Benefits of Financing Your Trailer

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If you are thinking of financing a new trailer, then you should have several questions you to ask before you sign any documents. For instance, you may be curious as to what the benefits are of trailer financing in Florida, or would like to know if there are any risks of obtaining financing for your trailer. There are many benefits to financing your trailer, such as enjoying lower payments, assuming your credit score is good. Here, we will discuss some of the benefits of financing your trailer.

Benefits of Financing Your Trailer

Enjoy Financial Flexibility

Some people opt to pay cash to purchase their trailer or may choose to liquidate some of their assets to obtain the funds to buy one. However, selecting to finance your trailer may allow you to enjoy an unrivalled sense of freedom as well as enjoy financial flexibility in the process. Financing may be your best option if you enjoy travelling on the road with loved ones and would also like to enjoy the freedom that accompanies trailer financing.

A Home Away From Home

If you are currently renting a condo or are renting your permanent home, then your trailer may qualify as a secondary residence. Or, if you are a full-time trailer occupant, your trailer may qualify as a bona fide home or domicile. If in doubt, please speak to a licensed tax advisor in the state to determine which option is ideal for your unique living arrangement.

Deduct Interest on Your Loan

If you are currently paying interest on a trailer loan, then you may be able to deduct some interest on it. This is assuming it is being used as collateral for the loan in question. The trailer must be designated as a secondary residence to qualify for a reduced interest rate. It must also include, at the very least, basic living amenities and accommodations; including, cooking facilities, a bedroom, and a commode.

Longer Mortgages and Tax Benefits

Mortgages for trailers tend to be longer on specific models, as some models may qualify for a mortgage term of 15 or more years. Financial terms tend to be lower, vis-a-vis, other mortgages. There are also certain tax benefits that you may be able to reap if you know where to look.

It is highly advisable that you do your research to determine what tax benefits and deductions you may be able to obtain on your trailer, as the benefits and deductions may be so substantial that you may be better off financing your trailer than buying it outright.

Lower Down Payments and Easier Approvals

Generally speaking, the required down payment for your trailer will be lower than the required down payment for a conventional home. Please note that several different factors will determine your finalized loan terms and conditions; including, how much the trailer costs, the model or type, your credit profile, as well as how old you are.

In most scenarios, you will only be expected to put down a down payment of 10% when obtaining financing via a trailer or truck loan company. This is in stark contrast to the usual down-payment rate for a property, which can range from 20 to 30%. Approval rates for trailer loan applications tend to be much higher compared to a typical property.

The very fact that you’re thinking of buying a trailer will increase your chances of realizing your dream of trailer ownership; i.e. you can probably afford it. For instance, a study conducted by the Recreation Vehicle Industry Association found that only roughly 1.4% of all trailer loans were delinquent. The data compiled was based on a survey of multiple trailer dealers and lenders, and the very low delinquency rate is substantially lower than the rate for conventional home loans. The majority of trailer lenders are willing to extend the terms of their loans, which means that the payments that you make each month will also be more manageable.

Most people who want to own a trailer will think about taking out a loan on their current property instead of taking the trailer financing route. However, the majority of lenders will tell potential trailer owners that borrowing money against an owned property is impossible unless the funds are used directly for that property.

Furthermore, the interest deduction on your home’s mortgage is limited to the interest that is paid on mortgage debt. It can be utilized to either enhance or buy a dwelling or to refinance the remaining balance on a renovation or an acquisition. However, buying a trailer will not qualify for the deduction as mentioned above, so it is something that you will need to consider.

What’s more, a home equity loan will restrict the interest amount that can be deducted, particularly if the balance on the trailer loan goes over the $100,000 mark. De facto, the interest deduction on a home mortgage is restricted to the interest amount paid on equity loans of up to one hundred thousand dollars.

Every trailer purchase will be different. The situation that you will be presented with may be very different from the scenario that another potential trailer buyer may have to deal with. Ergo, you should talk to a licensed and trustworthy financial or tax advisor before you decide on whether or not you want to finance your trailer.

To learn more about the benefits of financing your trailer, call Truck Loan Center at 1-866-230-0094 or contact us here.


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