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 > How to get a loan for RV

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way2roll

Wilmington NC

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Posted: 04/07/21 06:34am Link  |  Quote  |  Print  |  Notify Moderator

Sorry for the ramble but here goes:

Debt load - the sum of all the money you currently owe - is used to calculate your income to debt ratio. The sum of your total income from all sources divided by debt load = your income to debt ratio. Lenders usually like to see an income to debt ratio lower than 40%. Other factors come into play that add to a lender's risk of lending. FICO is one. The lower your FICO the greater the risk to the lender. This will result in a higher rate. When buying RV's it gets a little trickier as RV's are a heavily depreciating asset. Most lenders won't finance anything older than 10 years - and the older the RV, the higher the rate. This offsets the loss in value in their securitized asset - the RV. In other words, the older the RV the less it's worth and they can't get all their money back if they have to seize and sell. So they offset that risk of loss by charging higher interest and greater down payment from you.

Get your FICO score. Any of the credit scoring agencies (Equifax, Trans Union etc) will offer one for free per year. Calculate your income to debt ratio - how much can you reasonably afford?

Banks aren't in the habit of willy nilly telling you how much buying power you have. That's because it's heavily dependent on the exact thing you want to buy and it's value. Example - you might be able to buy a $200k house, but only a $20k RV. The amortization as well as the value of the asset secured against the loan is very different. If you find an RV you like and you think you can afford, approach the bank and ask for a "soft pull" for approval. They can tell you with limited information if they think you'll qualify without impacting your credit scores. Most banks do this now as common practice.

Lending is HIGHLY regulated and there are processes the banks have to follow to provide you with accurate information and they can't do that without actually following a due process. Several laws in place protect the consumer from false and misleading lending practices - this means they can't say "we think you might be able to buy that". They have to provide factual information based on real values from you, about you, your income and the asset you are buying. It's a pain I know, but those laws and practices are in place to protect you.

* This post was edited 04/07/21 06:54am by way2roll *


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pitch

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Posted: 04/07/21 06:42am Link  |  Quote  |  Print  |  Notify Moderator

mich800 wrote:

et cetera wrote:

Looking at all the forums, none are a perfect fit so will ask here, my apologies if not the best sub-forum.

Trying to figure out how much I can get in a loan. I need some help with loan basics as I've never gotten one before.
And how much I get will drive my purchase decision, alternating between B-class and C-class. I full-timed in a 32' TT before but it was bought with cash. Anyway, that's immaterial.


I have no debt, no bankruptcies, my credit history is this: TransUnion is 705, Equifax is 630 via CreditKarma. I don't have the FICO score. I am hoping to get at least 40K but where do I go, my bank or maybe Navy Federal Credit Union, or what?


Do yourself a favor and get your real fico scores so you have a general idea what tier you would be in for a loan. Credit Karma scores are worthless for anything other than entertainment.

Then it generally comes down to debt to income ratios the lender uses.


WrongCredit Karma score are totally sufficient to watch your numbers. I have depended on CK for years and their figures are never more than oneor two points different.
Are they what your lender uses? No but they are derived from the same data, and are accurate.

way2roll

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Posted: 04/07/21 06:50am Link  |  Quote  |  Print  |  Notify Moderator

spoon059 wrote:

Do you own a house? We took out a HELOC at a very low rate and used that to buy our trailer. Paid it off in less than 3 years. Rates are so stinking low right now for mortgages it's even more beneficial than it was 6 years ago when we did it.


Home equity line of credit is a great tool when rates are low to buy things like RV's.

A few things to keep in mind. Lenders usually won't ever let you borrow more than 80% of the value of your home. So a HELOC's amount is determined by an appraisal. The amount of the appraisal x 80% (minus the amount of outstanding debt in your current mortgage) = the amount available to borrow. Example: if your house appraises at $200k, 80% is $160k - this is the total amount of debt you can have against your home. If you owe $100k on a mortgage, then the maximum amount left for a HELOC is $60k.

The other thing to note, is that a HELOC is essentially a second mortgage in addition to your first mortgage and must be paid off if you ever sell your home. Using the scenario above, if you sold your home for $200k, you walk away with $40k - not $100k. (actually by the time you pay the realtor and associated fees - your net would probably be more like $20-25k)

Some of this might be old news to a lot of you, but I talk to a lot of people who don't even know what a HELOC is let alone the implications of getting one.

et cetera

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Posted: 04/07/21 07:48am Link  |  Quote  |  Print  |  Notify Moderator

toedtoes wrote:

Credit unions will usually have the best rates. New RVs are pretty easy to finance, but used ones can be much harder to finance (RV loans usually have an age restriction). If buying used, you may have to get a personal loan or equity loan.

With all that, really think about financing an RV. It's rarely a good move as the RV depreciates and you'll be underwater for most of the loan life.


I have zero debt load of any kind, CC included. But also zero assets.

I can buy new if I have to. I do not own any real estate or have any notes or anything, own my car. Thus can afford between 1000-2000/month. I want a 3 to 5 year loan. I don't mind a nice used unit. Since I will turn a nice new unit into a used one pretty quickly.
A 5 year old class B or a class C.

My alternative is rent at the moment. It's very expensive in DC area and it's a total waste of money. I am aware of the fact a new RV will take a giant hit in the first few years but it seems a lesser evil than blowing away at least 20K annually in rent with no light at the end of the tunnel.

I need the very basics of getting a loan. What is a credit union, where do I find one, what documents do they need? I am in Northern VA if that makes any difference.

et cetera

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Posted: 04/07/21 07:58am Link  |  Quote  |  Print  |  Notify Moderator

way2roll wrote:

Sorry for the ramble but here goes:

Debt load - the sum of all the money you currently owe - is used to calculate your income to debt ratio.

{ * * * }


This is certainly good food for thought.
Actually I would be happy with a 20K loan for an RV or even a TT, I could theoretically pull one with a Suburban or such. I have an idea of what I want but also have flexibility since I am not in a strong negotiating position (i.e. buying with cash) and am at the mercy of what they will give me.

If they make it easier to get a new one, then so be it. It's better to be underwater with an RV than with a rental. My range of what I can spend is what a 1 bedroom apartment costs in my area, which is $1500-2000. Since I will pay that much anyway.

I do need to understand the specific steps to take to get a loan, how do I identify a credit union to engage in this process?

time2roll

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Posted: 04/07/21 08:51am Link  |  Quote  |  Print  |  Notify Moderator

If buying from a dealer they will often set you up with decent to very good financing.


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toedtoes

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Posted: 04/07/21 08:55am Link  |  Quote  |  Print  |  Notify Moderator

This comes up a lot. Folks don't want to pay out in rent so they decide they'll buy an RV. The logic is that it will somehow be better.

First, living in a small RV is not that comfortable. The space for cooking, personal hygiene and relaxing is far more limited and can be awkward. RV Parks that cater to year round stays are limited and are often located in bad areas.

Second, you also have to consider the additional costs: overnight fees, propane, water, electrical. Where are you going to park your rig? Are you going to depend on friends and family to let you park in their driveways? If so, are you going to pay them for the use of water and electrical? Are they zoned to let you stay there? If you'll be staying at an RV Park, have you determined which one? What are the rates? Do they allow year round stays or just seasonal? If you will be moving around, have you factored in fuel costs and such? Will you have a daily driver or just the RV? A class C will get only about 10mpg - are you prepared for that. If the RV will be your daily driver, you will need to unhook it from electrical and sewer everyday. You will need to be extra neat and keep everything put away for travel. Even with a trailer, you will be looking at 10mpg. A suburban won't get much more than that even when not towing.

Third, an RV does not have much insulation. It gets much colder in an RV than in an apartment. Winters can be uncomfortable at the least. And the cost for extra heating in winter can be more. In hot summers, an RV can be stifling. An 80 degree day can make an RV unbearably hot. AC can only be run when hooked into electrical power.

Fourth, buying an RV does not make better financial sense than renting. You are still throwing your money away. At the end, you will have an old beat up RV worth a few hundred dollars at most. RVs break down and have issues. With an apartment, the management/owner is required to fix things. With an RV, if the roof leaks, you will be paying to fix it. If the propane systems leaks, you will need to fix it before you can use it. If you stay outside of RV Parks, you will need to move your RV to dump stations to empty tanks. You will need to find access to fresh water to fill your tanks.

As you have absolutely no idea how to take out a loan, I am guessing you are young. Being young makes all of the above a bit easier - you have time to learn from life and an RV can give you that experience. But you still need to really figure out the practicals of living in an RV before you move forward with this plan.


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et cetera

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Posted: 04/07/21 09:10am Link  |  Quote  |  Print  |  Notify Moderator

I full-timed for 2 years in a 32' Airstream, I am not totally new to the concept. It's not a money saving situation and tons of unplanned expenses can come up, like I had to replace the AC unit.. my fridge had to be repaired as well.

Learned a lot and understood what I want and what I don't want. Understood what was essential and what was just nice to have, and my personal deal-breakers (that may not be your deal breakers). For example I hate carpets with a passion as they are high-maintenance. I need either wood or Pergo type floor that you can just mop/wash. I won't consider wall to wall carpeting, except maybe for the bedroom. I need spartan type configuration.

My ideal configuration would be a 43' Fifth pulled by a F350. In a real world however it's neither practical nor affordable. There are better, more realistic choices for an active, working 40-something guy in a major metro area. A compact class C but a case can be for a nice class B since they just disappear and don't scream "Full-timing" and more or less blend in with all the delivery vehicles. I can't decide which one but either one will do.

I can deal with an Airstream again if I have to, the newer wide body. It's kind of amazing they haven't introduced anything new and seem to be stuck in the 90's. I need to look at all the new options.

My inquiry is about finances, the rest is really immaterial.
The problem is, I've had a high income for decades and thus became my own bank, I never needed to resort to a CC or a car note, bought my cars with cash. But now am paying for the total lack of credit history, it looks like I have been living in the woods for 25 years. They look at my credit report and it's blank.

I have been financially solvent with zero debt and now the loan industry looks at me with suspicion, since they never made anything off me, I am a risk. People buried into debt have higher credit scores than me.

et cetera

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Posted: 04/07/21 09:15am Link  |  Quote  |  Print  |  Notify Moderator

time2roll wrote:

If buying from a dealer they will often set you up with decent to very good financing.


any dealerships you recommend in the Northern Virginia rea?

Crowe

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Posted: 04/07/21 09:20am Link  |  Quote  |  Print  |  Notify Moderator

Just a note on FICO scores and hard credit inquiries:

According to FICO, a hard inquiry from a lender will decrease your credit score five points or less. If you have a strong credit history and no other credit issues, you may find that your scores drop even less than that.

Your credit scores are solid but if you can raise them and lower your risk then you should get more favorable treatment as far as interest rates, etc.


I may not have gone where I intended to go, but I think I have ended up where I needed to be Douglas Adams

RV-less for now but our spirits are still on the open road.

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