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Getting the best RV financing often depends on making sure you know what you are eligible for before approaching a dealer and looking for an RV. In many cases, the fees associated with dealer-provided financing provide a kickback to the dealer from the financing company, which helps increase the profit margin for the seller, but also adds to the cost for the buyer. While there may be cases where this will still be the best deal, the only way to know for sure is to understand what the competition is offering by getting a quote or quotes.
Of course, this is a good strategy to employ even when getting a normal car loan, but it is especially important for RV financing. In most cases, the recreational vehicle, sometimes called a motor home, will be the most expensive vehicle an individual will ever purchase. It is not uncommon for such a unit to cost $50,000 US Dollars (USD) or more. Therefore, even the slightest changes in fees or rates can make a substantial difference, resulting in a loss or savings of thousands of dollars.
Those looking at RV financing are likely to be given approval based on a number of different factors. The bank is likely to give an upper limit and interest rate based on whether the RV is new or used. A lower rate will usually be offered on a new RV because there is less risk, meaning in case of default the lending agency will be most likely to get their investment back. The total amount approved for borrowing may depend on the down payment, but is also heavily dependent on the income of the individual asking for the loan.
The best RV financing option will likely include a requirement of a down payment of 20 percent. This will show the lender there is immediately equity in the unit, thus lowering the risk. As a reward for this lower risk, the lender will usually offer a lower interest rate. Thus, it is in the buyer's advantage, when looking into RV financing, to provide as much up-front money as possible.
Also, the best RV financing will usually be offered on Class A RVs, rather than the smaller classes. Class A RVs resemble a bus body, with a flat front and a boxy appearance. These represent the best investment for the lender because they have the higher resale value, in the event the vehicle does get repossessed. In some cases, the interest rate for a Class A RV may be so much better that RV financing for a higher class of vehicle actually makes it the more attractive option from a financial point of view.