The freedom and joy of having your motorhome on the open road are priceless. However, financial situations vary per person. If you initially financed your RV and are considering refinancing it for a better rate, read on to learn what factors you should consider and how you can tell if refinancing is right for you.
Factors To Consider for RV Loan Refinancing
When you refinance a loan, you’re essentially replacing your existing loan with a new one. The new loan could come with improved monthly payments, interest rates, or loan terms.
To decide if RV loan refinancing is right for you, ask yourself:
How Does My Credit Look?
Your credit history plays a significant role in deciding your refinancing options. It’s possible you bought your RV when your credit score wasn’t the best it could be. If your credit score improved over time, refinancing your RV loan terms would allow you to pay a lower interest rate, so you spend less in the long run. If you’re in good financial standing and your motorhome is in good condition, refinancing might be the right choice.
Have Interest Rates Changed?
RV loan refinances rates constantly fluctuate, with interest rates dropping and increasing over time. If you purchased your motorhome when RV loan rates were high, you could qualify for a lower refinance rate.
Does Your Loan Have a Prepayment Penalty?
An important thing to consider is some loans charge you a prepayment penalty. You may see a fee for paying more than your agreed-upon amount each month. If you pay off your loan early, you could be stuck with a hefty fee. Before moving forward, verify that your loan terms don’t include a prepayment penalty.
How Long Has Your Auto Loan Been Open?
Average RV loans require you to make at least 12 months of payments before you’re eligible for refinancing. Refinancing your loan before 12 months can risk unnecessary inquiries on your credit.
What Condition Is Your RV In?
If you owe more than the current value of your RV, you may have trouble refinancing your loan amount. How much wear and tear is on your motorhome can also influence if RV financing is right for you. Older motorhomes and those with many miles usually have more trouble qualifying for refinancing.
Different Types of RV Loan Refinancing Options
Before refinancing, you want to decide whether you want a short-term or long-term loan:
Short-Term Loans
Short-term loans come with higher monthly payments in exchange for shortening the time it takes to pay your loan off. While this may sound tempting, you’ll want to check and make sure high monthly payments fit within your budget.
Long-Term Loans
Longer-term loans typically take 15 to 20 years for the buyer to pay off. While that may sound like a long time, these RV loan terms allow for more budget-friendly payments. However, some longer-term loans with a typical interest rate might have you paying more than your vehicle is worth over time.
How To Refinance an RV Loan
Remove a Co-Signer
Lenders often ask people to add a co-signer if their credit score is low or they didn’t have a high enough income. A co-signer agrees to take responsibility along with you for the loan.
When you first got your loan, you may have needed a co-signer. Whether your credit has improved or the co-signer no longer wants to be on the loan, refinancing your loan can remove them from any financial obligation.
Improve Your Budget
Are you saving for retirement and struggling to set aside a certain amount each month? Maybe you have a big vacation you want to start saving toward? You can refinance an RV loan to drop your monthly payment if qualified. You can then use that extra cash to set aside for any savings goals you may have.
Lending a Hand in Refinancing Your RV
Finance Solution helps you navigate different loan options and choose the one that best fits your financial situation. We examine all external factors to find the best loan for you. We make sure your loan gets quick approval, so you can get back on the road and enjoy your purchase. Contact us today to get the best refinancing options for your recreational vehicle loan.
