How to get a RV loan?

[etcetera]

 

 

I never got a loan for anything in my life, incredibly, so this is the first time.  I operated much pretty on a save-it, spend-it basis. But now I would like to get a RV loan. How much I get will drive my purchasing decision. Probably either B-class or more likely, C-class.

Looking at credit via CreditKarma, my TransUnion is 705 and my Equifax rating is 630.  I know that CreditKarma is optimistic. I got a credit card for the first time in my life a few months ago and apparently it boosted it some. No bankruptcies.  I don't know the FICO score that banks use.  I can afford to pay at least 1000/month, maybe 1500 and my goal is a at least a 40K loan over 36 months.

What are some of the basics of getting a loan? Do I go to my bank? Or another loan agency?

[Kirk W]

Welcome to the Escapee forums! I would start by visiting a loan officer where you bank and discuss your plans with them. Since you are established there it is quite likely that they may be your best choice but it is wise to shop financing just as you do for the RV. You will find that the bank can tell you the most that you qualify for, but not what they would lend to you on an RV purchase without them knowing what RV you are buying because the RV will become security for that loan and so the most that will be loaned will depend upon what the RV's loan value is. Even without that information it will be worth your time to visit them. 

[sandsys]

Our bank once turned us down for a car loan because we would be leaving the state for two years before returning. I said I was sorry that hadn't enjoyed having our extended family's business for years. They called me the next day to say they would give us the loan. Is there something you can you do to make them see this as good business for them?

Linda

[Dapperdan]

You could try talking to the dealer you're going through to purchase an RV, ask if they have suggestions as to where you might seek financing.  They want to see you get the loan almost as much as you do.  It doesn't hurt to ask, others here have really good suggestions as well.  IMHO you are in a "good place" credit score-wise.  Take your time, there's NO rush, decide what you want, in the price range realist to your budget and go from there.

Good luck.

 

Dan

[etcetera]

what's the difference between a bank and a credit union?

[Kirk W]

7 hours ago, etcetera said:

what's the difference between a bank and a credit union?

Banks are for-profit, meaning they are either privately owned or publicly traded, while credit unions are nonprofit institutions. ... This means members generally get lower rates on loans, pay fewer (and lower) fees and earn higher APYs on savings products than bank customers do.

The Pros and Cons of a Credit Union Versus a Bank

[Twotoes]

How long before you are likely to make the purchase of an RV? Your credit score is somewhat low. Most banks want over 700 or 750. Yours is low not because of poor credit but because of lack of credit. If you have time to establish credit it would be good to do so. It will increase your chances of approval on an RV loan. 

[Jinx & Wayne]

Having a better credit score translates to having a better choice of lenders, lower interest rates and the ability to borrow more.  Take a look at this website for understanding credit and building credit scores.

In my experience credit unions have better interest rates and are more personal.  Membership in most is based on some kind of group with a common bond - area of residence (certain states, cities, towns or counties), place or nature of employment (military service, government service, etc), group membership (union membership and others.)  I see that you are in Virginia so here is one credit union for which you may qualify.

One of the drawbacks to credit unions in the past was size and location - just a few offices in a small geographic area.  Not necessarily a good thing for travelers.  With the prevalence of mobile apps, however, that is changing.  I belong to a credit union in Maine but do all my banking with them on the app or by a call.  In my experience credit unions are much more receptive to calls for banking.

Wayne & Jinx
2017 F-350 diesel, dually
2006 Carriage Carri-Lite 36KSQ

[etcetera]

16 hours ago, Twotoes said:

How long before you are likely to make the purchase of an RV? Your credit score is somewhat low. Most banks want over 700 or 750. Yours is low not because of poor credit but because of lack of credit. If you have time to establish credit it would be good to do so. It will increase your chances of approval on an RV loan. 

I tried to pull my FICO score, I get a free try from my bank and they could not do it, it does not even exist. So I fall in the "no credit" category. No established accounts for over 6 months.  I am totally cognizant of bank's requirements and that is the dilemma:   Wait and rent for another year, hoping it will hit 700, which is doubtful and lose tons of money in the process or buy under not very good financial conditions a new  

It's not that I am doing this to save money but I like it as a lifestyle choice. For what it gives me, the entire package. I full-timed for 2 years and came to realize what I liked and what I didn't. I also get the "TCO" concept.  What is essential and what is just bells and whistles.  The reason I did not do it a decade ago because I was a single parent of a young child going through a custody court and living in an RV did not look good in the courtroom. Now my circumstances have drastically changed.  I am not sure I fit in the paradigm of most people in this community. I work in IT and may relocate once or twice a year. An RV opens  options. I knew a successful IT contractor, he traveled around in a classy Airstream. Way cheaper than renting hotel rooms or month to month rooms. It's not what you get but the value of it.

So I am facing a bad and a worse choice. The obvious solution is to buy with cash, in a perfect world. And I could have done so a decade ago but I chose to pour my funds into attorney fees and such. I won but it's such a pyrrhic victory. It wasn't my choice, any of it and due to circumstances beyond my control, life happens. 

At this point i am trying to figure out much options and how "bad" it will be. And what the process to go through and  what to expect.  Do they stick me with an 18% interest rate on a loan on a new RV? 

 

[podwerkz]

You might look into a loan from your 401k, that is if you have one and if your employer allows it. 

It's not the best option, but it might be AN option. 

Good luck.

 

 

[Kirk W]

1 hour ago, etcetera said:

  Do they stick me with an 18% interest rate on a loan on a new RV? 

I have not heard of any loan rates that high in a very long time.

Quote

	Rate	Terms
LightStream	4.29%–11.89% (with autopay)	24 to 84 months
Navy Federal Credit Union	7.99%–8.8%	Up to 180 months
U.S. Bank	Starting at 5.24% (with autopay)	Not specified
USAA	Starting at 5.75% (with autopay)	12 to 180 months

Feb 17, 2021•

 

[Twotoes]

As I said above, you need to establish some credit. Go to your bank or credit union and get a credit card secured by your savings, even if only for a $500 credit limit. Use the card and make monthly payments for 6 months or so. Don’t pay the balance in full, make timely monthly payments. Also go to a local merchant and get a credit card from them, Koles, Home Depo, Lowe’s etc. (after you get the cc from the bank) and made a couple of payments. Establish you credit and then apply for the RV loan. Keep your balance low so you don’t have a problem with your debt to income ratio. After you get the RV loan you can pay off the balance on all the cards and only have the RV loan payment. 

[2gypsies]

3 hours ago, etcetera said:

I am not sure I fit in the paradigm of most people in this community. I work in IT and may relocate once or twice a year. An RV opens  options. I knew a successful IT contractor, he traveled around in a classy Airstream. Way cheaper than renting hotel rooms or month to month rooms. It's not what you get but the value of it.

 

Sorry... another subject, but once you get the RV issue settled keep in mind that a subgroup of Escapees is called Xscapers.  This group is geared to those still working while on the road.  They may be of help to you.

https://xscapers.com/

[etcetera]

2 hours ago, Twotoes said:

As I said above, you need to establish some credit. Go to your bank or credit union and get a credit card secured by your savings, even if only for a $500 credit limit. Use the card and make monthly payments for 6 months or so. Don’t pay the balance in full, make timely monthly payments. Also go to a local merchant and get a credit card from them, Koles, Home Depo, Lowe’s etc. (after you get the cc from the bank) and made a couple of payments. Establish you credit and then apply for the RV loan. Keep your balance low so you don’t have a problem with your debt to income ratio. After you get the RV loan you can pay off the balance on all the cards and only have the RV loan payment. 

I did that 2 months ago. Got 3K limit. Unsecured. So using it. can you explain the "Don’t pay the balance in full", is there some strategy I am not aware of?

I just tried the local Navy Federal Credit Union and got denied. I do not think they are  aware of my credit card at all, so you are right, it needs to be 6 months. will try again in 4 months.

 

Edited April 8, 2021 by etcetera

[sandsys]

41 minutes ago, etcetera said:

can you explain the "Don’t pay the balance in full", is there some strategy I am not aware of?

If you pay the balance in full every month you don't show a pattern of making regular payments. If you buy something not too cheap you can make the minimum payment every month to establish a pattern. I would buy something I'm going to want in my RV. In your case that might be something to increase your internet connection as you travel.

Linda Sand

[etcetera]

I am not going to be late with credit card  payments 

[podwerkz]

 

29 minutes ago, etcetera said:

I am not going to be late with credit card  payments 

That's a good thing! .....especially if you want a big ticket loan in the future.

Edited April 8, 2021 by podwerkz

[sandsys]

8 hours ago, etcetera said:

I am not going to be late with credit card  payments 

Not paying the balance in full does not mean being late. The bill will give you a due date and a minimum payment amount. As long as they receive that minimum by that date you are NOT late. You can even make those payment a week before the due date if that is more comfortable for you. But paying that minimum amount every month by the due date for at least six months is what establishes credit. If the minimum payment is going to pay off your purchase before six months then buy something else to keep the payment pattern going. Yes, it make things cost more because you are paying interest on the unpaid balance. But, that's what it takes if you want to build a credit record. If you don't want to qualify for a loan, ignore all this.

Linda Sand

[Kirk W]

On 4/6/2021 at 5:22 PM, etcetera said:

Looking at credit via CreditKarma, my TransUnion is 705 and my Equifax rating is 630.......

What are some of the basics of getting a loan?

After reading all of the advice here, I am wondering if you have yet spoken to a loan officer at the financial institution where you are currently banking? Most of the advice given about improving your credit scores has at least some validity, but all of the suggestions take significant time for that to happen. if you are planning to buy very soon, these will not help a great deal. If you have a good banking history with one bank start by talking with them. In addition, most RV dealers have a working relationship with at least one lender so you may want to talk with some of them as well. There is also a way for you to get the actual credit report information from each of the reporting organizations. Visit the website of Annual Credit Report.com and get a real copy of each one before you go too far.

In addition, I strongly suggest that you spend some time reading the information that each of the credit reporting organizations supply to the public, free. 

Everything You Need to Know About Credit Scores, All in One Place   from Equifax

What’s Considered a Good Credit Score?     from TransUnion

What is a FICO® Score?     MyFICO.com

[Jaydrvr]

Since you mentioned Credit Karma, you should be aware that their scores don't track well with actual FICO scores. My impression is that they underrate them by as much as 50-75 points. I think they do that to sell you more credit cards. You can often get your actual FICO score free through your bank or other financial institutions. Keep in mind that there are also multiple versions of the FICO score. There's not just a single score. Jay

[etcetera]

1 hour ago, Jaydrvr said:

Since you mentioned Credit Karma, you should be aware that their scores don't track well with actual FICO scores. My impression is that they underrate them by as much as 50-75 points. I think they do that to sell you more credit cards. You can often get your actual FICO score free through your bank or other financial institutions. Keep in mind that there are also multiple versions of the FICO score. There's not just a single score. Jay

I am aware of it, as I indicated.  It's more of a guide and it's useful in the sense it pointed out a collections item on a debt I did not own. And I was able to resolve it which should bring my score up.

[sandsys]

48 minutes ago, etcetera said:

I am aware of it, as I indicated.  It's more of a guide and it's useful in the sense it pointed out a collections item on a debt I did not own. And I was able to resolve it which should bring my score up.

Good work!

Linda

[Jaydrvr]

2 hours ago, etcetera said:

I am aware of it, as I indicated.  It's more of a guide and it's useful in the sense it pointed out a collections item on a debt I did not own. And I was able to resolve it which should bring my score up.

Good. It seems you have a good grasp on the way things function. Jay

[Star Dreamer]

Something else to consider, RVs depreciate very quickly after they are bought and banks may be reluctant to loan on them especially if they do not know if the person will pay the loan back because if a lack of credit history. You did not mention if you are putting any money down on the purchase which sometimes helps as they reduces the depreciation the bank will take if you default on the loan.  

Usually it is much easier to get a car loan in today's banking system.  Yes, you will pay a higher percentage rate due to this. Do you have anything else you can use for collateral to get a loan on like a car you currently own without a loan on it?  

You may be better off holding off for a year doing research and trying to establish a credit rating. 

As a side note, if you start traveling for work, will all of these new locations be in mild enough weather for an RV or will you need something that will handle more extreme weather changes? You also mention a Class B or C, will this also be your primary vehicle to run around with on a daily basis or will you have a daily driver you will need to bring with? If so you need to make sure your RV is large enough to handle pulling that around when changing locations.

[Kirk W]

8 hours ago, Star Dreamer said:

Usually it is much easier to get a car loan in today's banking system.  Yes, you will pay a higher percentage rate due to this. Do you have anything else you can use for collateral to get a loan on like a car you currently own without a loan on it?  

OK, you have my attention now.  Please share the details of how you do this?