What To Do When You Can’t Afford Your RV Anymore?
There is nothing more miserable than not being able to keep up with loan repayments and this is especially true for RV debt. After all, your RV was supposed to bring you joy and fun experiences and not the stress of repayments that you can no longer afford. But what should you do when you can’t afford your RV anymore? In this article, we take a closer look at the problem and exactly what you can do to start climbing away from the despairing reality of RV debt!
Why RV Debt is on the Rise in the US
The truth is, life happens and financial circumstances can change in a way that people simply cannot keep up with their usual bills. The cost of living crisis has had a devastating impact and thousands of people all over the country are dealing with the same problem with repayments. It’s also true that not everyone understands the financial risk involved with RV debt and that these changes can significantly impact the ability to keep up with repayments.
For instance, a motorhome is a depreciating asset which means the current value is often less than the RV debt. This is not something most people think about at the time of purchase because they rarely intend to sell but it can cause problems when the buyer can no longer afford to hold on to the RV.
You also have situations where people might suffer financially due to illness or losing a job and many other life events that severely hamper the ability to afford repayments. Either way, something needs to be done about the situation as ignoring the obvious is sure to lead to bigger problems with your RV debt.
What To Do When You Cannot Afford Your RV
While some owners choose to rent their RV to help cover the cost of repayments, this uncertain approach is not a long-term solution. Others simply stop making payments and wait for bad news in the mail but the best option is to take a more realistic and transparent approach that will tackle the problem head-on. Let’s take a look at three of those options for dealing with RV debt:
- Sell Your RV and Take the Loss
Selling the vehicle now will help pay off a substantial amount of the RV debt and then leave you with repayments that you can actually afford. However, you must consider how much of a loss you are willing to take on the unit because any sale is unlikely to help you recoup the remaining amount on your RV debt.
But how to get started?
You will firstly need to know the true value of the RV and this should take everything into account including the mileage and overall condition. The difference between this value and the remainder of your loan is the “loss” that you can expect to incur. If you have lots of savings, you might also be able to take out a bridge loan and then sell the vehicle to cover the remainder of the RV debt.
2. Refinance the Loan on Your RV
Lenders can sometimes refinance the loan on your RV and essentially reduce the amount of your monthly repayments. However, you might be beyond this point already and just wanting to get rid of the RV debt entirely. This is a question you need to ask yourself as refinancing can alleviate the burden of repayments but it might not be enough to improve your financial wellness long-term.
3. Surrender your RV to the Lender
Surrendering your RV to the lender is possible but you might want to avoid this option because it can lead to more debt than you need to take on. That is to say, the lender will take ownership of the vehicle and then sell it for a lesser price at auction before insisting you also pay them the difference between the sale and the remainder of the loan. This is why most people opt to sell the vehicle privately and take control of their RV debt and finances in general.
Final Thoughts on Taking Control of RV Debt
You should want to make this decision for yourself because if the lender takes control, it will not only affect the amount you repay but also your credit rating. There’s also the fact that rebuilding your financial wellness is clearly a priority right now and you can always get your hands on another RV later on. Sure, you might withstand some short-term pain but at least you will end up with repayments that you can actually afford, not to mention a healthy credit rating.