A Guide to Saving Money on Travel Trailer Financing
Whether you are looking to purchase a pop up camper for weekend camping or a more luxurious fifth wheel or motor home, travel trailer financing can help make that dream a reality. The best way to make sure that your travel trailer is an investment and not a drain on your future is to do your homework prior to making a purchase.
Determine the best travel trailer for your needs
There are a multitude of travel trailers available and it's important to understand the differences between each type in order to choose the one that suits your needs and budget. Options available to you for travel trailer financing can vary based on the type of travel trailer you choose so be sure to take your financial situation into consideration when choosing your travel trailer. Travel trailers that meet certain specifications can be considered a second home and may qualify you for certain related tax breaks.
Evaluate your credit score
Most lenders will take your credit score into consideration when putting together your travel trailer financing package. It will not only benefit you to know your credit score and monitor it in the months prior to your travel trailer purchase, it can also save you money over the long term. The higher your credit score, the more likely it is that you will be able to get a lower interest rate which over time can save you significantly. If you have items that are negatively impacting your credit score, take immediate steps to correct them prior to purchasing your travel trailer.
Use a larger down payment to lower your interest rate
One way to lower your interest rate and save yourself significant money over the long term is to put a larger down payment on the loan for your travel trailer purchase. If need be, start saving early in the process and set aside the money toward the down payment. A larger down payment may save you money by qualifying you for a lower interest rate and lowering the amount you need to borrow. In addition having a larger down payment amount available can sometimes be the difference between getting enough funds for your dream trailer or settling for something less.
Consider a home equity loan
One great way to save money on your travel trailer purchase is to consider using a home equity loan. If you own your current home and have some equity built up in your house, it can be used for travel trailer financing. Using your home equity loan will often result in a lower interest rate than if you took out a direct loan to finance your travel trailer. In addition, your home, even with the current state of the housing market, will retain its value much better in the long run than a travel trailer.
Avoid loans through RV dealers
After you've selected the right type of travel trailer for your needs and negotiated the price you can afford, be wary of accepting the invitation to apply for travel trailer financing through the RV dealer. RV dealer loans are quick and easy, but they can also be much more expensive. RV dealers may earn a substantial profit from this type of arrangement. Interest rates that you are charged can be 'marked up' as much as two percent which costs you more over the term of the loan that the dealer keeps as extra profit.
In short, if you choose your travel trailer wisely and do your homework prior to making a purchase you can avoid spending too much for your purchase. In addition, the process of travel trailer financing will be less daunting for you as an informed consumer.