Whether you are ready to hit the open road or make a splash on the water, a recreational loan can help make those dreams a reality. Affordable rates and your choice of repayment plans are a few perks you can enjoy with a recreational loan. Here’s an easy-to-navigate breakdown of the different types of recreational loans and their benefits.
What is a recreational loan?
A recreational loan is comparable to other loans except that folks use them to finance vehicles used for fun, such as RVs or boats. This long-term financing allows you to get recreational vehicles and gradually purchase them, making pricey “toys” more affordable and accessible. The boat, RV or motorcycle serves as collateral for the loan. A quality recreational loan offers flexible repayment terms and that means you can tailor your loan to fit your unique financial situation.
What can I finance with a recreational loan?
You have many options for recreational loans – there is a loan to accommodate almost everyone’s requirements. For those who love the open road, recreational loans are available to finance the following:
- Travel trailers
- Off-road vehicles
For those who prefer the open water, recreational loans can be found to finance boats, both big and small:
- Jet skis
- Wave runners
Where should I start?
Applying for a recreational loan is similar for both land-based and water-bound toys. A thorough summary of your finances may help inform your purchasing decisions in the future.
Step 1: Budget
The average cost can range from $15,000 for a bowrider boat to at the least $300,000 for a yacht. If you’re looking for an RV, be prepared to spend $10,000-$300,000. Pricing varies depending on age of the vehicle, features (such as audio tracks systems, GPS, power steering, etc.), and whether it is employed or new. With so many choices on the market today, you will undoubtedly find a recreational vehicle that suits your budget. Leading us to the heart of step one: get clear about your budget. Examine these essential points:
- Compare your monthly payment in the years ahead with how much you are able.
- Down payment standards will vary by lender but 10% to 20% of the purchase price is good spot to start; a lot more you deposit, the more flexible your repayment will be.
- Plan for recurring expenses, such as maintenance, fuel, insurance and storage.
Step 2: Credit check
Your credit plays a pivotal role in virtually any lending situation, and recreational loans are no different. The higher your credit score, the better positioned you are to receive favorable loan terms. Pay back any lingering debts and settle unpaid balances to boost your report. You will also want to ensure no errors in your credit file. If you locate errors, you can dispute these reports with the credit rating agency. A great credit score means you may receive lower interest rates.
Step 3: Find the right lender
Now that you’ve done your homework, it’s time to discover a partner in the recreational loan process. There are lots of ways to secure a recreational loan; however, a credit union is probable your best bet. Recreational loans tend to be more complex, similar to a mortgage, so it’s important to have the right partner to help you navigate the procedure. As a not-for-profit, a credit union is uniquely positioned to put its members first and offer excellent rates, personal attention and favorable conditions on your loan. Some even provide members-only insurance discounts, such as guaranteed asset protection. You can even use its helpful tools, such as online applications and loan calculators, for a far more convenient experience.
Shop smart by getting prequalified for a recreational loan before you begin browsing. This accomplishes two goals:
- You know exactly how much you can afford. This gives you the power to haggle, negotiate and understand your financial situation thoroughly.
- You won’t feel pressured to to remain the dotted line with a dealership. Salespeople will likely provide you with financing options to pay for your new toy. Still, you can maneuver the sales process knowing you are already in a fantastic buying position since you did your homework.
Step 4: Close the deal
With the hard work behind you, it’s time to close the deal and luxuriate in your new toy. Discuss any final costs, such as fees, insurance and storage. Before you take possession of the boat or RV, insurance must maintain effect. Insurance can cost you roughly 1% to 5% of a boat’s value annually. For an RV, your gross annual insurance payment will change by size. As an illustration, a little pop-up camper may cost you $100 annually, while an extravagance motor home could be $1,500.
You should also factor in the storage cost if you plan to park your automobile away from your home. The amount you pay will depend on the size of your recreational vehicle; for example, an RV may cost from around $30 to $130 per month to store. You can expect to pay roughly $50 monthly per foot of the boat’s length for a watercraft.
Key points to keep in mind
If a recreational loan is in your future, know that it’s an excellent way to finance your spare time fun. In conclusion, keep these points in mind as you progress:
- New or used. Recreational loans can be used to finance both new and used RVs, motorcycles, campers, boats, jet skis and even more.
- Plan flexibility. Partnering with the right lender is critical because it impacts your repayment plan options. Discover a credit union with friendly repayment conditions that work for your way of life and get preapproved.
- Along with selecting the best lender, your credit score plays a substantial role in your recreational loan. With a good rating, you’ll enjoy lower interest levels.
- Holistic planning. Remember to look beyond the sale sticker as your brand-new purchase will be needing upkeep, storage, insurance and more. Make certain long-term costs fit into your budget.
Congratulations on putting your wellbeing and wellness at the forefront by choosing to relax in the wild. With some preplanning and the right financial partner, you’re well on your way to enjoying everything nature has to offer with the help of a recreational loan.