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This page I wrote for my old rv website RVforSaleGuide.com before developing the Vanabode as the best travel vehicle for cheap easy long term road trips. People still like big rv's despite the much greater cost and trouble to operate, so here's what I know about them.
RV and Motorhome Loans and Financing
Here I cover how to get a good rv loan, interest rate and financing package. RV loans and financing can be the trickiest part of purchasing an rv, especially if you are buying a used rv. Financing is typically where many dealerships make extra profits at your expense, often through special add-ons, higher rates, or special dealer fees, they pass on to you at inflated costs. Many of the larger RV dealers offer good rv financing in-house and should at least be compared and considered. They often have such a large volume of applications that are specially targeted to RV's, that they can compete with typical banks and credit unions.
Of course you want to find the best rate and lender for your financing and this is made easy because there are so many different financing programs available. You can find them through your local bank or even a finance company such as credit unions, savings and loan financing programs, and motorhome dealers. I would recommend first checking with a few lenders and doing some research on their loan programs because many dealerships can find a lender that best meets your needs and will help you set up a program. Usually, motorhome loan terms and monthly payments tend to be more flexible when compared to other kinds of loans. Lenders can usually approve or deny a motorhome loan within a day or two after the application has been received.
When you're looking around for different motorhome financing programs, there are certain factors that will affect which loan will work for you best. The majority of motorhome lenders will require a 20 percent down payment on loans that are more than $99,999 and about 15 percent on loans that are less than $99,999, also these will have terms ranging from nine to sixteen years. A lot of newer motorhomes can be financed with a 20-year term.
Follow this process - and you will come out ahead. First, settle on an rv that you want without discussing financing, settle on a price, agree to a trade in value (if you have one), then tell the salesman you are willing to discuss any financing options they have but do NOT tell them or show them the terms you have already gotten approval for from your bank or other rv loan financing source. The ads on this page are from highly reputable rv financing institutions that may be of value to you in at least getting a free quote from them. Spend a little time now seeing what they offer BEFORE you visit the rv lot and get an rv loan.
RV loan interest rate - Your interest rate will vary
because it depends on many factors, which include your loan total, expected
down payment, credit profile and the value of your RV. Most companies
will want to process your rv loan application BEFORE discussing terms.
This is normal and since most companies can complete your application
in less than an hour, it shouldn't be an issue.
Financing older rvs - It can be quite difficult without perfect credit to finance an older rv. Some companies will go back 12-15 years on a real solid class A with a serious legitimate survey or appraisal on it. Other companies will not touch anything older than 7 years regardless of value or credit score. The point is ask FIRST if they loan on your year rv so you don't waste time filling out an application for an rv loan that will lead nowhere.
Credit score - the better companies that will finance you on an rv loan without up front application fees or credit check fees, who have good interest rates, and can get it done in an hour or two, will require a credit score of 600 - 640 and sometimes higher. If you don't have a credit score in that range you will need to be more flexible in your approach and in the interest rates you will be willing to accept.
Obviously your credit report and credit history can help determine whether you're going to be approved or not for financing a motorhome. I would recommend getting a copy of your own credit report prior to even applying for financing for your motorhome. There are a few different companies that will provide you with your credit score, like Trans Union, Experian, and Equifax. Getting a copy can help you be more prepared and catch any mistakes that may be on your report so you can correct them ahead of time; this will make the motorhome financing process easier and less stressful on you.
What is the likelihood that you will be paying your bills on time? This is what the FICO score will find out for the lender. This type of credit score was developed by Fair Isaac and Company. Your FICO score is accepted world wide by many lenders as a reliable means of credit evaluation. This will put your credit score into a single number and inform your lender of late payments, employment history, the length of time you have had established credit, time at your current residency, bankruptcies, collections or charge offs.
Getting an rv loan AFTER you bought the rv - Some banks have a cash recapture program that allows you to buy an rv using your cash, like when you stumble on a great incredible deal or distress sale and need to by it that day, then they give you the loan later and take possession of your title until payoff. This can typically be done up to 4-6 months after the rv purchase.
Another thing is that there are sometimes prepayment penalties when people decide to pay off their loan early. You should ask about that ahead of time. Will it be worth it later? And there could be tax advantages for financing a motorhome. For the majority of motorhome buyers, interest on the loan is deductible as second home mortgage interest, however to qualify for this the motorhome has to be used as security for the loan and it must have a basic toilet, sleeping, and cooking accommodations.
Be sure to ask if the interest on your motorhome will be tax deductible as some companies are different. I hope these points will help you when looking into motorhome financing.
RV Loan calculation - Make sure the loan you get is a simple interest loan. This way you only pay interest on the principal you owe, and that amount gets reduced every payment you make on the rv loan.
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