Do you have your heart set on exploring the country in an RV? Great! What's stopping you from getting one then? If the answer is bad credit, well, you're not alone. Bad credit is something that is affecting millions of Americans.
However, while credit scores are important and can have an impact on your ability to purchase just any RV, they don't necessarily preclude you outright from RV ownership. If you want to purchase an RV with bad credit, you need to do some careful financial strategizing.
We hope the idea to buy an RV didn't come to you last night and you're heading down to the dealership, expecting to leave with a brand-new camper today. Even if you have the most fantastic, pristine credit history in the world, you should realize the seriousness of an investment like an RV. Research the cost of owning an RV, from down payments to maintenance. Assess this next to your income and determine what your budget is.
An RV is not a purchase that should be made in haste. It can require at least a few months of planning not only to get the vehicle itself, but to get approved for the loan to purchase it. Compared to a regular vehicle loan, an RV loan can be much more difficult to obtain, and credit repair can be a long process. By planning ahead, you can research extensively and better your chances of being approved for a loan.
Pay Off Your Credit Card Balances
Your credit cards are like the ambassadors of your credit score. If you're carrying a balance on them, or worse, not making payments on them, it can have a severe effect on your credit score. Work on paying off your credit card balances before shopping for an RV. The relief of having a zero balance will be immense and vastly increase your chances of being able to buy an RV.
While you won't have to pay for all of your RV in one fell swoop, you will need to make some sort of down payment. Research down payments for RVs you're considering and then make a budget. Consider putting aside a portion of your paycheck every week until you have enough for the RV down payment. While doing this, be mindful of your bills and determine what expenses you could go without, such as cable TV.
Determine What You Want From an RV
RVs can come with a wide variety of bells and whistles, from showers to immense elaborate dining areas. If you want an RV with everything, then you had better have a pretty immaculate credit rating. There might be some luxuries that you want but that you know you'll never be able to afford. Be realistic with your financial flexibility and don't make any pie-in-the-sky commitments to an RV that's well outside of your budget.
Use Your Tax Refund and Check Out Tax Breaks
Tax season is almost over, and if you have money coming back, it can be a big boon. For one, you can improve your credit score substantially by paying off a large portion of your credit card bill with your tax refund. You should also look into tax breaks for purchasing an RV, as the IRS might allow you to consider it to be a second home.
Consider Refinancing a High-Rate Loan
If you receive a loan for an RV with particularly high interest and monthly payment rates, you don't need to shrug and surrender. Look around at various credit organizations and see about having your loan refinanced. These organizations will have requirements regarding the age of your vehicle, mileage, and your personal credit score, so be aware of all these aspects.
We'd like to congratulate you for looking into purchasing an RV and considering the importance of a good credit rating. Remember: just because you have a bad credit score doesn't mean you can't purchase an RV. You just need to go about it wisely.
Beth Kotz is a contributing writer to Credit.com. She specializes in covering financial advice for female entrepreneurs, college students and recent graduates. She earned a BA in Communications and Media from DePaul University in Chicago, IL, where she continues to live and work.
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