RV loans are available even to those with bad credit ratings. There are lenders prepared to finance an RV purchase, no matter what the credit rating of the applicant. Many companies are prepared to take an online application as the first step towards a bad credit RV loan.
There are some pros and cons to taking on an RV loan this way, and those with bad credit looking for RV financing need to be aware of them.
RV Loans Have a Low Delinquency Rate
RV loans are "a good credit risk compared to other types of lending….The delinquency rate on motorhome loans historically has been half that of other consumer loans" (based on information from the American Bankers Association, 1999-2007 (reported March 19, 2009 at rvbroker.com).
Because of this positive trend, an RV bad credit loan does not pose quite as much risk as many other types of purchase, so lenders are a little more willing to part with their money.
For the buyer, this may be a step towards rebuilding a better credit rating.
Why Banks Refuse Bad Credit RV Loans
Banks in many parts of the world were badly stung during 2007-8 due to bad credit mortgages, and so have tightened up severely on their lending.
According to the Bank of Nova Scotia's "Manage Your Credit" site, a bad debt is "any debt that compounds and provides no future benefit." An example of a bad debt is "money borrowed to purchase a luxury item that has no future financial value to you or your family" such as an RV.
Although an RV may have a great deal of emotional and recreational value, the bank is not concerned that but rather with the financial value of a depreciating asset.
Bad Credit RV Loans Online
Companies that specialize in RV loans, and especially in bad credit financing, are easily found online. Quotes can be obtained anonymously, but ultimately the company will want financial details, including
- Time at current residence
- Employment history and details
- Annual income
- Other outstanding debts
Interest Rates on Bad Credit RV Loans
There are several factors that determine the interest rate for an RV, according to Wells Fargo Bank:
- Current financial market conditions
- The term of the loan loan
- The value of the particular RV or amount of loan
- Credit and financial profile of the borrower
- Down payment (larger down payment = lower rates)
However, the loan is secured by the vehicle itself, which is a plus.
Obtaining a bad credit RV loan means having an RV sooner rather than later to enjoy the RV lifestyle of inexpensive holiday travel and accommodation. The downside is that RV financing with bad credit carries a higher interest rate than paid by those with better credit.
Sources
- Bank of Nova Scotia
- Wells Fargo
- RVBroker.com
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Thomas Alan Gray - Tom has been writing for over 30 years; curiosity leads him to dig into a wide variety of topics.
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