Navigating the Trails: A Guide to ATV and Snowmobile Loans
As the temperatures start dropping, many people start thinking about buying a new or used all-terrain vehicle (ATV) or snowmobile to navigate the winter ahead. On average, more than 200,000 snowmobiles and ATVs are sold every year, both for business and pleasure use.
If you’re like many people, paying cash upfront isn’t an option. Making the purchase means qualifying for what is commonly referred to as a powersport loan. While the process is a lot like getting a loan for a traditional vehicle, it differs in several ways. Knowing what to expect and finding the right ATV or snowmobile loan is essential. The right terms will yield affordable monthly payments and enable you to hit the trails with nothing to worry about besides enjoying the experience.
How to Get an ATV or Snowmobile Loan
Smaller monthly payments make getting a powersport vehicle more attainable. It can also give your credit score a boost as you establish a positive payment history. However, because snowmobiles and ATVs are seen as luxury items rather than necessities, the loan process is a bit more nuanced than the steps for a conventional auto loan.
Let’s explore those steps in more detail to ensure you understand everything involved.
Understand Your Budget
Perhaps the most important step to take is understanding what you can afford. Before you start shopping for snowmobiles, ATVs, or loans, it’s critical to take a good look at your budget. Evaluating your current finances will help you determine the monthly payment you can comfortably handle.
Look at the amount of money you have coming in every month and your other expenses. You can use this information to guide you as you shop. For example, if you are working with a limited budget, you might need to opt for a more basic model or look for a used snowmobile or ATV.
To understand the total costs you may be facing, it’s helpful to keep several factors in mind. For example, when you finance an ATV or snowmobile, you will likely be required to pay a percentage of the purchase price as a down payment. In addition to the down payment and your monthly loan payments, you must also consider fuel, insurance, trail fees, and maintenance costs.
Check Your Credit Score
This three-digit number has a powerful impact on the type of powersport loan you will qualify to receive. Like other types of loans, snowmobile and ATV loans take your credit score into account. Not only can it impact your approval, but it also may dictate the terms of the loan.
Your credit score is commonly referred to as a Fair Isaac Corporation (FICO) score as a reflection of the scoring model developed by the corporation. This number ranges from 300 to 850, with scores between 670 and 739 deemed “good” and those of 740 and higher considered “very good.”
You can check your score by requesting a free copy from one of the three reporting bureaus. Equifax, Experian, and Transunion provide you with one free copy of your credit report every 12 months. Some of the primary factors that impact your score include:
- Your payment history
- Credit utilization, which is calculated based on the amount of your available open credit and credit used
- Credit history duration
- Duration of individual credit accounts
Research Lenders
Just as you would with any other loan, it’s helpful to shop around for ATV and snowmobile loans. Many traditional lenders don’t offer them, leading some borrowers to opt for personal loans instead. Dealers may offer financing. Opting for financing through a credit union like Hudson River Community Credit Union offers an attractive alternative.
Gather Documentation
To apply for a snowmobile or ATV loan, you will need several documents. Typical information required includes:
- Identification, including your Social Security number and driver’s license or another form of government-issued ID
- Proof of residence, including a driver’s license and a recent bank statement or utility bill that displays your current address
- Information about expenses, such as your monthly rent or mortgage and car payment
- Proof of income, including check stubs, bank statements, and tax returns
Consider Down Payment
The amount of down payment required varies from lender to lender. Most look for an upfront payment of 10% to 20%. If you’re able to save to pay more, that will work in your favor. Higher down payments lead to a lower amount financed and lower payments.
Get Pre-Approved
Once you find a few lenders that meet your needs, you can start the preapproval process. Submitting multiple applications can help you find the best deal, allowing you to compare options based on total costs, fees, and interest rates.
Compare Loan Offers
Carefully consider the loan terms, which include the interest rate, length of the loan, and the monthly payment amount. Comparing a few lenders can help ensure you choose the best possible loan for your unique needs.
Read the Fine Print
While the information detailed in large print is important, the fine print can make or break your loan. For example, is the annual percentage rate (APR) fixed or variable? A fixed rate remains the same over the life of the loan. Variable rates change over time and can increase significantly. Other fine print details may include information about late fees, possible discounts for signing up for automatic payments, and fees associated with the loan.
Finalize the Loan
Because you’ve been pre-approved, you already know how much you can spend. All that’s left to do is go shopping and find a snowmobile or ATV that fits your budget.
Get Your ATV and Snowmobile Loan with HRCCU
New or used, business or pleasure, there are options out there for every instance. HRCCU can finance up to 105% of the cost of a new ATV or snowmobile. With competitive rates and terms, we make it easy to get the powersport vehicle you want with the best possible financing.
Apply today with HRCCU.
