Getting the Best Financing

Tens of thousands of places offer RV financing, including thousands of lenders on the Internet. Corning Credit Union does RV financing too. Because anybody can claim to be an RV lender, and because fine print rules RV finance contracts, picking a lender is your most important decision.

Picking the right lender for an RV loan is even more important than picking the right lender for a car loan. Why? RV loans generally run more years than car loans. Accept an interest rate that’s only one percent higher than you need to on a $40,000 ten-year RV loan, and you throw away up to $4,000 dollars in unnecessary interest payments!

How lenders determine what you can borrow.

“Remote” lenders—those that never meet you but transact business by email and regular mail—generally loan you a percentage of the fully equipped RV’s selling price. Your credit union does that, too: Your credit plus the RV’s selling price determine what you can borrow.

But the difference in lenders can be startling:

• Some lenders “load up” contracts with fees and processing charges that can increase as your loan increases.
• Others advertise low rates, and then raise them dramatically when your loan application is actually processed.
• Other lenders require “backup” collateral. For instance, they may require that you use your home as a backup asset for your RV loan. These outfits tend to lend you much more money than you can afford to pay back, then if you default on your loan, they attach your home or other asset.
  
  A warning: Unfortunately, some of these lenders also promise a credit card as a bonus with your RV loan. The credit card is also tied to your home mortgage. What happens if you can’t make the credit card payment? They go after your house!
• Some lenders even offer “balloon” payments with their RV loans. There are two variants: 1) Your loan payments are cheap for the first year, and then rise dramatically for the rest of the loan term. 2) Your payments are low for the whole term but a large “balloon” payment—the remaining balance of the loan—falls due as the final payment at the end of the loan term. What’s the result of balloon payment loans on RVs? Many people get in deep financial trouble.

Finding the lowest total-cost loan

Here’s a simple way for you to make sure you are getting the RV loan with the lowest overall cost. This technique, incidentally, has saved CCU members thousands of dollars on auto loans:

• Do your homework on the RV you want to buy, using the tools on this site.
• Pre-apply for an RV loan at your credit union. It costs you nothing to get this “baseline” look at your RV credit worthiness. While you’re at it, ask CCU about the reasons, other than interest rate, which help make a CCU RV loan usually the best, cheapest, and safest loan for you. Here are our phone numbers if you wish to talk to us and you can apply online.
• Use this “baseline” approval to help you compare loans at other sources. Do it like this:
  
  • Ask any potential lender to completely fill out a sample loan contract for the exact terms the lender will give you for a RV loan.
  • Bring that contract to us at CCU. We’ll compare the exact terms of their loan to our loan.
  • If they are cheaper, we’ll send you to them!
  • And what if they won’t give you a copy of the contract they want you to sign? Don’t go with that lender. Don’t finance with people that won’t really let you compare true costs.

More Information

In some circumstances, you may be able to consider an RV (and the loan on it) a second home for income tax purposes. The Michigan Association of Recreation Vehicles and Campgrounds offers an informative article, “Trimming Your Personal Income Taxes with Your RV,” that shows you where to find information and allows you to estimate potential tax savings. “Flexible financing options make buying an RV easier” provides additional information.

Getting Lost in America: How to finance a recreational vehicle is an overview article by Lucy Lazarony of bankrate.com and reprinted on rvadvice.com.

Prepared for Corning Credit Union by Remar Sutton & Associates, April 2003. Reviewed and updated May 2007. All rights reserved.