Navigating the Twists & Turns of an RV Purchase

Blog Author Shari LaCroix

Written by: Shari LaCroix, Lending

Published: August 10, 2015

Found in: Loans

I've lived in the Pacific Northwest most of my life. In this beautiful state we have access to mountains, ocean beaches, the desert, and so many other beautiful places with in a few hours' drive. One of the best ways to access these beautiful places is with your own RV.

My family has been RV'ing for over 10 years.  We started out tent camping, but wanted more of the luxuries that come with "RV-ing." We've done it all. We started with purchasing our first camper. When the family grew, we decided a little more room would be nice and purchased a small travel trailer before finally ending up with a larger travel trailer. Now that the kids are grown, we wanted to get back to camping basics and downsized to a teardrop trailer. There are so many options for traveling in style with your RV. Trust me; we've tried most of them.  

If you're looking to finance your RV, I want to help along the way. I recently did a presentation at the last RV show on RV Financing 101. A few people found it so beneficial they asked if they could have copies of my presentation. I decided to write a blog and share them again.  

The first step is choosing an RV that fits your lifestyle and spending plan. You want to determine what is most important to you in this transaction. Do you want the lowest interest rate?  Is an affordable payment that fits your budget your primary concern?  How long do you want to pay on your RV, and how long do you plan to keep it?  A good place to start is right here on our website - there is a loan calculator that can help you answer these questions.  

Next, you will want to look at financing options. Financial institutions vary in what they offer as far as interest rates, length of the loan and how much they will finance based on the type of vehicle. Choose one that meets the criteria that is most important to you. There are a number of ways you can finance your new RV. You can go to your primary financial institution and apply for a loan directly with them. For more convenience, WSECU has partnered with Credit Union Direct Lending (CUDL) that connects dealers with credit unions for easy financing. It is one stop shopping!  You can locate the RV, and finance it with the credit union of your choice all at the dealership. Let the dealership know if you have been pre-approved. This will save you valuable time.  

Depending on whether your monthly payment or paying the loan off in a short period of time is the most important thing, then the length of the loan or "loan term" will be a major factor in how you structure the loan. You'll want to determine if a short-term or long-term loan is best. There are benefits and tradeoffs to both. A short-term loan can possibly give you a lower rate and less interest paid over the life of the loan. Due to the shorter term, you should expect a higher monthly payment. A long-term loan may possibly have higher rates. It will give you a lower monthly payment, though you will pay more interest over the life of the loan. Another thing you will want to factor in when you are figuring out your payment amount is sales tax and additional products that dealers offer such as warranties and GAP (Guaranteed Asset Protection). These added costs will affect the final amount financed and your payment.  

An area that can cause confusion when purchasing your RV is how much will be financed by the lender and how much cash you will pay out of pocket. The key factor in determining this is what percent of the value of the RV will the lender finance of the purchase price?  This is commonly referred to as loan to value or LTV. For example: WSECU will finance 80% LTV on your new RV. The RV values at $20,000. This means they will finance $16,000 towards the purchase price of that RV. What if the vehicle costs more than $16,000? This means you'll pay cash out of pocket for the difference. Many times lenders will not factor in other costs like sales tax, GAP insurance, or warranties into the loan-to-value calculation. Don't worry if the final amount is more than what you were approved for initially. There are other times the lender may make an out-the-door call (OTD). That means that the approved amount is the total amount financed including tax, license and warranty. Sometimes, many lenders can finance the sales tax and warranty into your loan.  

There are so many amazing places to explore around our beautiful state. If owning a RV makes it more enjoyable, my hope is that I have supplied you a foundation to make an educated choice.  

Shari LaCroix