The freedom of taking to the open road on a motorcycle. The thrill of traversing the countryside on an ATV or snowmobile. The satisfaction of knowing everything you need for your road trip is right alongside you in your RV. These are all priceless feelings – but you do need money to purchase the vehicles you’ll need to enjoy them.

Fortunately, buying a pleasure vehicle is as easy as taking out (and paying off) a loan. Let’s go over the steps you can start taking right now to make your new motorcycle, ATV, UTV, snowmobile, RV, boat or jetski a reality!


1. Check Your Credit Score

Your credit score is determined by a number of factors, including the amount of debt you owe, your payment history, how long you have used credit, and which credit cards you have. Lenders use your credit score to determine how much risk they are taking on by assigning a loan to you.

Multiple types of credit scoring models are available. If you receive your credit score from FICO, your ranking depends on which of the following ranges your score falls within:

  • 300-579 – Poor
  • 580-669 – Fair
  • 670-739 – Good
  • 740-799 – Very good
  • 800-850 – Excellent

Borrowers with higher credit scores can expect multiple benefits, such as securing larger loans and making lower interest payments. Borrowers with lower credit scores may not be able to secure home loans – although lenders are typically more willing to give them financing for pleasure vehicles. This is largely because vehicles are easier to repossess than houses.

Learning your credit score is easy. Simply choose a reputable online service such as TransUnion, Experian or Credit Karma. Alternatively, you may ask your credit card company, bank or credit union. Just take care to avoid credit score scams! Never speak with robocallers, click links in emails from unknown senders, or provide payment information to a service that advertises itself as free.


2. Know How Much You Can Afford

Your credit score alone does not determine the amount you can afford to spend on a vehicle loan. Before committing to a loan, consider how much money you make, how much you can to spend on a down payment and monthly installments, and whether you already have other debt. You may also want to consider the expenses associated with owning a new vehicle, such as fuel, insurance and accessories.

The amount you can afford to spend on monthly loan payments will determine which type of pleasure vehicle you can buy. Everyone’s financial situation is unique, but as a general rule it is not advisable to spend more than 10% of your disposable income on vehicle loans. You may increase the amount of your disposable income dedicated to vehicle loan payments if you are already paying off a car or truck, but only if you are certain of your ability to make multiple regular payments for the foreseeable future.


3. Choose the Pleasure Vehicle You Wish to Buy

Now that you have a good idea of the amount of money you can afford to spend and the type of loan you can receive, you are qualified to select the best pleasure vehicle for your budget. It’s no different from buying a house, really. Few people decide on a house before they have understood their budget and which mortgages are available.

Note that many banks will decline to lend less than $5,000 toward a vehicle purchase. Furthermore, there are typically fewer loans available for vehicles purchased from private sellers (i.e. CraigsList) as opposed to dealerships.


4. Find the Best Loan

Some borrowers prefer to shop for loans online and compare their findings until they have identified the best one. Others prefer to simplify their search for financing by partnering with their local bank. Whichever option you prefer, take care to keep realistic expectations for the loan you will ultimately commit to. Though there are many ways to improve your credit score, many of them will require more time than you are willing to put between yourself and your new pleasure vehicle.

If you are purchasing a new or certified pre-owned vehicle from a dealership, then it is worthwhile to explore the financing options the dealership offers as well. Many dealerships offer rebates and discounts when you partner directly with them, and others offer a cash incentive which effectively lowers the vehicle’s overall price. In short, it is always best to explore all of your options when you want financing, no matter what you are purchasing.


If you live in Central Minnesota, then the Sherburne State Bank team is available to help you secure the best financing regardless of your credit score, budget, or what you intend to buy. We welcome you to come visit one of our branches in Becker, Monticello or Princeton in person, or contact us today!

You are now leaving Sherburne State Bank's website

Sherburne State Bank provides a link to this external webpage because it may contain related information of interest to you. This link does not constitute an endorsement by Sherburne State Bank of any information, products or services on this external website.