Many people who buy RVs finance their purchases. Depending upon what type of RV you are contemplating, financing may be similar to purchasing a house or an automobile. It is not unusual for RVs to be financed for 10 to 15 years and even 20 years on loans over $50,000.
In the world of financing campers, a credit score dominates your finance rate. The better your credit, the lower your interest rate and terms will be, thus lowering your payment and, ultimately, the price of your camper. In addition to credit ratings, loan companies take into consideration a person’s work history and debt to income ratio when determining whether to offer someone a loan.
There are many sources for financing when you begin the camper buying process. Campers and Campfires suggests that you shop around for the best rates. Most dealers will have inhouse financing available, but they may or may not have the best interest rate for which you can qualify. Most credit unions will offer competitive loan rates when financing a camper. We used Lightstream to finance our RV. Lightstream offers competitive rates, and they have a program to match the lowest offer you receive elsewhere. It was the most uncomplicated loan process that I have ever used. I completed the loan online, and I had a check for the loan amount within a couple of days.
Many companies that grant loans will hold the title as security until you have paid off the camper. Like automobiles, many campers depreciate as much as 30% the minute that you drive off the lot. Depreciation affects financing and will cause you to owe more than your camper is worth.
When considering depreciation and the fact that campers can be financed for up to 20 years, make sure that you get the camper with the floorplan and options (Check out our article on floorplans) that you desire. For a 20-year option to be beneficial, you must be prepared to keep your RV for an extended time. Campers and Campfires does not recommend the 20-year option due to the interest that you will pay over the life of your loan. A 20-year finance option can lead to a situation where you are upside down on the loan.
Financing Extended Warranties
Receiving pre-approval on a loan is helpful when preparing to purchase a camper. Often, the dealer uses financing as a leverage point when negotiating a deal. If you can secure financing from another source, you are free to negotiate the best price possible for your camper. The power of negotiation is the main reason that we chose Lightstream. They provided us a loan without using the camper as security. Having the money in hand allowed us to negotiate the best deal possible, and then we wrote the dealer a check for our camper.
Be prepared when you are in the negotiating and financing processes that the dealer may try to roll in other amenities into your purchase price. Dealers will try to upsell you for a variety of options, such as an extended warranty or a Scotchguard treatment. It is a good idea to discuss these items ahead of time with the dealer so that you have the opportunity to research the options and determine if they are a good match for you. The dealer will make the up-sells sound attractive and easy to pay for since they will be included in the financing. These extras can add up to a steep monthly payment. While this may sound great at the time, ensure that you remain within your budget.
Financing With Less Than Perfect Camping
If your credit is not stellar, there are still options available for purchasing a camper. When having trouble financing through a dealer, research local credit unions for better rates. Lending Tree is also a good option. Lending Tree is like a clearinghouse for loans. They work with hundreds of lenders and can help match you with a lender willing to offer you a loan. If you still have difficulty securing a loan, there are a few other options that you can explore.
If you are willing to wait a little longer to make your purchase, continue to save money until you have a larger down payment. Larger down payments improve the chances of securing a loan. If you put down more money on your purchase, it signals to the lender that you are committed to the investment and more likely to fulfill the terms of the loan. A larger down payment also helps ensure that you do not owe more than the camper is worth. Ensuring that the value of the camper is higher than the amount of the loan is appealing to a lender.
If you do not want to delay your purchase, temporarily set your sights a little lower. Maybe look for a smaller camper or a pop-up to get yourself started until you can afford something larger. You can also search for a used camper that you can purchase without financing. Know that campers are always improving, and they have made significant gains over the last decade. It may be that you buy a smaller camper now, and in a year or two, you will be able to purchase a new RV with the latest technology and amenities.
No matter what your circumstance, options are available for camper ownership. Stick to a budget and negotiate well. If financing is not available for you at the moment, know that other options are available.
Do you have any tips for getting the best rate on an RV loan? We would love to hear from you. Please drop us a line in the comment section below!