RV Financing changes: Your complete new guide to RV loans for 2020

 RV Financing changes: Your complete new guide to RV loans for 2020

RV dealers can help with RV financing and RV loans

RV sales are booming these days like we haven’t seen in years.  But knowing the ins and outs RV financing and RV loans can be a daunting task.

With the economy taking a big hit because of COVID-19, you may have heard interest rates are at an all-time low. That may be true for home mortgages but it sure isn’t for RV financing rates for RV loans.

So, this week in our interview of the week segment (scroll down), we talk to an expert on getting  RV loans and RV financing. We’ll talk about what’s involved in getting new RV loans and how existing RV loans can be refinanced to save you big money.

Plus, we have lots of RV news, tips, questions, and an off the beaten path report for you… all coming up in Episode 295 of the RV Podcast.

Click the play button below to hear this episode of the RV Podcast. The interview about RV Financing and RV loans is about 20:25 into the podcast.

 

Here's the RV Podcast Show Notes for Episode #295, released on  May 20, 2020 

WHAT MIKE AND JENNIFER ARE UP TO THIS WEEK

There’s lots of news this week about the different parts of the country opening up. Many states are now well into phased reopenings, with non-essential travel being allowed again and state and national parks and campgrounds once again being opened.

One piece of bad news, though, has to do with RV travel to and from the US and Canada. The border remains closed. Officials announced yesterday that it will stay shut to all no essential travel at least until June 21. That is a long time. It’s been shut since March and a lot of RVers on both sides of the border are naturally very disappointed.

Down here along the panhandle of Florida, the area known as the Emerald Coast because of the blue-green color of the water, things are very close to the normal we had back in early March. Most businesses are open, limited to 50% of their capacity. And while social distancing is the new norm, people are acting responsibly. The private RV parks are open. Hotels are open and busy and short-term rentals of condos for vacations are once again allowed

We plan to stay down here for another few weeks. And yes, we will continue our Friday night virtual campfire and Happy Hour at 7 PM Friday nights on our RV Lifestyle YouTube Channel. These are in addition to our Sunday night Ask Us Anything live streams as well.

RV LIFESTYLE NEWS OF THE WEEK

KOA campgrounds see reservations rise and expect the trend to continue
Interesting story out of Forbes last week with Kampgrounds of America. The network of privately owned campgrounds in the United States and Canada reports that bookings started to outpace cancellations in mid-April so much that today reservations for July and August are only 15 percent below last year's numbers. KOA conducted its own research and found 4 in 10 campers are still planning to take their planned trips this summer, and leisure travelers who camp, and had plans canceled, are planning to replace original plans with a camping trip.As crowds soon return to national parks, rangers concerned about the impact on wildlife
Rangers preparing to reopen parts of the national parks are expressing concern about the safety of wildlife when people return. Animals throughout the national park system have relaxed as people have vanished, venturing into places they wouldn't normally dare go. At Joshua Tree National Park a ranger discovered an endangered tortoise sunning himself in the middle of what is normally the park's busiest road. Yellowstone's elk – which can get quite testy after their babies are born – are able to not worry about people getting too close. And at Yosemite, bear have been spotted in meadows near California’s Yosemite Valley Visitor Center – not to mention the many parks spotting coyotes and other animals in their parking lots. 

Americans expected to stay home for kick-off of summer, AAA not issuing travel report
This Friday is Memorial Day weekend, what many consider the official kick-off for summer. But for the first time in 20 years, AAA will not be issuing a travel report. Why? Too many states still have travel restrictions because of COVID-19, making it difficult to get an accurate estimate. But the amount of travelers is expected to be low. Last year 43 million Americans traveled for Memorial Day Weekend – the second-highest amount since AAA began tracking holiday travel volumes in 2000.  What a difference a year makes.

Some national parks, some state campgrounds begin to open
Yellowstone National Park has opened its Wyoming entrance today for day use. Colorado state parks campgrounds are now open and operating at 50 percent capacity. West Virginia state park campgrounds are open to state residents only and this Thursday, May 21, camping will open again in Virginia state parks. Every state is different. Many have restrictions. As always, if you are out (or thinking of heading out), be sure to check first. Campendium is keeping daily updates and you can access by clicking here.

Heading out for a hike? Remember, it is rattlesnake season
If you decide to head for a walk anytime this week, be sure to stay alert for snakes. From Nevada and Arizona (where an experienced hiker was bitten last week) to New York's Hudson Valley, stories filled the news last week of rattlesnake sightings and tips on how to be safe. A few years back we spoke to a snake expert who shared tips and general know-how that is good to review. To hear the interview click here.

 This part of the podcast is brought to you by RadPower Bikes, America's #1 e-bike brand, offering direct to consumer pricing on powerful premium electric bikes. Now with free shipping  

LISTENER QUESTIONS OF THE WEEK

 

QUESTION: From Virginia – I have watched a few of your videos.  Did you ever find the right carrier for your van? I know you had a Stowaway 2 but wanted one for bikes but were not sold on the Nicova, the other one you tried.  Any others have come on the market since?  We have a class B van and we have 2 teens, 2 dogs and want to bring along a tent and that’s 4 duffel bags and 4 camping chairs.  If we could take bikes or a kayak we would but can’t imagine how. Thanks- Virginia

ANSWER – We have not been happy with any of the rear carriers and returned both of them. For our Rad Power eBikes, we use the Hollywood brand rear hitch-mounted bike rack.

QUESTION: From a newbie- When you two a car behind your motorhome, does it put miles on your car, too?

ANSWER – Assuming you mean flat towed, with all wheels down. No it doesn’t as you are towing in neutral with the transmission disabled. But it does add wear and tear…on the brakes and especially the tires. We’re talking about cars made since 1991 or so, with newer odometers. It will add to the odometer on really old cars with the old-style cable-driven speedometer

Do you have a question you’d like us to answer or a comment on the things we’re discussing? If so, we invite you to leave us that question or comment on the special voicemail number we have for the podcast – it’s 586-372-6990.  If you are driving and can’t write it down right now, just go to the RV Lifestyle travel blog at rvlifestyle.com and scroll down the page. You’ll see that number prominently posted on the blog.

This part of the RV Podcast is brought to you by Battle Born Batteries, maker of quality, safe, and reliable lithium batteries that can be installed in just about every RV. Get in touch with Battle Born to find out what lithium batteries and an upgraded energy management system can add to your RV Lifestyle. Check them out at https://rvlifestyle.com/lithium

RV INTERVIEW OF THE WEEK

RV financing can be tricky
It can be tricky figuring out the best way to do your RV financing or RV loans

RV financing is very different from car loans. And even though you may have heard that interest rates are at all-time lows, that is not the case with RV loans. In fact, RV financing rates are actually going up.

Below is a transcript from Episode 295 if the RV Podcast where we interview Jeff McLeod, a top expert on RV financing, who explains exactly what you can expect with RV financing and how you can use a free tool to find out exactly your payments would be for RV loans of varying lengths and interest rates.

Click the play button below to hear this episode of the RV Podcast. The interview about RV Financing and RV loans is about 20:25 into the podcast.

Here's the full transcript of our interview about RV financing and Rv loans.

Mike Wendland:           To help us figure out the ins and outs of RV financing and RV loans, we've asked our friend Jeff McLeod from Newcoast Financial Services to stop by to help us understand the ins and outs of financing an RV, particularly as it relates to the unique challenges posed by COVD-19. 

Here's the deal, all you have to do is look at the news these days and you'll see everybody is hyping RV sales as the way for people to have a vacation and not have to worry about COVID, and all the stuff about cleanliness, because your RV's pretty clean, and you can easily social distance in it. The question is what's involved? What do people need to know about RV financing? We're used to buying a car and financing a car, but explain, first of all, the big differences in RV loans.

RV financing involves more red tape

Jeff McLeod:                 Well, an RV is a recreation, a luxury item, and that's what lenders look at it as. A marine product, a boat, an RV it's going to be looked at as a, not a need item, but a luxury item. And so when it comes to financing an auto, the criteria is, or the bar, if you will, is a little bit lower than what they look for for an RV application.

Buying an RV requires RV financing or an RV loan for most people
Buying an RV requires RV financing or RV loans for most people

The thought is, is a car loan is going to be generally a shorter term. And it's something that people need and rely on to get back and forth, to work every day and to shuttle their kids back and forth to school. So when you're looking at an RV loan, generally credit scores are in the 700 and above credit range, depending on your credit score, the higher the score, the lower the rates. And also they look at different things like income and net worth and things that will kind of play into your financial wellbeing.

Now, those items do not really come into effect as far as your overall financial picture, until you start getting RV loans over $100,000, $150,000. With those types of RV financing, you would be asked to submit to your tax returns, personal financial statements, and confirmation of liquidity.

Generally people with good credit scores and employment can expect not to have to deal with that unless they start approaching RV loan requests for more than 150,000. Interesting though, with COVID going on and there's a lot of people being laid off or furloughed, lenders are doing, which has not been done in a long time, they're doing a confirmation of employment.

So at the time of funding, be prepared that the RV financing lender will call the applicant's work and make sure they are employed on the day that that loan is funded.

Mike Wendland:           That's because of course, so many people have lost their jobs, unemployment rates are skyrocketing. So that makes sense. Now, one confusing thing that I have heard is, and I think a lot of consumers are in the same boat is, well, the fed has just dropped the interest rate almost to a negative interest rate. That means you would think the best prices, the best interest rates at all, but not for RV loans, I'm told.

RV financing rates have actually gone up since COVID-19

Jeff McLeod:                 That's correct. And again, since we're in this new frontier of a COVID-19 virus and with the furloughs and the layoffs, and as you just pointed out, the unemployment numbers, somewhere around 15% now, RV financing lenders are preparing for a possible, let's say a slowdown or some delinquencies in their portfolio because realistically, if somebody loses their job or it gets furloughed, the income could be cut.

And history has shown us that RV loans payments may not be made or could be made late and lenders have to kind of look at that in their whole risk analysis. And so pricing is adjusted.

“In fact, with some of our lending partners, we've seen rates for RV loans actually go up as much as a half a point or more in the past 30 to 45 days.”

And again, they're managing risks because fed funds rate, it gets cut and that affects more your mortgage rates because mortgage rates right now are at an all-time low.

So people are confused by that. And there is not a direct correlation between the two. The house is more of a need item. It's not going anywhere where the RV is something that, again, as I pointed out earlier, is more of a luxury item. And so you have to manage the risk with what the environment you're in at this point.

Mike Wendland:           So putting these two things together, RV financing and getting RV loans is a lot different than buying a car. It's a lot different than buying a house so that consumers who've never financed an RV before, should not expect to go in like a car dealer and walk out that same day with the keys to an RV if you're financing it. That's a bottom-line assessment.

To access a free RV financing tool to see what a new loan would cost or existing RV loans can be refinanced, click here

 

Jeff McLeod:                 I would say that's a fair point up to a certain dollar amount. If you're going to go in and buy… If you were to walk into a dealership and buy a $35,000 travel trailer, that can be done pretty quickly. That's not going to take a lot of, should we say extra documentation. But as RV loans dollars go up, then that's when you have to be more prepared.

To get the keys to a new RV, most of us have to do some sort of RV financing or get an RV loan
To get the keys to a new RV, most of us have to do some sort of RV financing or RV loans

So I like to tell people both in refinancing and purchasing and those that we work with people, private parties that are selling, one individual is selling to another individual. And there's a lack of lenders out there that can accommodate that. So we get a lot of that.

I like to tell them if RV loans are at $150,000 or more, then that's when I start asking for the two-year complete tax returns, the personal financial statement, verification of income, and possibly award letters, some pensions. So just keep it as a rule of thumb. If you're going to be in that 150,000 or higher dollar amount for a request, then you're going to need more documentation. And most of the time with good credit and current employment and so forth, you won't run into that much over, under that amount of 150.

RV loans can be refinanced

Mike Wendland:           Now let's ask for those who already have RV loans through RV financing We have seen a lot of people refinance home mortgages. That's become a pretty common way to every couple of years, maybe shave a little bit off the payment. And I wonder if, can you do the same thing with RV loans, for those who are already financing an RV, can they refinance it and potentially save money that way?

Jeff McLeod:                 Yes. We have seen a record amount of refinancing since the middle of March and we're happy to do a free analysis. We'll find out what the customer has now. And always, it's not always about cutting rate, Mike. Sometimes it's about shaving term. So as an example, somebody bought an RV last year, it's 20 years, and let's say, hypothetically, they're RV financing is at a 5.99 rate.

We may be able to show them away at four and a half-rate to go to 15 years and cut off four years of what the loan amount is for. And so that's an option. But I'll give you an example and most people can know what is involved in saving. So most of what we're seeing right now, if you're over five and a half percent, then you should definitely be thinking about a refi. And an example would be at a 5.99 rate at $100,000 over 20 years.

If you were to keep that RV the entire term, you would save about 18,000, close to $19,000 in interest. Now we know that most people are usually in RV loans anywhere from four to maybe four to seven years, that's usually the average cycle or the turn as they call it. So let's cut that back then to what is really a real savings for most people that might trade every four to seven years.

So again, if you're at a 5.99 on $100,000 loan, and you want to go a 4.6 interest rate on that same $100,000, it would save you close to $9,000 in interest over between now and the end of 2026.  Now on a higher dollar amount, of course the savings are going to be more because the interest Rv financing rate is calculated on the loan balance, of course.

So I just used $100,000 as a round number to illustrate if you were to save a point, a point and a half on rate, what that would look like to somebody in the next five and a half, six years.

To access a free RV financing tool to see what a new loan would cost or existing RV loans can be refinanced, click here

Mike Wendland:           I don't think a lot of people realize that just as you can renegotiate the terms of your home mortgage, you can do the same thing for your RV. What about buying used RVs? I think we've been talking primarily about new RVs, but you mentioned there's a little bit of a difference when you're buying it from an individual, or I would think of a used RV. Talk about that a little bit for us, Jeff McCloud.

Jeff McLeod:                 Yeah, sure. So there's a lot of activity out there online with people that are listing their RV's for sale on different platforms.

And one of the tricks for that Mike is they'll find a purchaser, somebody that's interested and then at that point, if I want to buy an RV from you and I go to my credit union and say, “Hey, I want to borrow $180,000 to buy this class A diesel motor home.” They might look at me and say, “What's a class A diesel motor home?” Or they might say, “Sure, we've got RV loans for you. It's five years at 9%.” Neither one is going to be an option.

And so we work with a variety of Rv financing brokers that will match up buyer and seller. We work with private parties that find the unit they want to buy off a particular website.

And we handle that transition from seller to buyer and fund that transaction and make sure that even if they have a payoff, by the way, the seller has a payoff, we can help make sure that pay off is made and the new owner gets either his new financing put in place and the payoff is made on the seller's loan.

So you need some expertise when it comes to that. And also you want to work with people that specialize in this type of lending.

Should you find your own RV financing or rely on the dealer?

Mike Wendland:           When you go to a dealer and the dealer says, “We can take care of RV financing for you.” What's your advice to the consumer? Obviously you want them to get other rates, I would think.

Jeff McLeod:                 Sure. So we work with a lot of dealers throughout the country, and we know we're not their main lender. We're not their go-to lender. We help with more complicated deals that the dealer might have come across their desk. To be frank, a customer is the dealer provides many, many great options for RV financing.

So if the customer does decide to buy an RV from a dealer, I would encourage you to speak to the finance professionals there, they have great programs for RV loans and they can handle it as a one stop shop. Where we get involved with a dealer, as I said, there could be cases where loan to value is outside of a normal guidelines for most lenders.

That could be an issue where a dealer would come to us or perhaps on a coach that's not listed in the native value. And an example of that, it would be somebody buying a custom coach, like a Prevost conversion, something like that. So that's really where we intersect with a dealer and have a partnership or help them out with deals like that.

To check out RV Financing and see what the payments would be for RV loans of different lengths and interest rates, CLICK HERE

 

Mike Wendland:           What we are going to send them to Newcoast Financial Services and we'll put the link in and people can actually go to it and plug in the numbers themselves. But I think this is, in conclusion, this is the kind of thing that folks should just check up on every year or so, if you currently are financing, right? And if you're not-

Jeff McLeod:                 I would say so.

Mike Wendland:           And if you're not, if you're buying for the first time, be aware that there are different companies, different banks out there, and you may still want to go to somebody like Newcoast and run through this free tool that you guys have that'll help them figure that out. Well, confusing times and a lot of people are coming into RVing and I think this is a great resource for them.

Jeff McCloud has been our guest from Newcoast Financial Services. And Jeff, thank you so much for making your time available to the RV podcast audience today.

Jeff McLeod:                 Glad to talk to you again and be safe, everybody.

The interview of the week is brought to you by SunshinestateRVs.com, where every new  motorhome is delivered to the customer free, anywhere in the country

OFF THE BEATEN PATH REPORT   

RV Financing changes: Your complete new guide to RV loans for 2020 2By Tom & Patti Burkett

Shiner Texas is probably best known for its largest export, Shiner beer.  In the early twentieth century, Czech immigrants began to arrive in this area of the Lone Star state in numbers.  Mostly farmers, they had good success in the fertile river bottom soil and soon became the dominant ethnic group.  

Hankering for a taste of home, and unable to find a suitable product on the frontier, they established the Shiner Brewing Association, in 1909, to satisfy their needs.  It wasn’t too long before the farmers realized that, although they were good at growing the ingredients, they were pretty lousy at making the brew.

Spoetzl Brewery
The Spoetzl Brewery

Enter Conrad Spoetzl, a Bavarian brewmaster who had seen considerable success as founder of the Gambrinus Brewing Company and traveled as far afield as Egypt honing his craft.  He found Shiner to his liking, bought out the farmers, changed the name of the company, and set about building a brand.  

Patti with some Shiner Beer
Patti with some Shiner Beer

The farmers were pleased, and Shiner beer enjoyed wide distribution through the area now quite well settled with German and Czech families.  Spoetzl continued to run the brewery for more than fifty years.  Today they produce a dozen or more beers, all made right here in Shiner, and distributed nationwide.

Shiner has a few other things to offer.  If you’re here at the right time of the month, you can take in a performance by the Shiner Hobo Band.  Not surprisingly, accordion figures prominently in the arrangements, and all the band members are, shall we say, quite experienced.  

Most any day you can get a good meal at Friday’s Fried Chicken.  The founder, Vick Patek (Patek means Friday in Czech), retired a few years ago, but the food is still just as tasty as it always was, at least according to the loyal regulars.

Not too far down the road from Shiner is the little town of Yoakum.  Tom’s family has roots here, so it was fun to poke around a bit, visiting old houses and the cemetery.  The town runs a nice municipal campground, and we stayed for several days.  

When we arrived and put our money in the dropbox on the shower house, the sign said to call a number if you wanted electric service (a $5 premium).  We called, and the dispatcher who answered the phone promised to call back shortly. 

 Sure enough, she reported in about five minutes that Joe, the electric man, was out to dinner with his family and would stop by to activate our pole on his way home.  Joe arrived with family in tow, clearly on his way home from a birthday party.

We had breakfast at the H&H Cafe and Bakery, cement floors, and Formica tables, with a fine plate of eggs and bacon and a variety of tasty baked goods, including some Czech specialties.  

H&H Cafe
The H&H Cafe

On the edge of town we spied the Circle Y Saddlery.  Never wanting to pass up an opportunity, we stopped and I went in to ask if we might have a tour.  The front office was empty, so I wandered back farther in the building and came across a cowboy looking gent sitting at a break room table.  

I asked my question and got this reply.  “Well, I’ll tell ya.  I’d be mighty pleased to let you out there on the floor to walk around, because we’re proud of the craftsmen who work here, and most of ‘em are willing to let you get your nose right down in their business and talk your ear off while you do it.  

But one day a while back an insurance fella came through here and saw that and he like to shat a cow.  He said ‘Y'all can’t do that anymore,’ and so we don’t, and I’m real sorry.  I can get you a cup of coffee though.”

As Satchel Paige once said, you win some, you lose some, and some get rained out, but you have to suit up for all of ‘em.  It’s true in baseball and we can assure you it’s true out here too, off the beaten path.

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RV Financing changes: Your complete new guide to RV loans for 2020

Mike Wendland

Mike Wendland is a veteran journalist who, with his wife, Jennifer, travels North America in a small motorhome, blogging about the people, places, joys and adventure of RV life on the road at RVLifestyle.com. He and Jennifer also host the weekly RV Podcast and do twice-weekly videos on the YouTube RV Lifestyle Channel. They have written 10 books on RV travel.

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