How To Finance a Trailer

Whether you are looking to move a big load, need some extra storage, or want a portable living space, trailers serve as the perfect workhorses to get the job done.  In addition, the new trend of tiny houses of fewer than 500 square feet tend to fall into the trailer category.

Depending on what type of trailer you are purchasing, there are different financing options, including personal loans, business loans, and financing through a trailer dealer.

How To Qualify for a Trailer Loan

While most lenders offer a variety of loans for many different purposes, most will only lend to buyers with good to excellent credit. LightStream, for instance, offers great rates but requires good credit, several years’ credit history, and a stable income. After you are approved for a Lightstream loan, you have 30 days to accept the loan and use it for your needs. These terms are typical, but each lender is different and has varying standards for loan qualification. Check with the lender of your choosing to see what they require in order to get approved. SuperMoney has detailed reviews and user comments on leading home loan and personal loan providers.

Which Loan Works Best for Each Trailer Type?

How_To_Finance_Trailer

Mobile homes in housing communities/trailer parks

Loans for mobile homes most commonly span from 5 to 15 years, with select lenders offering 30-year loans recently.  The more permanent the mobile home is, the easier it will be to obtain a loan.

Pros
  • Down payments for mobile homes generally range from as low as 5% to only 10%.
  • These types of loans are most similar to traditional mortgages.
  • If the mobile home is your main residence, the interest paid can be deducted from your income taxes, just like an actual mortgage.
Cons
  • Mobile homes are considered personal property, not real property, and usually come with higher interest rates.

Tiny Homes/Semi-Permanent Housing

Tiny homes are not eligible for mortgage loans, simply because mortgages have minimum loan amounts. They are also a semi-permanent type of housing, and traditional mortgages are strictly for permanent homes. Since they are mobile, tiny homes have many other options for financing, but you’ll have to do your homework to find lenders.

Local credit unions can also be used for secured RV loans. For example, the Credit Union of New Jersey offers financing from 24 to 84 months, with interest rates ranging from 1.49% to 3.74%, depending on whether 0%, 10%, or 20% is put down.

Pros
  • The more money you are able to put down, the less the amount paid in interest will be over the course of the loan.
  • Since this loan is secured by collateral, the interest rate tends to be lower than unsecured loans.
Cons
  • This is a secured loan, which means that the trailer will most likely be used as collateral if the loan is not repaid.

Meanwhile, one of the original tiny house builders, Tumbleweed, offers financing directly through their company to those with a 650 credit rating or higher. Tumbleweed’s interest rates range from 5% to 7% with 20% down, for a loan over the course of 15 years.

 

Since personal loans can be used for anything, they can also be used for tiny homes. SuperMoney’s personal loan comparison tool allows the buyer to narrow down lending options by inputting their desired loan amount, credit score, and other factors.

Camping Trailer

Smaller mobile homes and recreational vehicles can be financed through an RV loan from LightStream, with 2.99% being the lowest interest rate available.

Pros
  • LightStream’s RV loans are unsecured, so they do not carry collateral.
  • They are flexible with the length of time for repayment, with loans ranging from 24 to 84 months.
Cons
  • LightStream only provides loans to those with good to excellent credit, so finding financing for a camping trailer with less than that may be difficult.

Utility/Commercial Trailers

Trailers used to haul equipment, especially for commercial use, have the option of being financed directly through dealers, with personal loans, or with business loans.

SuperMoney offers an easy loan comparison tool for business loans, helping the buyer find the perfect lender depending on their credit score, interest APR, amount needed, and other factors. This single form makes the process of finding a lender for a business loan simple and pain-free.

Pros
  • Unsecured business loans do not require collateral, so there isn’t any risk of losing your home, vehicle, or other assets.
  • If your business files for bankruptcy, the court may dismiss the unsecured business loan, in order to ease the burden of debt.
Cons
  • It will be harder for those business owners that do not have a great credit score to be approved for this type of loan.
  • Since unsecured business loans are based on credit score and not collateral, they often come with higher interest rates. This needs to be considered because the higher payments can ultimately put a company in debt.

It is essential to find a lender that fits your needs, and having a variety of options available make it easier than ever before. SuperMoney outlines the benefits of acquiring funds with many different lenders, including OnDeck, LendingClub, and Avant.

Lenders also offer the option of refinancing a trailer loan. If you decide that the loan you chose isn’t right for you, look into lenders that can offer you a lower rate. As with all loans, shop around and compare options before taking the plunge. See how to get the lowest rates on loans here.

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