Getting a Recreational Loan

7/13/2023

Snowmobiles in the winter, campers in the spring, fishing boats in the summer, and ATVs in the fall, certain pairings just make sense.

Recreational loans tailored for purchasing recreational vehicles like UTVs, personal watercraft, and RVs fit into this narrative. Unlike personal loans, recreational loans tend to be secured by the recreational vehicle itself, which can translate into lower rates. Recreational loans can also be tailored to the appropriate loan term for a given vehicle – you wouldn’t get an 18-month mortgage, nor should you get a 30-year ATV loan!

Arkansas Federal Credit Union has a long history of serving our local community. If you’re considering a recreational loan, experience our superior service and expertise firsthand!

When to Apply

Since many of the activities you’ll use your recreational vehicle for are seasonal, the time of year you apply can be important. If you want a boat for the fishing season but delay your application until September, you risk not getting your vehicle in time to enjoy the season, but then again, you may get a better deal. Many sellers offer better prices during the off-season.

Keep in mind that loan approval can take days or even weeks. So, give yourself enough time to enjoy the season with your new recreational vehicle! If you envision your life in a certain way in six months, don’t wait five months to apply – get moving on it.

Other Factors

Your creditworthiness significantly influences your approval odds. So, it’s a good idea to understand what affects your credit before applying.

Credit analysis tools like NerdWallet can help, but the most important thing you can do is to pay your bills in full and on time. Recent delinquencies or collections impact your credit score and your lender’s underwriting process.

Avoid opening new accounts before applying. It’s best to have old accounts with low balances than new, maxed-out ones.

By familiarizing yourself with the factors that contribute to your creditworthiness, you can secure the best possible recreational loan rate and terms. Keep in mind that not only is the season of the year important – so is your credit hygiene.

Recreational Loan Uses

You can use a recreational loan to finance a wide variety of recreational vehicles. Some of the most common include:

Boats
RVs, the original “Recreational Vehicle”
ATVs
UTVs
Motorcycles

With no shortage of options, the hardest part is deciding which recreational vehicle to get!

What Can You NOT Use a Recreational Loan For?

While there’s certainly a wide range of vehicles you can purchase with a recreational vehicle loan, some types of vehicles do not qualify:

Everyday commuter vehicles, like SUVs or sedans, that you could use as a primary means of transportation. For these, consider an auto loan.
Commercial use vehicles. While you can use a recreational vehicle loan to finance a UTV for your recreational use, you cannot use it to purchase a UTV for your business. Consider a commercial business loan instead.
Non–roadworthy vehicles that may have once been recreational (such as salvage vehicles) are typically not eligible for a recreational vehicle loan. For that, you may need a personal loan.
Real estate, even if its primary use is storing your recreational vehicle. For example, a boat may qualify, but you cannot purchase a boat dock with a recreational loan.
Antiques or classics. Some recreational vehicles are worth more as collectibles than they are as vehicles. For those, lenders typically favor a more specific loan program suited to protect antique or classic recreational vehicles.

Recreational Loans vs. Personal Loans

Personal loans are recreational loans’ older, more flexible brother. You can use a personal loan to pay for home renovations, vacations, and even recreational vehicles. However, since personal loans are designed for flexibility, that means they can’t offer the targeted value of a more specific recreational vehicle loan.

Recreational loans, typically collateralized by the vehicle itself, tend to have lower rates than personal loans (which are generally unsecured). Also, their terms are appropriate for the type of vehicle being purchased, whereas personal loan terms may be longer or shorter.

In short, while you can use a personal loan for a recreational vehicle, you likely will not receive the same favorable rates and terms that a recreational vehicle loan offers.