An Overview: Easy RV Affordability With Simple Financing Terms
Today, even with the highly volatile and unstable economic times, all is well with the RV industry. Despite the economy, RV ownership has actually increased during the last ten years rising from 7.6% in 2010 to 8.5% in 2011. Moreover, according to new demographic statistics, more than 8.9 million Americans today claim ownership to RVs. The RVs beauty, practicality, convenience and comfort all lend to their rising popularity with consumers.
However, a large part of the increase in ownership nationwide is the fact of the relative simplicity by which they are able to be financed by consumers. Unknown to many consumers, RVs are financed just as simply and quickly as an average auto loan — in fact, RV financing rates are virtually tied to the same financing rates used to determine rates on auto loans.
Today, financing an RV is simply a matter of finding the RV most appropriately fitted to ones life-style and then sticking to a predetermined budget. In this overview article several factors will be covered which may help ensure that ones RV financing be as pleasant and profitable an experience as possible for the consumer.
Where Is The Best Place To Get Financing
Prospective RV owners have discovered that financing does not have to be necessarily secured through an RV dealership as in past years. Many times, financial institutions such as banks and credit unions, as well as other resources, can offer better competitive rates and terms. Shopping around for better terms is always the way to go for those future RV owners.
Knowing The Purpose and Approximate Length of RV Ownership May Set The Pace For Finance Terms
Whether the RV will be used for frequent trips, residential purposes or even for business will help determine what terms need to be secured and how. If one is paying cash, this is not much of a serious consideration. However, determining whether financing will be done for short, medium or long range purposes and how the length of term will fit in with other financial goals, will aid in making the final decision.
The Norm For Financing Terms
Typically, financing up to 90% of the final purchase price plus any extras added at the time of the purchase is the norm; however, it is not the rule. As with an auto loan, financing is whatever a buyer and seller can best mutually agree on.
Generally, RV loans are merely simple interest loans with terms which vary from 10 – 20 years. Many seller lenders give custom-made financing terms such as: no down payment, no minimum deposits required and many times terms with a deferred payment schedule. As a plus, there are typically no prepayment penalties for early pay-off nor extra fees. Many times, life insurance and extended warranties form part of the loan agreement negotiated.
The Length of Loan
Typically, where terms are concerned, a great many if not most RV loans which exceed an amount of $100,000 can be readily financed for up to 20 years. However, RVs financed for amounts of between $25,000 – $100,000 carry a usual maximum 15 year term of length.
Many industry leaders opine in favor of a shorter term having the best or better advantages in financing. This mind-set adheres to the belief that a shorter-term RV loan will permit an equity to be built up more quickly in favor of the RV owners wallet when or if the owner decides to sell. Nevertheless, a down payment and the ability to keep up with timely, monthly payments is another strong consideration when deciding for a shorter or longer loan term.
Concerning the Lending Rates
Generally, there are several factors which may, or will definitely, affect your RV loan rate. Some of these factors are:
- The actual rate of the loan
- Credit worthiness
- Credit scores
- Credit payment history
- Any down payment given
- Loan-to-value figures
As with all things financial, a high-risk borrower will generate higher loan rates. With a low-risk borrower, a lower borrowing rate will be the result. Consequently, for the best loan rates, a large down payment amount, shorter length of terms and having a good, strong credit rating will facilitate the best RV financing terms.
Pre-Approved
If one is buying from an RV dealer, having a verified “pre-approved” status will almost always guarantee an advantage in negotiating. It is a green flag for the seller as it signifies that successful financing is already a “done-deal.” It also means that the prospective buyer is a viable, serious buyer who is able to come up with the money required for the purchase. Furthermore, there is no fear of an offer coming apart at the last moment due to not having all steps in place. Generally, this means a quick, easy sale for the seller and quick possession by the new owner. Any possible credit and loan limits will also be set by a “pre-approved” status and may even help in eliminating any financing stress which can creep up during the negotiating.
Additional Hidden Benefit of Financing An RV
If one utilizes the services of a tax accountant, be certain to check about the tax deduction availability based on the interest paid at the time of the RV purchase. Choosing wisely and having a plan or strategy of financing, may help ensure a happy, pleasurable RV experience.
Tip(s): Some Questions To Ask Before Securing Financing
- 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?
- What is the finance amount I can best negotiate?
- What is the length of my loan going to be?
Despite the volatile and unstable economic times, all is well with the RV industry and RV owners. Easy financing terms have made owning RVs less of an issue. With a healthy increase in RV sales, especially with “baby-boomers” financing has like-wise become more healthy and affordable for buyers.