Like all other loans, an RV loan has similar requirements when assessing your credit and finances. Lenders will always look for a strong credit history backed by a solid income stream to ensure your ability to repay.
It is hard for those who do not have a good credit history to get RV financing. However, after thoroughly evaluating applications, some lenders specialize in RV loans for lousy credit.
These evaluations differ from case to case instead of following the same SOPs for every applicant.
Buying an RV is a thrilling experience, and while the financing part may not be as exciting, it is an important part. The best way is to educate yourself with the correct information, so you are much more confident when making your decision.
RV Financing VS Traditional Loans
The different types of loans as compared to RV loans are mentioned below:
Loan Terms
A typical auto loan offers financing for 12 to 84 months; however, RV financing can be done for an extended time.
These loan terms are decided on various factors like the age and value of the RV in question. Your credit history will also be an essential factor in determining the loan terms.
The typical loan term for a new RV is about 120 months, but bigger and more expensive trailers and motorhomes can be financed for up to 240 months.
Interest Rates
As opposed to low-interest rates offered on general auto loans, which are sometimes as low as three percent, RV interest rates are higher.
Banks do not offer low-interest rates on recreational vehicles as per the law. However, these rates largely depend on your location, the value of the RV, creditworthiness, and the term requested by the bank.
Zero-Down Payment Financing
Banks offer zero down payment financing options for new RVs like any auto loan. However, people do not choose this option because the value of RV depreciates as soon it is driven out of the lot. Again, this option is available depending on creditworthiness, RV’s value, and age.
Is RV Financing Hard to Get?
RV financing will only become hard to get if your financial situation is not intense. The financing offers will depend on your credit history as well. It is easy as a simple auto loan, mainly when applying for a secured loan.
In the secured loan, your RV is the collateral, whereby your inability to make repayments will result in your RV being repossessed.
Dealer Financing VS Bank Loans
RV financing is offered by both banks and dealerships, where dealerships help you obtain a bank in their name. This is a widespread practice for someone applying for RV financing with a bad credit history.
Used RV Loans
Used RVs come at a much cheaper rate than new ones. However, getting a loan for a used RV is difficult compared to a new one. Some banks and financial institutions offer to provide financing for used RVs but not for those 10 to 12 years old.
If you are insistent on buying an older rig, keep in mind that you will need sufficient funds for a down payment. Making a down payment of 10 to 20 percent will offset depreciation and provide security for the lender. A good credit score will also offset the age of the RV as a determining factor to approve financing.
Full-Time Living RV Financing
Other factors to consider when planning to live in the RV full-time will make financing a little more complicated. Banks and dealerships will be unwilling to finance your RV because you will be giving up your permanent address home.
This will make you a high-risk client. On the other hand, the benefit is that your loan interest will become tax-deductible because your RV will become the primary address. Several lenders are willing to finance full-time living RVs, so do your research and choose the best option.
Documents Required When Applying for RV Financing
A simple financial background will be required when applying for RV financing like assets, debts, and source of income. Additionally, you will also need to provide information about the RV you want to finance. This includes your RV’s model, VIN, and year of make.
Is Anything Negotiable?
RV dealers often negotiate and are open to reducing the prices. Some dealers even come down by 20 to 30 percent off the MSRP.
However, this is always the case, but you can get the best price for an RV during the offseason. The offseason starts in October and lasts until February, so that is the best time to make your purchase.
Moreover, when you are financing your RV through the dealership, you can negotiate the terms of financing. You can also make a deal with the dealership to throw in some add-ons like cameras, an extended warranty, and other things that come with the RV.
What to Expect During the Financing Process?
Getting an RV is not possible within a day. Know that it takes time to find the right RV, finance it and then drive it off. It takes 24 to 48 hours to approve your RV loan, and the dealer takes time to get the RV ready for you.
It may take between one to two weeks before you can have the RV at your disposal. Moreover, depending on your financer, you can expect to pay a financing fee ranging from $100 to $500.
Helpful Tips for RV Financing
A Good Credit Score for RV Financing
A credit score of 700 or above is ideal for scoring the best terms on an RV loan. You can buy the RV with someone who lives with you. It can be a sibling or a partner.
Other Considerations for Lenders
Lenders look at the credit score for sure. However, they also look at your income history and your debt-to-credit ratio. Another consideration is the specifications of the RV you are planning to finance.
Add-Ons in RV Financing
Any RV, old or new, requires extra purchases before you can start driving it. Some of these purchases can be added to the RV financing. You can check these add-ons with the dealer or the financers before making the final decision.
Where to Get an RV Loan?
Since plenty of lenders offers RV loans, it is good to shop around before settling on one. Consider the interest rates, terms, and other fees associated when looking for the best option.
Lenders Specializing in RV Loans
Plenty of lenders finance RV loans and are experts in the trailer home area. Consider Good Sam, LightStream, GreatRVLoan, and Camping World for your RV financing needs. These are great options for RV financing since they offer longer terms with better interest rates.
National Lenders
National lenders like Alliant Credit Union, Mountain American Credit Union, and Bank of the West offer RV financing with favorable terms.
RV Shows
RV shows are a great place to get better rig options with financing offers from dealers. Dealerships offer exceptional prices that are incomparable.
Since dealers at the RV show offer much more, they can walk you through the process of financing. If one of these financing plans works for you, you can start the process immediately.
Enjoying the Road Life
Getting an RV and exploring the world is the dream of many. With more people choosing a home on wheels, the question of financing becomes evident.
Getting financing for an RV is not hard as long as you have a good credit history. Your financial stability is a significant consideration factor like any other auto loan.
