A Guide to RV Financing for Full Timers

If you’ve looked at the prices of RVs lately, it’s no wonder many rely on RV financing. For full-timers, higher prices often mean replacing their mortgage payment with an RV payment. Today we’ll give you a guide to RV financing for full-timers to help make your next RV purchase a breeze.

Why Is It Difficult to Get Financed as a Full-Time RVer?

When banks loan large amounts of money, they’re taking a massive risk. They’re looking for stability and consistency to ensure you can pay back the loan in full. These same banks also want an assurance that if borrowers stop making payments, they can repossess the RV.

A full-time RVer can take their RV anywhere in the country, making it difficult, possibly even impossible, for the bank to track them down. Many full-timers sell their homes before hitting the road, which is often a major red flag for a financing department.

RVs get classified as luxury items. While cars and homes are necessities, RVs are not. Therefore, banks will often have more stringent requirements when it comes to approving financing for RVs. However, some popular banks will finance full-time RVers.

Who Finances Full-Time RVers?

Many RVers establish relationships with local credit unions in anticipation of going full-time. Credit unions can approve you for an RV loan at a great interest rate. If you have an established relationship with a local credit union, it might be best to check with them first.

Large banks like Fifth Third Bank are popular financing options. These large corporations may have more hoops for you to jump through, but they’re great options for RV financing for full-timers. Some of the larger banks may be more reluctant to approve you, but they’ll often provide the lowest interest rates.

What Do You Need to Get a Loan?

Before you start touring RV dealerships, there’s a handful of things you can do to increase your approval odds. Let’s take a look!

Good Credit Rating

Because RVs are luxury items, a low credit rating will likely result in a denial. Therefore, if you’re looking to get an RV loan soon, it’s a good idea not to apply for any other financing leading up to the purchase of your RV.

If you have a low credit rating, start cleaning up your credit before applying for a loan. A loan denial can hurt your chances of approval because it will require multiple hard credit checks. Coming into the financing process with a good credit rating can make for a smoother financing process.

Record of On-Time Payments

A record of on-time payments is essential for securing RV financing for full-timers. You don’t want missed or late payments on your credit history. Banks will be hesitant to loan money when they find a history of failure to make on-time payments.

While there are a few tricks to raise your credit score quickly, there’s no quick fix for a record of late payments. A late or missed payment can take up to seven years to fall off your credit history.

Proof of Income

Banks want to know that you’re not overextending yourself by purchasing an RV. Make sure you can provide proof of income. Many banks will require employment for a year or more, depending on the type of position. For example, income from independent contractors often doesn’t count as income when it comes to loan approvals. Therefore, you’ll need a longer work history to show stable proof of income.

A Down Payment

One of the best ways to increase your odds of getting approval for an RV loan is by putting down a big down payment. Banks love down payments, as they’re a sign of financial stability and responsibility.

If you’re struggling to get approval, putting down a large down payment can greatly increase your odds. Down payments are also beneficial for the purchaser as it helps reduce negative equity as RVs depreciate rapidly. Unfortunately, it’s easy to owe more than an RV is worth after the first year, especially if there’s little or no down payment.

What Credit Score Should You Have to Get RV Financing?

Because banks view RVs as luxury items, it may be more difficult to acquire an RV loan. Investopedia suggests aiming for a score of 700 or higher before applying for an RV loan. If your credit score is not above 700, there are a few things you can do now to help quickly raise your score.

Don’t apply for anything that requires a credit check in the near future. Multiple credit checks on your credit history are a red flag to lenders. It will also lower your score, and you want every point you can get when it comes to RV financing.

Another great way to improve your credit score is to pay off consumer debt. Large amounts of consumer debt could signal to banks that you’ll have a tough time making payments. 

It may take months to get your credit score to an acceptable rating for lenders, but it’s worth the effort. A better credit score means lower interest rates, which saves you money in the long run. If your credit score is high, banks are likely to approve you but only with a high-interest rate or massive down payment.

Should You Finance Your RV as a Full-Timer?

Many full-timers think you should go into the full-time lifestyle with as little debt as possible. However, others say being responsible when financing can make the lifestyle possible for many more people.

Because many full-timers sell their houses before hitting the road, they often use the equity to pay off their RV loan. This means fewer and lower payments while they’re RVing.

Navigating the world of RV financing can be an adventure in itself, but it doesn’t have to be. If you dream of hitting the road full-time in an RV, start preparing now for the financing process. Doing the hard work now will make the process easier when it comes time to finance your dream RV. What tips do you have for fellow RVers when it comes to RV financing for full-timers?