Financing Your RV
Unless you are independently wealthy or selling your home and belongings, borrowing money to buy an RV is a reality for most of us. RV loans are available through banks, credit unions, and finance companies, as well as through RV dealers. Shop around for financing, and you may find a bargain. RV manufacturers, like car makers, introduce a new line of RVs every year. They may offer special financing or rebates to get last year's models off the lot. If you can live without that latest greatest widget that only comes on the new model, you may find you can save yourself a lot of money down the road.
If you have the available cash in the bank to pay for your rig outright, you may still want to consider financing. Interest rates for RVs, like home mortgages, have been at their lowest amounts for the last few years. While this may not last forever, it may be wise to take advantage of these low rates. Paying cash means that money is gone forever, taking any present or future earning power with it. You may find that you can negotiate lower interest rates by having a nice little nest egg in the bank.
Here are some things to watch for when considering dealer financing:
Compare the overall costs of dealer financing to other sources. Your RV dealer may boast a lower interest rate, but he may also have some hidden fees that actually make the loan cost more in the end.
Read the loan documents carefully for any clause that could cost you money. Some loans carry prepayment penalties that may end up being very costly.
Avoid costly loan “add-ons” that the loan salesperson may try to pressure you into buying. These additions may include an extended warranty or loan insurance that is overpriced to you but a significant moneymaker for the salesperson.
FACT
Finding a lender to finance a used RV is usually more difficult than for a new RV. You may also find that interest rates are higher to match the higher risk. If you need to finance even a used RV, your best bet may be buying a trade-in from a dealer that also sells new RVs and has a finance department.
You may be able to walk into your RV dealer with financing in hand. Many lenders offer preapproved loans for buyers who are good solid risks. With a preapproved loan (it will be contingent on the appraised value of the RV you decide on), you can avoid the painful loan sales process with the dealer.
If you are having problems getting a loan, you may want to try increasing the amount of your down payment. Risking more of your own money will often persuade a reluctant lender to risk their money.
