It may be said that there is no greater mystery when buying an RV from a dealership than financing. Some of the most important questions you should be asking as you prepare to finance an RV are:
How much can I finance?
How long should my term be?
Am I getting the best rate?
Should I get pre-approved before I visit an RV dealer?
As a general rule, you should be able to finance up to 90% of the purchase price (including any extras that you are adding at the time of purchase) of an RV.
When it comes to terms, most RV loans over $100,000 can be financed for as long as 20 years while RV loans between $25,000 and $99,999 typically have a maximum term of 15 years. The general opinion is that a shorter term has the best advantages. A shorter-term RV loan will allow you to build up equity in your RV more quickly which will translate into more money into your pocket when it's time to sell. However, individual issues such as the amount of down payment and ability to make monthly payments should be considered.
Part of the confusion that, no doubt, comes into play when financing an RV is the lending rate. The rate that you obtain for an RV loan is based on a number of factors; the term of your RV loan, your credit quality, credit score, credit history, repayment history, down payment and loan-to-value. The basic rule is: The higher the risk, the higher the rate; the lower the risk, the lower the rate. The best way to improve your rate is with a larger down payment, shorter terms and a strong credit history.
If you are purchasing a used RV, whether from a dealer or a private individual, pre-approval gives you a negotiating advantage. It lets the seller know that you are a serious buyer because your financing is already in place. This way your offer can be made without any concern that you’re financing may fall through so you have the ability to close quickly. Pre-approval also helps you determine your credit and loan limits, allows you to address and resolve any credit issues before they become an issue, and helps eliminate any financing anxiety that might arise once you have entered into a purchase.
A final question that might be weighing on your mind is how the financial institutions that provide RV financing have weathered the current economic status in the country. Those that have not taken on too many high risk loans will certainly be able to provide a better financing package in a downturn economy than the ones that have.
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