or trying to figure out how much down you can put on an RV is stressful, tiresome, and can even be a bit frightening when you start seeing the big numbers.
Vacationing in an RV with your family or friends can be the experience of a lifetime, but you want to make it affordable. Side-step the troubles above by following our tips to make the most of your money. That way you’ll enjoy your vehicle for years to come.
Geraldine Mills is a Californian traveler who recently bought an RV to travel from state to state. She admits getting payday loans to be able to fulfill her dreams of owning an RV. Geraldine works as a content specialist for several travel websites both here and abroad.