Bad Credit RV Financing
At times, bad credit RV financing may help an individual to get back on the path towards responsible financial practices and a favorable credit score. This seems like a tall order, especially when a person with a poor credit history begins searching for funding options. Terms set by banks and other traditional sources of funding may discourage customers who are trying to purchase a new or used recreational vehicle (RV). Some restrict product selection to a limited type of vehicle, or have unreasonably high interest rates. Many financial institutions are not equipped to offer loans with the same freedom as online institutions or an RV dealership which has had experience dealing with customers with poor credit ratings. Once a person has had credit problems, it may seem to take forever for these to get straightened out, but there are options which may be pursued so that the dream of owning a recreational vehicle becomes reality.
Surprisingly, a person can obtain bad credit RV financing. Part of this is due to the fact that, in general, RV owners are a responsible group. They have a default rate of less than 2%, so lenders are able to offer lower interest rates on loan products. Some companies have over twenty years of experience in dealing with customers regarding bad credit RV financing. They understand that nearly everyone goes through distressing financial times at least once in their lives. Situations beyond one's control such as illness or natural disaster can wreak havoc on the financial status of a normally responsible individual. Lenders are especially willing to work with a customer who has had a single episode of financial difficulty. Those who have had repeated setbacks in major areas such as mortgage payments or car repossessions will need time to repair their rating status.
Even with an occasional episode of falling behind in payments to creditors, bad credit RV financing may still be available. As an individual makes on-time payments and pays off this loan, his or her rating will improve. At that point, the customer will have opportunities to refinance the loan to a better rate. Sometimes, even bad credit RV loans have better interest rates than other types of loans available for such customers from other institutions.
Many factors influence the interest rates which are available to a borrower. These include the loan amount, the finance terms and an individual's credit history. Finance terms may vary according to the length of the loan. Short term loans of amounts ranging from $10,000 to $99,999 will usually be financed for somewhere between 7-15 years. Loans for amounts over $100,000 are given a longer term -- perhaps as much as 20 years. The downpayment which a customer is able to put on the purchase of the recreational vehicle may have a significant impact upon the interest paid over the life of the loan. Most lenders require at least 10% down, although for bad credit RV financing, one would be wiser to have about a 30% downpayment so that a relatively good interest rate can be negotiated. Use an online loan calculator to help determine which time/price/downpayment combination will yield the best results. Notice the great difference in overall price which can be obtained with even slight changes in loan variables.
One must also determine whether the loan will have a fixed or variable rate. These loans are self-explanatory: a fixed-rate loan is one in which the interest rate is set at a certain level for the life of the loan, while a variable loan's interest rate will vary according to changes made in rates by the Federal Reserve or by a bank adjusting its portfolios in reaction to economic conditions. Although the variable rate loan may be tempting because (at least initially) these usually have a lower monthly payment amount, a fixed rate is generally a better deal over the long haul. Interest rates change, and it seems that they move most often in an upward direction! Also, having a fixed payment can make budgeting for such expenditures easier, which is especially important if one has been trying to correct past problems and keep purchases on track. The runaway train of a suddenly-ballooning payment is the last thing a person dealing with bad credit RV financing wants to experience. This could derail the whole process of credit repair.
Some customers prefer to be pre-approved for a loan before they even begin to shop for their recreational vehicle. In this scenario, the loan amount, terms and interest rates are already negotiated beforehand. This option gives the customer more control over negotiating for the best price, for a person knows exactly how much money will be available. One may even find oneself in the situation described by the writer of Proverbs 20:14: "It is naught, it is naught, saith the buyer: but when he is gone his way, then he boasteth." Once the buyer accepts the loan terms it can be from 1-5 days before the money is in hand. The option of having loan payments deducted directly from a bank account is easily set up, and may sometimes result in additional discounts. Note that dealers will require evidence of RV insurance at closing.
A buyer who needs bad credit RV financing can easily locate the same with an Internet search, or by speaking with loan financing agents at a RV dealership. The loan officer will request certain personal information, and ask questions to determine the best loan product for each individual's particular situation. When terms are agreed upon, the matter will be submitted to the lending organization for approval. The approval process is generally quick, although it may take several days to receive the money for the RV purchase. Even with bad credit RV financing, it is possible to purchase a recreational vehicle which may be paid off in a reasonable amount of time, and enjoyed for years to come.
Bad Credit RV LoansLenders who specialize in bad credit RV loans look beyond past payment histories to take a chance on borrowers with cash or collateral. Obtaining financing to purchase a recreational vehicle (RV) seems to defy logic; after all, what lender would want to risk losing money on borrowers who have failed to pay in the past? Unlike an automobile, recreational vehicles, such as motor homes and campers, are considered luxury items. Some larger more expensive models come equipped with king-sized beds, flat panel TVs, fully-stocked state-of-the-art kitchenettes, and computerized controls. In addition, recreational vehicles are huge gas guzzlers; and owners have to pay fees at RV parks, at the toll booth, and for regular maintenance. The dream of owning an RV can easily be diminished by prime lending institutions that might turn down a borrower with a less-than-perfect payment record.
But sub-prime lenders look at other factors when financing what seems to be a frivolous purchase, especially in light of a lagging economy. An obvious reason why sub-prime lenders, credit unions, and finance companies can overlook past transgressions is that there is still money to be made from financing borrowers with potential to pay up. Today's loan officers realize that consumers who are gainfully employed; own a home or other real property (including the RV for collateral); and have savings, checking or retirement accounts might be a good risk for bad credit RV loans in spite of past bankruptcies or foreclosures. High interest rates charged to high-risk borrowers, along with the cost of financing boosts the bottom line for lenders willing to take a chance.
Anyone who has read a newspaper or Internet article is well aware of the housing market slump, sub-prime lending crisis, and sky high interest rates. Economic woes such as these have created a new sector of employed consumers who cannot qualify for prime loans, but may still be able to meet monthly obligations with less stringent lending requirements. These consumers have less than the 700 to 780 consumer credit scores prime financing institutions demand. Finance companies may be willing to lend bad credit RV loans to a borrower with a 640 score or one who is nearing the seven- to ten-year mark of a Chapter 13 bankruptcy, also known as a wage earner. Chapter 13 filings require debtors to pay monthly installments to a court-appointed trustee who, in turn, pays creditors in an attempt to satisfy delinquent debts. Consumers coming out of a Chapter 13 have faithfully made restitution and will soon have a clean slate. Potential creditors also realize that federal law prohibits debtors for filing again within a certain period of time between bankruptcies, therefore these consumers may be considered a good risk. Consumer credit counseling agencies can also help bankrupt borrowers get filings expunged from records, thereby boosting scores.
Obtaining bad credit RV loans may also be possible for debtors who have gone through foreclosure due to high-interest adjustable rate mortgages (ARMs), the bane of many homeowners' and lending institutions' existence. A homeowner who qualified for an adjustable rate mortgage several years ago may be viewed as a victim of the housing market collapse, led unwittingly into a home loan arrangement which proved to be more than the innocent homebuyer could handle. If mortgage payments were paid consistently just prior to the interest rate increase, lenders could look favorably on borrowers who made valiant and sincere efforts to honor financial obligations. Bad credit RV loans may be extended to those who have proven efforts to rectify past financial failures by obtaining secured charge card accounts, consolidating delinquent debts, or slowly rebuilding creditworthiness by making payment arrangements to satisfy creditors. High-risk borrowers may also win favor with future lending institutions by working with reputable consumer credit counseling agencies to repair and restore creditworthiness and a good reputation for paying on time. "A good name is rather to be chosen than great riches, and loving favor rather than silver and gold" (Proverbs 22:1).
Retirees who have fallen on hard times, but are eligible to withdraw monies from Individual Retirement Accounts (IRAs), 401ks, and Certificates of Deposit may also be excellent candidates for bad credit RV loans. Long term savings accounts carry penalties for early withdrawal; usually before age 59 and a half or at other maturity dates. In light of U.S. economic woes, especially in the housing market, it is entirely conceivable that retirees could incur money problems trying to make ends meet while holding onto a retirement nest egg! However, once CDs and employer-provided savings accounts mature, seniors could experience a windfall of ready cash to make their golden years financially secure. The prospects of future financial security could make lenders offering bad credit RV loans take a second look at senior adults looking forward to retirement.
High-risk consumers seeking to obtain bad credit RV loans should first order copies of consumer credit reports from one of three reporting agencies in the U.S. Consumers should carefully review report findings to assess whether delinquent or discharged accounts can be purged from the file. Any discrepancies can be addressed with creditors' representatives via a telephone call, email or correspondence. Making payment arrangements with creditors to handle delinquent debts is the first start toward boosting report scores. Before shopping for an RV loan, high-risk borrowers should also review personal budgets to see if payments are manageable. Borrowers with low scores can expect to pay higher interest sub-prime rates. However, the pleasure of traveling cross country for fun in the sun with family and friends just might offset the pain of paying sky high interest for years to come.