Specializing in Financing for Horse Trailers, RV’s, Recreational Trailers, Motorcycles and Boats NATIONWIDE

Last Updated:
Feb 25, 2008

Loan Tips

Some expert advice when looking for the right financing to purchase your horse trailer, RV, recreational trailer, motorcycle or boat.

Maybe you are looking for a loan for a horse trailer, RV, recreational trailer, motorcycle or boat — for the first time — or you just need some advice to ensure that you find a quality lender and a good interest rate. Hopefully, you’ll choose Southeast Financial, but regardless whom you choose, here are a few tips to keep in mind:

Avoid loans that are not simple interest.

Simple interest loans have payments that are due on a monthly basis. There are no penalties or higher interest rates if you prepay your loan. Simple Interest is a method of allocating your monthly loan payments between the interest and the principal. The amount of your payment allocated to interest is calculated based on your unpaid principal balance, the interest rate on your loan, and the number of days since your last payment. The remainder of your payment is credited to principal and reduces the unpaid principal balance on your loan.

With pre-computed loans, on the other hand, the interest owed over the life of the loan is calculated using a standard amortization table. Once you sign on the dotted line for this type of loan, you're on the hook to pay back principal plus the full amount of interest that will accrue over the entire term of the loan. If you prepay a simple interest loan, there is no penalty, and your payments will decrease. Precomputed loans actually penalize you for early payments.

 

Note: Southeast Financial only provides simple interest loans with no prepayment penalties

Don't just accept the dealer’s financing offer.

 

Don’t merely accept the dealer’s loan financing before comparing the offer with finance options offered e.g. by your bank or other credit providers. Dealer financing might be less hassle but you could well end up with an expensive loan and more restrictive terms and conditions.

 

Note that Southeast Financial already knows the best banks to shop your loan and can be your single loan shopping source.

Don’t “over” shop your loan at too many places.

 

Don’t fill out applications at several financial institutions and have all of them checking into your credit history. Doing so can make you look desperate and lower your credit score—especially if you submit applications to 10 or 20+ institutions.

 

Note that Southeast Financial runs your credit report but with our 12 years of experience, we are knowledgeable in ensuring that only the best few bank option(s) are contacted which ensures that your credit score will not be negatively impacted.

Make sure that you have a reasonable debt to income ratio.

 

Your debt to income ratio (DTI) is a key indicator of your true financial picture, and it is definitely the lending industry's measure of fiscal health. Your debt to income (usually household) ratio is calculated by dividing monthly minimum debt payments (excluding mortgage or rent, utilities, food, entertainment) by monthly gross income. For example, someone with a gross monthly income of $4000 who is making minimum payments of $1600 on debt (loans and credit cards) has a debt to income ratio of 40% ($1600 /$4000 = .40). If your debt ratio is typically under 40% you’re usually in good shape with most lenders (whose formulas vary). Some lenders will include your home mortgage but raise the acceptable ratios, and others do not. While variations will result in different percentage outcomes, the overall concept is the same: a debt to income ratio compares debt load to income.

 

Be able to put at least 10% down on your purchase.

 

Virtually all banks that finance recreational vehicles, trailers, haulers, motorcycles, and boats require at least a 10% down, and very few do 100% financing. It’s almost an immediate red flag in getting a reasonable loan—or any type of loan--if you can not pay at least 10% down on the purchase price. And watch out for credit scams that offer you 0% down and deferred payments—you’ll end up paying a LOT more for such loans.

 

More questions about finding the best loan for the horse trailer, RV, recreational trailer or hauler, motorcycle or boat that you want to buy?