In today’s market most potential RV buyers have to rely on financing in order to obtain the RV they are interested in. If you are looking for a new or used RV and plan to get an RV loan to pay for your purchase the following guidelines can be helpful.
Choose the Type of RV and price range you want to finance
Start out by looking at your budget and decide what you can afford. Take into consideration your current monthly debts and any foreseeable future expenses. Most lenders that offer recreational financing will require that your debt to income ratio be less than 40%. You can calculate your DTI ratio by totaling up your monthly recurring debts (total of all of your monthly payments for installment loans and revolving loans), then divide that number by your monthly income. For example: if your total monthly debts total up to $2,000 and your monthly income is $6,000 your debt to income ratio is 33% ($2,000/$6,000 = 0.3333). Keep in mind that you will also need to consider the payment on the new unit you plan to purchase when figuring your DTI ratio, the new payment may put you over the 40% maximum.
Next you will want to do some research on RV’s to determine which type of RV is right for you. Are you looking for a motorhome, travel trailer, fifth wheel, or maybe a tent camper? Once you have chosen the type of RV you plan to finance you are ready to shop around and compare pricing, but before you start negotiating contact the lender and get pre-approved.
Talk to Your Recreational Lender
A lender that specializes in recreational financing will typically be able to offer you better rates and terms than your local bank or credit union that does not do much of this type of financing. Most banks do offer RV loans, but they usually have a maximum term of 5 to 6 years and their rates tend to be higher. A lender that specializes in recreational financing will generally offer you a lower rate and a term of 5 to 20 years and they are usually simple interest loans that can be paid off anytime without a pre-payment penalty.
Once you have done your research on what rates and terms are available for the RV you plan to purchase, get a pre-approval from the lender. By being pre-approved when you do begin your negotiation with the RV dealer you will be in the strongest possible position to negotiate.