What is a recreational vehicle loan?
What's the story
Recreational vehicles, or RVs, are the new rage in India for adventuring across the country's diverse landscapes while enjoying the comforts of home on wheels. However, financing an RV can be tricky due to its niche nature. This article demystifies recreational vehicle loans in India, covering eligibility requirements, interest rates, and repayment options in an easy-to-understand format.
Eligibility
Eligibility criteria for RV loans
In order to be eligible for an RV loan in India, applicants need to meet certain requirements stipulated by lenders. The applicant must be at least 21 years old and not older than 65 with a steady income. The minimum income requirement varies among lenders, but it typically starts at ₹25,000 a month. A good credit score (above 750) is beneficial for eligibility and may lead to better loan terms.
Rates
Interest rates explained
Interest rates on RV loans in India are not standardized and can vary significantly among different banks and NBFCs. Factors such as the applicant's credit score, the loan amount, and tenure impact the offered rate. That said, rates typically fall between 8% and 15%. Hence, it's crucial for potential borrowers to shop around and compare rates from various lenders to ensure they're getting the most favorable terms.
Tenure
Loan tenure options
The tenure for RV loans in India generally varies from one year to five years, although some lenders may offer terms up to seven years based on the borrower's creditworthiness. Opting for a longer tenure lowers your monthly installments but leads to higher total interest payments over the loan's duration.
Down payment
Down payment requirements
Most lenders mandate a down payment of 10% to 25% of the RV's value. A higher down payment can lead to lower interest rates and monthly installments, as it minimizes the lender's risk. Borrowers need to evaluate their finances prudently to determine how much they can comfortably afford as a down payment without causing financial stress.
Tips
Tips for securing an RV loan
Before applying for a car loan in India, you should check your credit score and take steps to improve it if needed, as a better score can help you secure a loan with more favorable terms. Also, comparing what different lenders offer can help you find lower interest rates or more flexible repayment options that fit your budget.