Summer has arrived in Canada at last, and you are more than ready to get out of your own neighbourhood and explore the country in an RV. The only problem is that you don’t have one yet. One way people get around this problem is by renting an RV for their travels.

However, most RVers eventually want a vehicle they can call their own even when they need to finance the purchase. This blog presents some tips on how to finance your RV without taking on more debt that you can manage or reducing your cash flow too drastically by making a large down payment on your purchase.

The First Rule of RV Financing

Before you head to the nearest RV lot and hand over a lot of cash, take stock of your current financial situation and how much you can afford to spend. If you know you will finance some of the purchase, we recommend ordering a free copy of your credit report from Equifax Canada or TransUnion Canada as soon as possible.

You can also consider requesting your credit score for an additional fee. Companies offering RV financing put a lot of stock in this number, so knowing your score helps you understand your buying power. You are also in a better place to negotiate for the lowest interest rate and most favourable payment options when you have a high score.

Researching current interest rates on RV financing also helps you when the time comes to make a purchase. Some companies may be willing to lower their interest rate to beat a competitor and win your business.

How Much Does RV Financing Cost?

The answer to this question might surprise you because financing an RV could cost less than you think. The key is to ask the RV dealer to spread the cost out through amortization (the process of reducing debt through a series of regular payments). You do not have to worry if you are still uncertain what the term amortization means for your situation. An RV financing representative will explain it to you and walk you through several scenarios.

RV dealers have gotten more flexible with financing terms over the years. Many now offer loans of up to 20 years on both new and used RVs. While the typical down payment you can expect ranges between 10 and 20 percent, some businesses offering RV financing have no money down options. Just make sure that you can afford to repay the full balance over time before you take advantage of this offer.

How Do I Finance an RV?

Dealer financing of RVs is a popular option in Canada, but it is far from your only choice when it comes to paying for your RV. An important thing to remember about dealer loans is that they often go through a bank, and this might end up costing you extra money. For example, if the bank offers the dealership a 3% interest rate on your loan, your finance representative may quote you a 4% rate to ensure the dealership makes a profit.

On the other hand, some dealerships offer lower rates to customers because of their established relationship with a bank. This is where it really comes in handy to complete your research first, because you will know the going rates and can negotiate with the RV dealer if their offer is too high.

You also have the option of going to your bank directly to apply for RV financing. You might appreciate this option if you want to receive pre-approval for a loan and then go shopping for an RV. If approved for a loan, your banker can issue a cheque directly payable to the RV dealer when you already know the cost of the RV you want to purchase. Keep in mind that the RV acts as collateral for your bank loan. That means the bank can repossess it if you default on the loan.

Taking out a personal loan is another option to consider when it comes to RV financing. Some people prefer this option because they do not have to put their RV on the line with an unsecured personal loan. However, you will pay a higher interest rate if you do not offer the bank any type of collateral.

Once you have secured financing, you can reduce how much you pay over the life of your loan by making larger than the minimum payment required or by requesting a shorter loan period. We wish you the best of luck with finding an affordable RV that fits your finances as well as your dreams.

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