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How to finance a recreational vehicle

Purchasing a recreational vehicle is very much about attaining a new way of life. The rolling homes-away-from-home let their owners pick up and roam to their heart's content.

"It's the freedom and the comfort," explains Peter Scalf, RV owner and founder of RV Advice of the WWW. "It's basically like being at home wherever you go. You can take off. You can just hit the road. You don't have to have a real destination."

Even as gasoline prices are pinching budgets, a study released in December by the Recreation Vehicle Industry Association (RVIA) found that more Americans than ever are hitting the roads in recreational vehicles. According to the survey, which was conducted by the University of Michigan's Survey Research Center, nearly 8 million U.S. households own an RV. The RVIA estimates that the numbers will only continue to rise as more and more people look to RVs for their leisure-time trips.

Foremost on their vacation agenda is escaping to nature and remote locations, saving money, spending quality time with family and enjoying a stress-free trip. Today's "RV owners cherish the control that RVing offers in today's uncertain travel climate," cites the RVIA.

But before you can start on that journey, there's all kinds of financial maneuvering that needs to be done. Landing a good financing deal on a recreational vehicle takes some work.

First off, a recreational vehicle is considered a luxury item. You'll need good credit to qualify for the best financing.

"Applying for a RV loan is more stringent than an auto loan in that you're required to fill out a personal financial statement," says James Barron, senior vice president of marketing and operations at Essex Credit Corporation, "but you'll not necessarily be denied a loan based on poor credit."

"RV financing is credit score-driven. The interest rate of your loan is really contingent on your credit profile. Many lenders will consider a C credit score, even a D profile. Although most borrowers tend to have an A or B credit score."

The journey of a thousand miles ...
Banks, credit unions and independent finance companies all offer RV financing. A list of RV financing companies is available on the RVIA Web site. Financing can also be arranged at RV dealerships.

As with autos, you want to have a financing deal in place before shopping for your vehicle. That way the dealer will have to beat the interest rate on the loan to get your business.

Check with your bank first. Scalf says, "Shop around so you know what interest rates are, what the value of the coach really is. Check it out."

People get so excited about finally purchasing an RV that they're not as careful as they should be when it comes time to crunch numbers. Scalf has heard from people who ended up paying thousands too much in interest. One reader learned that his RV was worth $10,000 less than the purchase price.

Riding along with automobiles
Interest rates on RV loans are closely tied to auto loan rates.

"It's really similar because that's what the market bears for that kind of loan," says Karen Mason, director of publications for RVIA. "The auto and RV end up being very similar kinds of rates."

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