Taking off on a road trip adventure in an RV is a great way to spend time with friends and family. You can set up your home on wheels in a remote location, then relax and enjoy the natural surroundings. Traveling by RV allows you to have unique experiences that a hotel room could never match.
If you’re thinking about purchasing an RV to make some new memories with your loved ones, you may be wondering if your credit score is high enough to qualify for an RV loan. The following overview of the financing requirements for RV loans can help you decide if you’re ready to apply.
How Do RV Loans Work?
RV loans are similar to car loans in several ways. They are installment loans, which means you’ll receive the full amount upfront. You’ll then repay the loan with fixed monthly payments. RV loan terms may be up to 15 years.
The interest rate on RV loans is usually fixed and is locked in when the loan is created. This means you won’t have to worry about future rate increases.
Whether you’ll need a down payment for an RV loan depends on your lender. An important benefit of making a down payment to consider is that the higher your down payment, the less you’ll have to finance. This will help you save money on interest.
Collateral is usually not needed for an RV loan. These loans are similar to car loans in that the RV itself serves as the collateral.
RV loans are offered by banks, credit unions, and other private lenders. If you’re interested in obtaining the best interest rate for your loan, non-profit credit unions usually offer the best deals.
Unlike banks, credit unions are owned by their members. They don’t have to worry about earning a profit for shareholders. Therefore their primary concern is to make sure they offer the lowest interest rates and fees to provide the best possible service to their members.
What Is the Minimum Credit Score for an RV Loan?
The specific credit score you’ll need to qualify for an RV loan will vary from one lender to another, with the most common score being 660. This is considered an average score, and many people will have no problem meeting this requirement.
When considering you for an RV loan, your lender will look at several factors. Although your credit score is important, it doesn’t give your lender a complete picture of your ability to repay the money you borrow.
The length of your credit history is one factor that will be considered. Lenders want to make sure you made all of your previous debt payments on time. Missed payments could indicate that you may have trouble making payments on a new loan.
Your employment history is another important consideration. Lenders prefer to loan money to people with steady employment. They also want to make sure you earn enough to make the monthly payments.
Your lender will also review your current debts to make sure you aren’t overextended. That’s because, the more debt you have, the greater the chance that you could start missing payments on one of your loans.
How to Improve Your Credit Score for an RV Loan
Although you may be able to qualify for an RV loan with an average credit score, you may be able to obtain a lower interest rate with a higher score. Because your credit score indicates how well you managed your debts in the past, lenders often reward borrowers who have high scores with the best possible rates.
The following are several ways you can improve your score.
Make Sure to Pay All of Your Bills on Time
The payments you make to your lenders are reported to the credit bureaus that issue your credit score. Because missed payments can harm your score, it’s important to reach out to a lender if you’ll be late on a payment. You may be able to make an arrangement to pay at a later date to help you avoid a negative report to the credit bureaus.
Keep Your Credit Card Balances Low
Carrying too much credit card debt will negatively affect your credit score. Ideally, you don’t want to use more than 30% of your available credit at a time. Less is better. If you have a high balance, paying off some of it may help to improve your credit score.
Don’t Cancel Old Credit Accounts
An important factor in determining your credit score is the average age of your credit accounts. So, if you have a credit card you’re no longer using but you’ve had it for many years, it's better to keep the account open instead of canceling it, since this could help your credit score.
Make Sure Your Credit Reports Are Correct
Mistakes are sometimes made with credit reporting, so something negative could end up on your credit reports that shouldn’t be there. That’s why it’s important to obtain and review copies of your credit reports each year to make sure the information they contain is correct. If it’s not, be sure to dispute incorrect information with the reporting bureau.
Don’t Apply for Too Many Credit Accounts in a Short Period
Whenever you apply for a new credit account, a hard credit check will be done. Hard credit checks cause your credit score to decline a little, which may last for up to a year. Therefore unless necessary, it’s best to avoid applying for new credit accounts in the months before you apply for an RV loan.
RV Loans With Wasatch Peaks Credit Union
Are you ready to begin your RV adventures? If so, Wasatch Peaks Credit Union offers an RV loan with competitive interest rates and no application fees. Terms of up to 15 years are available, and you may be able to finance up to 100% of the purchase price.
You can apply either in person or start your application online. Click on the following link to learn more about our RV loans and to get an estimate of your monthly payments with our online RV loan calculator.