What Are The Best Finance Options For Used RVs?
The best RV financing options depends on the person seeking financing and their unique needs, as well as the type of vehicle being financed.
The perfect financing solution for one person may not meet the needs of another. There are many criteria that define different financing programs.
For example, financing new and used RVs will have different limitations, maximum loan values, and other restrictions. Even the state in which you reside can impact your loan options. Additionally, the financial history and credit worthiness of a borrower will have a significant impact on what loan instruments are available to the borrower. Even your intended use of the RV will restrict the type of loan you may be able to obtain, and the terms and interest rates applicable to the loan.
To begin with, let’s start with the credit worthiness of borrowers. Some RV lenders will underwrite loans to borrowers with bad credit, even though the typical minimum credit score for an RV loan is 700 to 750 points. There are a few lenders who will underwrite loans even if the borrower’s credit score is as low as 550 points.
However, loans written to borrowers with bad credit have other restrictions, including a much higher interest rate (up to 17.95%), and potentially a shorter-term length. Bad credit borrowers also may not be eligible for larger loans which will restrict the types of RVs they may be able to purchase.
Full financial picture
Credit worthiness should be based on much more than just the borrower’s credit score. To be fair, underwriting decisions should be a reflection of the borrower’s current financial performance, ability to repay the loan, their debt-to-income ratio, work history, and documented and verifiable income, not just a credit score based on outdated financial information. After all, some folks may have a poor credit score based on past events like a job loss, injury, sickness, divorce, or other disruptive life challenge.
Unfortunately, negative credit scores linger for years after the circumstances that damaged the credit score have been rectified. That is the frustrating reality of credit scores, and it can present a stumbling block for borrowers seeking the best RV financing option.
If you have lingering negative credit issues, then look for lenders that factor in a wide variety of current financial data into their underwriting decision, and be willing to provide a clear statement of why there may be negative financial information in your financial history which is no longer a financial challenge.
Other issues that limit a loan
Assuming creditworthiness is not an issue, there can be other factors that impact what type of RV financing is accessible to a borrower. Perhaps the borrower wants to purchase a vintage RV as a DIY project.
If they are not able to pay cash for the RV, it will be difficult to find any lender that will underwrite an RV that is more than 10 or 12 years old and in poor shape. The good news is that most “project RVs” are affordable, and people who are willing to take on that type of project know there will be many expenses other than the purchase price, so it’s assumed that they are financially able to manage all those expenses.
Loans for old RVs
Most lenders restrict the age of the RV (and if the RV has an engine, they may also impose mileage restrictions).
Commonly, most lenders restrict the age to 10 years old or newer (15 years is the oldest I’ve found listed on any lender’s website), and 60,000 miles for a gas motorhome, or 100,000 miles for a diesel motorhome. These restrictions can limit the pool of RVs for which you will be able to obtain financing, but with nearly 200,000 RVs listed for sale at any one time on RVTrader, plus thousands of used RVs on RV dealer lots across the country, your selection is not overly restricted by the age and mileage restrictions.
How to get the best RV financing
The best RV financing is always going to be a personal consideration. What’s perfect for one borrower may not even meet the basic needs of another. One person may want a short-term loan, while another needs the term to be as long as possible.
One thing that most borrowers will agree on is having the lowest possible interest rate, but even that can be a compromise because getting a low rate might require a larger loan amount, an unfavorable term, or too much down payment.
With RV financing, like many other complicated systems or programs, the devil really is in the details. Therefore, to get the best possible RV financing, the borrower will need to provide ALL the information, documentation, and explanation required by the lender. It can take time to gather the documentation, but an incomplete or inaccurate application will definitely not result in the best RV financing.
What happens if your loan application is rejected?
If the underwriter feels like the applicant has withheld critical financial information, is trying to hide information, or is unwilling to provide all the data required, their natural inclination is to just say no to the loan application. Being rejected for an RV loan can have serious consequences and show up almost immediately on a credit report. That rejection can lower your credit score, and that will impact future applications.
Applying for RV financing
If you are in the process of comparing RV financing options from different lenders (and I strongly recommend that you do that), just look at what they have to offer, but don’t fill out multiple online applications. Choose the lender you think will provide the best solution for your needs, and then fill out the loan application carefully and completely.
Take your time and complete the application with purpose and intent. Don’t make the underwriter guess about what you want to accomplish, who you are, what your financial situation is, and how you intend to repay the loan. You may still be shopping and not quite ready to commit to a loan, but you should strive to receive approval for any loan for which you submit an application.
You may decide to decline the loan later, but you don’t ever want a lender to reject your application. To get the best RV financing, you need to look at the transaction from the lender’s perspective. They’re in the business of lending money, but only if their risk is within a tolerable threshold.
If you can show them a strong financial picture, demonstrating your ability to pay back the loan and you’re willing to put some skin in the game, with a significant down payment, you’re more apt to obtain approval for the loan that best meets your RV financing goals.
- National Vehicle is a company that helps people buy and sell used RVs, and part of their service is helping buyers secure financing.
- RVTrader gives RV buyers access to a huge database of RVs for sale, they also provide useful information about financing and provide a link to a well-known vendor SE Financial.
- iRV2 forums allow folks to chat with other RVers online, and get other perspectives on everything RVing, including products, destinations, RV mods, and much more.