When it comes to RV financing, your chances of getting approved for a loan will depend on several factors, the biggest being your credit score. Basically, the higher your credit score, the better your odds of securing a loan, and the lower your interest rates will be. The opposite is true if you have a low credit score.
If you are wondering whether or not your credit score is good enough to finance an RV online, here are some estimated ranges to help you with that:
- Excellent credit: 740–850
- Good credit: 670–739
- Fair credit: 580–669
- Poor credit: 300–579
Getting a good deal with a poor credit score can be challenging since most lenders hardly consider credit scores below 600. But don’t let this discourage you. Fortunately, there are still ways to boost your chances of securing an RV loan, even with bad credit.
How to finance an RV online with a poor credit score
1. Improve your credit
The first thing to do after discovering your credit is poor is to review your credit reports for any errors that may be hurting your credit score. These include timely payments reported as late, duplicate account errors, and closed accounts reported as open.
Such errors can have a huge negative impact on your credit score. So, if you find any in your credit report, ensure that you dispute them as soon as possible.
Another thing to check for is whether you have an outstanding debt to pay. Lenders consider borrowers who haven’t paid off their old debt as a risky venture, and can you blame them? If you haven’t paid off your debt, how can they trust that you will repay this new one?
Therefore, before shopping for an RV loan, always endeavor to pay off your outstanding debt. This positive impact this will have on your credit score might not happen immediately, but over time, it will.
2. Save for a down payment
Having a poor credit score means getting high-interest rates, and that’s if you manage to get approved. However, if you offer a down payment that is higher than the required amount, the lender might feel more inclined to approve your loan request.
Some lenders require 20% percent of the RV’s price as a down payment. But if you start saving up for a higher amount today, in a few months, nothing will stand between you and your dream RV—not even your bad credit.
3. Get preapproved
After the aforementioned steps, the next thing to do is to get prequalified for an RV loan. Getting prequalified will force lenders to take you more seriously since they know you can well afford whatever RV you’re considering buying.
In the long run, this will boost your negotiating power and help you get the best loan rates available for someone with your credit score.
4. Shop around for the best deals
Finally, having a poor credit score means paying more on interest than you would have had to if your credit score were higher. This is why you should always shop around for the best offer on RV financing online.
Never make the mistake of signing with the first dealer you visit, without visiting others to evaluate their loan deals. Rather, visit local lenders, RV dealerships, banks, and credit unions; compare their loan offers, and choose the one that best suits your needs.
