Purchasing an RV can be one of life’s greatest moments. Traveling around the country, taking in all the sights and sounds. For many, to realize this lifelong goal means utilizing some sort of financing to facilitate the purchase. You may think purchasing an RV is similar to an automobile loan, and in some respects you’re right. However, there are many differences and being unfamiliar with those can end up costing you money.
In this article, you’ll lean 5 ways to maximize your RV loan. These tips will give you a base to start off , allowing you to narrow in on the right path.
Save for a Down Payment
First and likely the most obvious is to save for a down payment on your RV. The simple fact is the less you borrow the more you save, which you can allocate towards your travels or investing.
For example, let us compare the following two purchases. The RV cost is $15,000 and the interest rate for borrowing will be 4.5% over 6 years. First example is a $1,000 down payment with $14,000 being financed at the 4.5% for 6 years. Over the life of that note, you will end up paying about $2,001 in interest.
Now, if you were to save up and put a down payment of $5,000 with the same terms, you will end up paying about $1,429. That’s a difference of $572 or about 28.5%, which is a sizeable difference.
This illustrate the importance of a down payment. It may mean postponing your purchase a few months but that will save you a respectable sum of money.
Shop for the Best Loan Terms
In the process of saving for a down payment, you should be searching for the best loan terms on the market. Many times, individuals go to their local bank or the bank they do business with and only go there. There are many lenders in the marketplace and your financial institution may not be the one.
A myth you may hear is running your credit will negatively impact your credit score. While that has validity, if you are shopping around for a loan it will not have an impact on your ability to get approved.
When shopping for a loan, you want to find the lowest interest rate possible. From there, if you can afford slightly higher payments, look to shorten the loan length as much as possible. This combined with the lowest interest rate possible will save you money over the life of the loan.
Payoff Your Loan Early
Now that you’ve saved for a down payment and found the best financing options, look to pay down your note as early as possible. Nearly every lender on the market will allow you to repay your note early without penalty, but ensure that’s the case at your loan closing.
When paying off your loan early, you allocate the extra money greater than the payment and applying it directly to principal. Even if you pay $50 or $100 extra a month it quickly adds up, saving you money over the life of the loan.
Sacrifice on Specifics
Now that you have a way to secure financing, it’s time to look around at your future RV. When shopping, you can borrow with greater efficiency by cutting back on the extras you may want in your RV. Maybe look to not have tinted windows or a rollout canopy.
Rather than purchasing it now, you can save money on the side and once your loan is paid off you can pay cash for the upgrades you desire. The goal with financing is to get what you need while not over borrowing, because that directly impacts your bottom line.
Negotiate on Price
The final way to maximize your financing is to negotiate on price. Almost always you can talk down the dealer or seller, which immediately saves you money because that’s less you have to finance. Everyone has a number in their head and it’s important you get as close as possible to that number.
Combine your negotiating skills with a large down payment and you can truly maximize your RV loan.
These 5 tips can help you ensure you are getting the right amount of financing at the right price. The goal is to balance your dream of owning an RV while not being ripped off by the lender. Finding the middle ground is simple and using these tips will help you get there.
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Photo by Robson Hatsukami Morgan on Unsplash
