RV Financing: 101

Are you ready to begin your RV Lifestyle? Learning about how RV dealer financing departments work can make getting approved much easier!

Now that you have chosen the perfect RV for your family, it’s time to deal with the dreaded finance department. Many dealers work with some of the nation’s leading lenders. RV finance managers make it convenient and easy by negotiating with banks on your behalf to obtain the best loan terms possible. Understanding the application process, which includes rates, terms and warranty coverages can help you make a better informed decision when choosing your lender.

Sometimes it better to have your own financing in place with a credit union or Essex Credit so that you know exactly what your deal is.

One big advantage of RV financing? RV loan Interest is tax deductible as a second home mortgage.

What if I have bad credit?

If you’ve had financial difficulties resulting in a low credit score or poor credit history, owning a RV may be easier than you think. Many people who think they can not afford a RV may be surprised to learn that there are still great lending options. Though you may incur a higher Interest rate, the finance department will ensure that your monthly payment is affordable.

How long are RV terms?

Loan terms will vary depending on the units age and amount that you are financing. Loans range in terms from 8 to 20 years. If you plan on paying off your loan in a shorter time period, there are Simple Interest Loans available so you are not penalized for an “early payoff.”

How much do banks require for a down payment?

Most banks require 10% cash or trade equity for a down payment.

How much will my payment be?

Monthly RV payments are determined by loan amount and length of term. Depending on these variables, your payments could be as low as $100 a month. With current low rates, you can truly enjoy the RV lifestyle of your dreams.

BASIC TERMINOLOGY

Trade Equity: The market value of your trade minus any outstanding current loan payoff.
Trade Equity = (Current Market Value) – (Outstanding Current Loan Payoff)

Term: The length of your RV loan. This is expressed in years or months.

Credit Score: A numerical expression estimating an individual’s credit worthiness and ability to repay financial obligations. Scores range from 300 to a high of 850.

Credit History: Consists of information such as:

Number and type of credit accounts
How long the accounts have been open
Amounts owed, amount of credit used
Whether bills are paid on time
Number of recent credit inquiries
Record of bankruptcies, liens, judgements, or collections

Interest Rate: An interest rate is the rate charged or paid for using money. (Cost of Money)

DTI Ratio: The Debt to Income Ration is your total debt amount (e.g. car payment, house payment, credit card payments) in relation to your monthly income. The finance manager uses the DTI to determine what monthly payments you can comfortably afford. Many lenders require a DTI ratio of 30% or less for loan approval. So if your monthly debt is $1800.00 and your monthly income is $4200.00 your DTI ratio is 42.8%. (Formula: Debt/Income) You most likely will not qualify until the DTI is lowered.

W.A.C.: The term “With Approved Credit” is used when a dealer is estimating a monthly payment. The monthly payment presented to you assumes you have great credit history. This price is always present with the condition “With Approved Credit.”

Good Sam has a loan rate schedule available for viewing which covers Loan amount and type of RV, New, Used, Refinanced or Fulltime.