Because I get a lot of e-mails from blog readers asking about RV financing, I thought I’d brush off this blog from March, 2014 and run it again.
I hear from people all the time who have a good credit rating, have found the perfect RV for their needs, and then run into trouble when it comes to financing. Getting a loan for a big ticket item like an RV can be a challenge, and if you are a fulltimer it can be all but impossible through many lenders.
One e-mail I received was from a couple who said they have excellent credit and have never had a problem getting a loan for anything in the past, but now that they have become fulltimers they are running into a brick wall and have been rejected by the two banks they have always done business with in the past. One of these banks carried their home mortgage, automobile loans, home equity loans, and a loan for a boat. They said the branch manager told them that if they were still living in their sticks and bricks house their loan would have been approved, but as fulltimers they do not qualify.
It seems to be getting harder to find financial institutions that are willing to work with RVers, but it can be done.
One thing I would urge all of you to consider is joining a credit union. They are member owned and much easier to work with than banks. And these days you don’t have to belong to a union or work at a certain company to join one.
Even if you have excellent credit, fulltime RVers can have a hard time getting a car or RV loan because they have no fixed address, just a mail forwarding service. So if they default, how does the lender find them to repo the unit? Now throw in being self-employed, like Terry and me, and in our case, further complicate things with Terry’s cancer and the huge bills we were left with when our insurance company denied her claim, which wiped us out financially and took years to rebuild.
When we started shopping for an RV to replace our old worn out MCI bus conversion, banks would not even talk to us. At an RV rally I chatted with a rep from Alliant Credit Union and she said to open an account with them. Four months later they loaned us $68K to purchase our motorhome.
A few months later we wanted to upgrade our computers and they upped our credit card limit from $5K to $10K to cover that purchase. A couple of years later we wanted to replace our van with a nice used Ford Explorer and I called them to ask about auto financing and they said to just go find what we wanted and fax them the paperwork. No problem with a $10K loan for the SUV purchase.
Of course, we always pay on or before our due dates religiously and have developed an excellent working relationship with them over the years. And for the record, I get no compensation for referring new members. There are also other credit unions who want RVers’ business. Check out their ads in RV publications.
I seem to be hearing about more and more lately about individuals advertising “creative financing” for RVs on places like Craig’sList and even signs on telephone poles. From what I can figure out, they are hustlers who find somebody desperate to get out from under an RV loan and charge them a finders’ fee to locate somebody to take over the loan payment. Not the loan itself, just the payment. Then they find someone who cannot get conventional financing and draw up a contract whereby the new purchaser pays them the monthly payment plus an added fee they tack on to cover their services, and they forward the payment on to the bank.
A deal like this is full of dangers for both the buyer and the seller. The RV owner has no guarantee that the new buyer will make the payments, and if they do, there is no guarantee that the middleman will actually pay the bank the money received. On the other hand, the title to the RV remains in the original owner’s name and the buyer has no guarantee that the middleman will apply the money he pays toward the loan, or that he will ever get a clear title. What if the original owner declares bankruptcy? The RV is going to be seized, no matter what kind of private deal is in place between the individuals. And I can guarantee you that no bank in the world is going to let a deal like this go on if they find out about it. They don’t know the new buyer or the middleman and are going to demand payment in full or that RV is going to get repossessed. If somebody offers you a deal like this, grab your wallet and run.
The same applies to for sale by owner deals where the owner will finance the RV, or, more likely has a lien on it from his bank but wants you to pay him so he can pay them. The same perils mentioned above about RV deal brokers applies here and can spell disaster for anybody foolish enough to take on a deal like this.
If you want to purchase an RV, especially as a fulltimer, you are going to need a down payment. How much depends on the rig you are trying to finance and your personal credit rating. So start saving money for that down payment today. Make sure your credit rating is high enough to qualify for a loan. Show that you have the financial ability to make the monthly payments. And don’t wait until it’s time to drive off the dealer’s lot before you start thinking about financing the deal. Establish a relationship with an RV friendly credit union today and build a track record with them. It can make all the difference.
We laugh now about how hard it was to get a loan back then, and now that we have a house, banks and credit unions are sending us blank checks to use for whatever we want and offering us all kinds of deals to earn our business. We are the same people we were back then, with the same work ethic and the same habit of always paying our bills well before they come due. But because our home no longer has wheels under it, we are somehow more reliable and more creditworthy.
Be sure to enter our latest Free Drawing. This week’s prize is an audiobook of Ken Rossignol’s The Chesapeake: Country Cornpone Cornucopia. It is the fifth audiobook in Ken’s series of short stories of and about people in and around the Tidewater Chesapeake region. There is lots of history and humor, making it a perfect way to pass time in front of a roaring fire or on a beach or promenade deck. To enter, all you have to do is click on this Free Drawing link or the tab at the top of this page and enter your name (first and last) in the comments section at the bottom of that page (not this one). Only one entry per person per drawing please, and you must enter with your real name. To prevent spam or multiple entries, the names of cartoon or movie characters are not allowed. The winner will be drawn Sunday evening.
Thought For The Day – I want buns of steel. The problem is, I really like buns of cinnamon.