Tips for Financing an RV
Investing in an RV is a significant decision, so you’ll want to find the most advantageous financing. Since interest rates on RV loans tend to be higher than home loan rates, do your research and find the most competitive deals before finalizing your purchase.
Establish Your Budget and Save for a Down Payment
Before shopping around for an RV, make sure you have enough money to buy one. This means having an idea of what you can afford and how much the purchase will cost – including monthly payment, sales tax, accessories, and insurance.
Know Thy Interest Rate
RV loans typically carry higher interest rates than home loans due to being taken out for an extended period and depreciating quickly. Depending on how long you plan to own the RV, however, this could be a great way to make your travel dreams come true while saving money on interest charges.
Once you’re preapproved for an RV loan, you can shop around to find the best price and terms. Most dealerships are more likely to negotiate with you if you have a preapproved amount in hand, so when looking for your dream RV, know that you’ll get a great deal!
Shop, Shop, Shop Around!
The best way to do this is to shop around. Dealerships often have the biggest selection, but sometimes you can save money, or find better inventory, by thinking outside the lot. For example, David R. Busse, a California-based camper, flew all the way to Ohio to visit an airstream factory.
After doing his homework there, he knew the bottom line for an Airstream trailer and was able to negotiate with a local dealer to arrive at what he calls “the best decision ever.” Conversely, Derree Kamp bought her cherished 1959 Shasta trailer when it wasn’t even listed for sale. “We saw it in a yard in Lincoln, MT,” says the Montana-based camper. “We asked the owners if they would sell it, negotiated a price, and paid cash. We then restored it and named her Stella.”
Negotiating a Low Price on an RV
You can save thousands of dollars by negotiating the right price for an RV. The key is being prepared, knowing exactly what you want and making it clear why the dealer or private party should give you a great deal.
Finding the best price on an RV takes some effort, but it will be worth it in the end. Additionally, take advantage of special incentives offered by RV dealers – so be sure to ask for those too!
Self-Financing with Home Equity
If you have significant equity in your home, you may be able to finance a new RV using your current home mortgage. This option is great for people with less-than-perfect credit scores since the loan payments will be spread out over the life of the loan.
When searching for an RV loan, several factors including your FICO score and credit history will come into play. To find the most competitive rate, it’s essential to research lenders who specialize in RV loans and compare their offers.
Ask About Tax Advantages
“The single most important tip that our customers have found helpful is the fact they can open their coach loan in the name of a business or LLC,” says Ellie Reineck, National Market President for IncredibleBank—an online bank specializing in motorhome financing. “There are tax advantages when structuring the financing this way.”
Itemizing your taxes is a good route to take. Make sure to ask about any tax deductions with respect to the interest on an RV loan. In this way, you’ll be able to write off your RV loan interest as home mortgage interest, because it’s applicable to a “self-contained” unit (dwellings described as having cooking, sleeping, and toilet facilities.)
It also might be worth itemizing your taxes. “Make sure you ask about the tax deductible aspect of the interest on an RV loan,” Dill advises. This deduction—being able to write off your RV loan interest as home mortgage interest—is applicable to “self-contained” units. Self-contained units are described as having cooking, sleeping and toilet facilities.