Buying an all-terrain vehicle, like a recreational vehicle, can be a costly proposition. Your initial expense will be lower if you choose a used unit, but even that can be difficult to purchase with cash.
Fortunately, there are many financing options available. Many ATV and RV dealers in Louisiana, Arkansas, and Texas can help extend credit through third-parties for convenience. But you could also take out a personal loan from a lender not affiliated with your prospective dealership or go straight to the manufacturer for a credit card.
Irrespective of the financing options, the process can be tricky. If you do not do due diligence, one mistake could derail your chances of getting approved and suffer some more consequences. For starters, avoid these common errors in judgment among ATV buyers:
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Knowing Your Creditworthiness from the Lender
As with other financial products, ATV loans emphasize creditworthiness. Superprime borrowers typically qualify for annual percentage rates ranging from 2% to 11%, while the lowest APR offer buyers with poor credit could get is 29%.a
As a consumer, you must have a clear idea of your creditworthiness before you begin shopping around. You could lose a lot of leverage at negotiation if the lender seems more informed about credit than you.
Furthermore, fixing your credit ahead of application matters. You might consider yourself an excellent consumer with no history of delinquency, but your credit reports might say otherwise. If there are inaccuracies in your credit file, they could pull your credit scores down and significantly affect your credentials.
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Applying for Loans You Do Not Qualify for
ATV loan application triggers a hard inquiry, an activity that slightly reduces your credit score. Multiple hard inquiries can just be as impactful as a single one when done within a specified period, but it is wise not to apply for loans that you might not be eligible for.
So, how do you know which ATV financing options apply to you? Get pre-qualified. This activity can give you some clue about the rate you might get based on the amount you need to borrow without triggering a hard inquiry. The more estimates you have, the more you could compare products more appropriately.
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Failing to Compare Rates with Similar Terms
Speaking of comparison, it is a sin to think that ATV loans are equal. You can consider them the same, but you will not be able to narrow down your best options by focusing on the wrong features.
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Ignoring Red Flags
ATV financing deals are not immune to scams too. The most common ones are money-down requirements, guarantees, and no-credit-check promises. ATV loans generally provide 100% funding, are not guaranteed for approval, and always come with credit checks. Any lender that says otherwise is probably a con artist.
In the end, ATV loan shopping is easier if you know how to carry it out. If you manage to avoid any of the said mistakes, you could find the most favorable source of credit more quickly and with less stress.