Was your RV loan declined? RV Financing can be tricky. Not if you know what to look for. Here are the three main reasons you didn't get it.
Why Was my RV Loan Declined? Here are 3 Reasons Why!
Financing an RV is just like getting financing for your car.
But there are a few differences that you must know.
Whether you are buying an RV from a dealership or at an RV Show, the old saying goes, buyer beware.
After financing four RVs, there are a couple of things we didn't know until our fourth one.
And boy, this last one was an eye-opening experience.
Reasons Your RV Financing Was Declined
Been there done that.
We have never had an issue with financing anything. I would have to say that our credit is pretty good.
So when our RV loan was declined, we were disappointed and surprised.
We asked the finance guy the reason why.
And this was someone we had worked with before.
This was all pre-covid so it was before the shit hit the fan, per se.
And all he could tell us was that we didn't make enough money.
Our "debt to income ratio" was too high. 🤨
We had just sold our $300,000 house. So the reason had to be something else besides "we couldn't afford it!"
We had no bills except for our fifth wheel and a pickup truck which were both getting traded in for the new Motorhome.
We had a good-sized down payment, as my mom had recently passed away and had money from the sale of her house.
After digging deeper, asking lots of questions to everyone we knew, in RV Facebook groups, and more, we found our answer(s).
Reason One RV Financing Gets Declined
The first reason was that we forgot we had a private mail service address.
MyRVMail.com is where we receive mail which makes it convenient for RVers to receive mail.
We even used it when we had our sticks and bricks home.
But ultimately, even though our vehicles are registered there, our insurance is at that address, as are our licenses, it's not a physical address.
If you don't have a physical address, (it is an actual building), it is impossible to get an RV loan with it.
Without a physical address, they can't find it if you don't make the payments. (It still is a recreational vehicle though! 🙄)
So, that was our mistake.
RV Financing Reason Number Two
You really don't make enough money.
Because of the fact that an RV depreciates rapidly, even more than an automobile, the banks have to be really careful when financing one.
It's easier for people to walk from an RV than a house.
And even though the financing can be extended for up to 20 years, more than likely, it's not going to last that long either.
Reason Number Three (and the main reason in my opinion!)
Did you know the finance guy at the dealership makes money off you?
Yep, he sure does. And we didn't know it either.
But then I thought about it and it always made me wonder.
Did you ever apply for an auto loan where they offer 0 % financing? And you didn't get that offer?
They would come back with 2.9% financing or something like that. EVEN THOUGH YOU HAD AN 800 CREDIT SCORE????
Yes, it has happened.
When the bank comes back with their interest rate, the finance guy tacks on another 1, 2, 3, maybe even 4% onto it.
Which in turn raises your payment, which looks to the bank like you can't afford it.
Or like our previous camper loan, our interest rate was 8.5%! Whoa, that was crazy.
Sad but true.
What to Do When Your Loan Gets Denied
After finding out number three, I was not a happy camper. Talk about getting depressed.
I really wanted a new RV.
So, we researched online who does RV financing and went and applied ourselves.
Surprisingly at the time, our local State Farm office was offering RV loans through State Farm Bank.
We went and applied, and got the loan without a problem. And at a 4.5% interest rate.
We went back to the dealership, gave the finance guy all the paperwork, (and boy was he surprised!), and picked up our new motorhome the following day.
So, if you are applying for an RV loan, auto loan, or anything, make sure you question it if something doesn't seem right.
I've been told, supposedly, that you can request to see the bank rate from the finance guy.
I have not tried it and I would just rather get my own loan from now on (ahead of time) and not have to deal with them.
It might get you a better deal too.
Have you ever had a loan declined?