In addition to the purchase price of your recreational vehicle, it’s important to consider how you’ll be financing any extra and ongoing costs that may be involved. For example, while a typical car needs fuel, servicing and insurance, a motorboat may need all of these plus safety gear and berthing expenses. This can add up over time, so make some calculations to be sure you can afford the costs.
Some recreational vehicles (particularly used models) may sell for relatively low prices, so you may be able to buy one with cash or a credit card. For pricier examples, you may be able to apply for a personal loan to buy a recreational vehicle from a major bank or a smaller specialist lender. Every personal loan is different, so be sure to compare the rates, fees, features and benefits offered by different lenders to find a suitable option for your financial situation and goals.
You may be able to secure your personal loan with the value of the recreational vehicle you’re purchasing, similarly to a secured car loan. This may let you enjoy a lower interest rate and more features and benefits, even if you don’t have a perfect credit score. Of course, this also means that you could lose your vehicle if you don’t keep up with the repayments.
However, not all lenders may accept recreational vehicles as collateral for the purpose of securing a loan. These lenders may not be confident that the vehicle’s value will be enough to secure the loan, or they may be concerned about the increased risk of the vehicle being written off if it’s being used primarily for recreation. If you can’t use the vehicle you’re purchasing, in some cases you may still be able to secure a personal loan with the value of equity in your home or savings in a term deposit.
You could also purchase a recreational vehicle with an unsecured personal loan, so you don’t risk losing your new toy if you have trouble with the repayments. However, the interest rates will most likely be higher, which may make financing your purchase somewhat less affordable.
It's also important to remember that your credit score may play a role in determining the interest rate you’re offered for a personal loan. If you have a history of borrowing and repaying money on time, you may have good credit and be eligible for lower rates. But if you’ve had credit problems in the past, it may not be as easy to get a personal loan approved, and you may be charged higher rates. In some cases, you may want to look into finding ways to boost your credit score for some time before applying for your personal loan.
