Financing an RV

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Gary RV_Wizard

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I suspect they are not willing to give their home mortgage rates & terms to RVs.  They likely view RVs as a higher risk proposition (it's a depreciating asset) and RV rates are typically higher or shorter term, depending on individual bank policy.  Some banks have no special RV financing terms at all - it's just a big vehicle loan (and expensive!).

An RV loan is a mortgage in the generic sense, i.e. the item being purchased is the collateral for the loan.  And the IRS considers it a mortgage under the federal tax code, which means the interest is tax deductible.
 

Ron

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In addition to what Gary has mentioned there are companies that specialize in RV financing.? I googled RV Financing and several are shown.

Just click HERE for the google listings.

 

jw1318

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hi Gary and Ron, read the conversation and wondered is it ok to finance through the dealer or would that be a buyer's choice?
 

Tom

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It's your choice how you finance an RV. Dealers work with lenders to get you the financing, but they won't necessarily be the best choice for you. You should shop around for the best loan, or at least get comparative rates before getting locked into a loan at a dealership.
 

PancakeBill

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Our finance folks work with many diffrrent banks to find your best rate.  Our customers are free to shop the rate, but not many do.  Some have and have come back, and occsionally one will find a better rate.  Advantage to working through the dealer (at least us herre at LD), is that it is all coordinated and quick.  My customer that found a better rate went through all kinds of issues, call, more calls, paperwork, more paperwork etc.  At the end she told me that if she knew it would take as long as it did, and be as much hassle as it was, she would have just stayed with what we had found her.  Of course, over the term of the loan she will save money, so in the long run it was worth it, but short run she was ready to haul a banker over a desk.

 

Tom

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Thanks for the input Bill. I really had no idea how many banks a dealer might use or how competitive the rates might be. I just know that, for example, when our kids have taken car loans through a dealer, I've subsequently taken them to the credit union and they've gotten significantly better rates. Fortunately, California law allows a buyer some time to find alternative financing and they were able to cancel the bank loans through the dealers. The dealer responses varied between "we could offer you a better rate than we previously did" to "we can't match a credit union rate".

This data is a little old though.
 

Gary RV_Wizard

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Like most everything bought through a dealer, the buyer should comparison shop the rate and also negotiate it with the dealer.  My experience has been that the dealer can and will match the best rate you can qualify for elsewhere.  However, they may not offer their lowest rate initially - neither the bank nor the dealer has any incentive to accept a lower profit margin.

My experiences with non-dealer financing have been easy enough - the finance compan contacts the dealer F&I people and make the arrangements. The only extra hassle on my end was that I needed to check with the finance company rather than the dealer if I wanted to get up to the minute status or to expedite something.  But that's really no different than with dealer financing - you usually have to call the F&I guy at the dealership to find out what's really going on anyway.
 

Carl L

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Mortgages are loans against real estate -- real property.  They act as a lien against the land and improvements including condominium property.  It faces issues of land title that are not involved in an RV.

Actually an RV loan can be treated as a mortgage for all intents and purposes if it qualifies as your first or second home and the loan acts as a lien against the RV.  Current tax laws allow the interest of the RV loan to be deducted as 'mortgage interest".  Note I said current.  Mortgage interest deductions are facing attack.
 
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Albslb2

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When we purchased our RV a neighbor went along and liked ours so well they bought a twin (not Identical)  within in weeks.  They simply went to a bank borrowed against their house and had a realestate loan at decent interest.  This would be great if you own property even if you were going to sell it.  You have the RV free and clear.  Wish I had thought of that, this dummy paid cash, and don't have the deduction.  Might work for someone else.  I just hate payments.
 

Smoky

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Albslb2 :

Don't feel bad.  No debt is ALWAYS better than debt, even with the interest deductions.  We are debt free for the first time in our lives since going full time in June and the increased spending power with no interest to pay is awesome. 
 

PancakeBill

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No debt is cool.  We are almost there and not there with reason.  When we sold our home in RI we paid off everything but the truck, I paid off 50% of it and will make accelerated payments on the balance.  Will finish it off in about 6 months.  This left us with a bigger buffer.  So at this point all we have is utilites and food etc.  Any plastic we use is basically as a convenience, and paid at end of month. 

However, when we decide o buy a new RV, we will likely finance a portion of it. 

 

blueblood

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Carl Lundquist said:
?Mortgage interest deductions are facing attack.

Yep ! Bipartisan Tax Commission has recommend that first mortgage interest be limited to 15% of the interest paid and second mortgages not be allowed. Although there seems to be some confusion on definition of second mortgage i.e. on second mortgage of first home or on a second home (RV) the RV manufacturers believe according to RV Business that it will apply to RV's if the whole thing ever gets off the ground which is problematic. However, remember they did do cars a few years ago.
 
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Albslb2

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Thanks Smoky -  I said that with a little tongue in check.  But one thing I can't stand is debt.  We recently had a chance to sell our house if we would finance it at a bank and turn over the loan of 120% to the buyer while we kept the overage of the loan.  Told the people  to go look elsewhere.  Won't happen with me and to buy something they could afford, but it wouldn't bge at my credit expense.  Learned my lesson, too many people owe me now and I know I'll never collect some of them.  Darn it.
 

stray_bullet

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I purchased my new motorhome 2 weeks ago. The dealer told me rates were 71/2 % for a ten year loan. I shoped around and found a better deal. Went back to the dealer told him he could do my financing if he matched my offer. In the end, he matched my deal, which made him a flat fee from the finanace company. The deal I got was......6 % for 20 years with 15% down payment. I intend to pay off in 6 years, but the 20 year loan earned the dealer a bigger flat rate for himself. My loan is a simple interest loan so I can pay off early with zero penalty.

Brad
 

Gary RV_Wizard

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Brad,
I'd say your expereince was fairly typical,  The dealer - and the finance company - offer the loan at a rate that is most profitable for them. Unless there is a shortage of money available, the finance company is  willing to accept a lower rate of return but they make up for the lower rate to some extent by cutting the dealer's commision/finder's fee. And the dealer is willing accept a lower fee rather than get no fee at all.  So everybody is still happy (especially you!).
 
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