It’s easy to focus on the fun parts of purchasing an RV. You know, things like choosing one with pretty finishes and extra storage space. Or thinking about the fun places you’re going to travel once you are an official RVer. But there are other parts of buying an RV that can’t be ignored, like financing. However, it doesn’t have to be a bad experience, and you can use your low-interest rate to build equity fast.
The basics of an RV loan
An RV loan is like the combination of a home loan and a vehicle loan. Makes sense, right? An RV is a combination of the same. While not every RV loan is exactly the same, this is some basic information on what you can expect.
Disclosure: Always verify the details of your loan when purchasing an RV. Make sure you understand all the details and don’t be afraid to ask questions.
RV loans are similar to vehicle loans in that you pay simple interest. That means the amount of interest that you pay each month is based on the balance of the principal that month.
However, unlike vehicle payments, RV loans often come with longer terms. For example, you may have a term between 15 – 20 years instead of the 5 or 6-year terms that’s normal for a vehicle loan. In this way, RV loans are similar to mortgages.
Generally, you can pay off an RV loan early without paying a penalty, but this is one of those details that you want to verify when obtaining your loan.
Why you want to build equity in your RV
If you just plan on buying one RV and keeping it forever, then you probably don’t need to be worried about building equity in your RV. However, realistically, that’s usually not what the future will hold.
Several years down the road, you may decide you want a different RV. It could be that your RV is starting to get older and you want something new. It could be that you want to upgrade to a larger RV to fit a growing family. Or, maybe your kids have finally flown the coop and you want to downsize your RV since fewer people will be traveling with you going forward.
In the case that you want to make a change in the future, the more equity you have in your RV the better. This helps if you’re trading in your RV at a dealership or if you are going to sell the RV on your own. The more equity you have in the RV, the more cash you have to use towards your new RV.
It’s the same concept as selling a car or selling a house. The more equity you have, the more cash in your pocket when you sell.
How a low-interest rate helps you build equity
Low-interest rates are great because they help you keep your payments low. While this can allow you to enjoy owning an RV while keeping some extra cash in your pocket each month, you can build equity faster by paying over and above the minimum payment.
RV loans work similar to vehicle loans and the amount of interest that you pay each month is calculated based on the principal balance of your loan. It’s simple interest. So, if you pay additional down on the principal each month you’re going to not only be building equity by paying your loan off faster, but you’re also going to pay less in interest over the life of your loan. It’s a win-win situation for you.
Are you ready to buy an RV?
At Sky River RV we offer the lowest interest rate on the Central Coast! For a limited only we are offering interest rates as low as 3.99% to select customers with top tier credit. You can shop all our entire inventory here: New and Used RV for Sale. Once you have found the perfect RV for you and your family simply contact our Finance Department where our helpful staff will walk you through all the details and ensure you lock in the lowest rate possible! We even have an RV financing calculator that you can use to help plan for your payments. Stop into one of our three locations today to begin shopping for your RV.
