Excellent credit score doesn’t guarantee RV financing

[bpaikman]

After YEARS of research, and months of market-stalking, we found a coach!
We started the process, and were stopped dead because we can’t get financing. Our credit score is excellent.
As soon as we sold our last coach in early 2018, we started saving for the next one, and finally reached our goal this year.
HOWEVER, we had saved it in a 401K that was being matched by employer, (plus putting all our previous MH payments into it.)
No penalty for withdrawal at our age, but we can’t yank out all the investment at once, because it would put us in a higher tax bracket, so we planned to finance about 80%.
We’ve been turned down, because as best we can understand, we’ve not financed any ‘big-ticket’ items since 2017 ( not THAT long ago!) when we sold our MH.
I stewed over it for a while, but slowly realized I could understand their position. RVs are overpriced, they don’t know one from another. They’d hold the title to something that rapidly depreciates, and could be wiped out in seconds with a bad accident or natural disaster.
I’m thinking we should get our kids to finance it, and we can pay them off.
But we’re pretty bummed.
USAA financed our last coach, but since Covid, their new policy is they won’t finance more than $25K on any RV.
So, oir next plan is to save some more, let our investments grow until $25K is all we need to finance. That will take a few more months - hoping prices come down and meet us halfway.
Maybe we dodged a market bullet anyhow.

 

[MapNerd]

Are you buying new or used? Used financing can be more challenging but new is typically easier. Maybe @Jireh Financial has some thoughts.

 

[Texas Clodhopper]

You might check Essex Credit a division of Bank of the West.

 

[sheridany]

There is a person named Ken Lamain who posts often on this forum and he is a broker/lender for RV's. You may want to consult with him.

Ken Lamain
[email protected]
RV Loans / Service Contracts
Home Jireh Financial, Inc. Eaton Rapids, MI (517) 888-0406

Edit: Sorry I did not see @MapNerd post earlier.

 

[AbdRahim]

Yes. I was completely debt free for years, excellent credit score, paid cash for last MotorHome, all bills paid on time. Banks reasoning? No recent credit history. Credit card is paid off twice a month, etc. It almost does not pay to be debt free these days. I think I will drag the payments on this one until I am ready to trade. Ridiculous.

 

[Jireh Financial]

There is a person named Ken Lamain who posts often on this forum and he is a broker/lender for RV's. You may want to consult with him.

Ken Lamain
[email protected]
RV Loans / Service Contracts
Home Jireh Financial, Inc. Eaton Rapids, MI (517) 888-0406

Edit: Sorry I did not see @MapNerd post earlier.

Thank you for the mention.
We appreciate it.
Ken

 

[Jireh Financial]

Good morning,
I did not know that about USAA, interesting. Your prior loan history is 2017 is not that long ago. We work with lenders that are "in" the RV and lending business. Most all lenders have some sort of program but it might not be all that good. The way investment accounts are growing, taking big amounts out is a tough call. Losing the compounding interest on what is gone can hurt in the long run. With good credit a person can often out earn the rate on a loan.
We would do our best to help.
I am out of my chair until Wednesday but working remote. My email is below or you can send a private message if you want to talk about a plan.
Let me know how we can help.
Thank you,
Ken

 

[MrSaxy]

To be clear, I am not a Dave Ramsey fan but he is correct in saying that a credit score is in actuality a “debt score”. They do not reward people who are debt free. When we retired, we sold our home, took what we cleared and purchased outright a new much smaller home. After a few months our “credit scores” dropped by 40+ points because we no longer have a mortgage. You just can’t make this stuff up.

 

[TJ&LadyDi]

This is why we keep and use two credit cards for all of our purchases. We have no other debt; no mortgage, no car or RV payments or other installment loans, etc. and still manage to maintain a good credit score. I think the monthly credit card activity (we pay the balance off each month) may be the reason.

It is a sad commentary on our fiscal world that people who pay their bills on time and stay debt-free are frequently considered poor credit risks.

TJ

 

[Jireh Financial]

One of the things to remember here is there is no magic bullet credit score. Credit score only "tiers the loan". That is how the rate is arrived at. The approval process takes several things into account. Loan history is absolutely a help in getting a loan. Credit history with the necessity things like home and auto. Things like RV's, for the most part, are considered extras or discretionary. The standards are different than the other things.
The best example of this is with younger people. They might have a CC with a $1,000 limit and a small auto loan for $10,000. That person will "score" very well. Great score but untested. Does that mean they can borrow $50,000 for an RV? No it does not. The next person can score much lower but have solid loan history and be better qualified in the eyes of some lenders because of the history. Score is only one small part of the approval process.
These are great conversations.
Holler if we can help.
Ken

 

[AbdRahim]

This is why we keep and use two credit cards for all of our purchases. We have no other debt; no mortgage, no car or RV payments or other installment loans, etc. and still manage to maintain a good credit score. I think the monthly credit card activity (we pay the balance off each month) may be the reason.

It is a sad commentary on our fiscal world that people who pay their bills on time and stay debt-free are frequently considered poor credit risks.

TJ

Apparently CC's don't count for much. They want recent big ticket history. Insane.

 

[TJ&LadyDi]

Apparently CC's don't count for much. They want recent big ticket history. Insane.

I guess that’s true. It is the reason why we simply pay cash for “big ticket items.” Nice to be in a position to do that.

TJ

 

[bpaikman]

Are you buying new or used? Used financing can be more challenging but new is typically easier. Maybe @Jireh Financial has some thoughts.

 

[bpaikman]

we only buy used.

 

[bpaikman]

I guess that’s true. It is the reason why we simply pay cash for “big ticket items.” Nice to be in a position to do that.

TJ

Yeah, nice. ?

 

[MapNerd]

we only buy used.

How used is used for you @bpaikman? If lightly used (2-3 years old, low mileage) and you can afford it in this market but can’t get financing for it, you might be able to afford new and get financing for it. The prices are pretty similar. Creditors prefer to finance new units simply because there is less risk they know you’re getting a new unit, and they can better predict the depreciation and loan to value. Used units are harder and riskier for them.

 

[bpaikman]

The motorhome we found was at a dealership and they checked with all their sources which might’ve been only in that state and they did say the only dealt with brick and mortar banks. I’m not sure about other sources. We don’t want an outfit that is going to be selling our loan to somebo, or variable interest stuff.

How used is used for you @bpaikman? If lightly used (2-3 years old, low mileage) and you can afford it in this market but can’t get financing for it, you might be able to afford new and get financing for it. The prices are pretty similar. Creditors prefer to finance new units simply because there is less risk they know you’re getting a new unit, and they can better predict the depreciation and loan to value. Used units are harder and riskier for them.

In the current market, for our requirements, I’ve not found anything newer than 2014. That’s approximately the same age as our first motorhome, snd we had no trouble securing financing for $80K. We were looking at financing $100,000.
HOWEVER, we were turned off by the financing turndown, and plan to save for a while longer. I’ll keep looking, and hoping that prices track downward somewhat to meet our savings, maybe by January.
We’re starting to discuss what else we could do with the funds: nicer home in a nicer area, travel to Europe, cruise to see the northern lights, train excursions….., but….. nothing appeals to us like traveling in a motorhome. A lot of work, upkeep, horrible investment financially, but there’s something about traveling in a self-contained cottage….eating our own cooking, sleeping on our own bed every night, a bathroom and fridge…

 

[bpaikman]

Even if I wanted to buy new, I’ve not found what I want in the newer models. Except maybe one certain brand ?.
Also, I’ve listened to many owners of new coaches and their issues on this forum, and it seems they have the same amount of problems we did with our 7-12 year old coach. We figured we were using the money saved in depreciation for upgrades and repair, and still pocketing quite a bit. The only thing we couldn’t get around was age - if a campground wanted to turn us away after our coach passed 10 years.
It still looked new - we kept it up, so we never were turned away.
And we sold it for about about $15K less than we paid, not bad in pre-covid years.
Repair wait time could be a problem these days, but then so could warranty work. We’re learning to do a lot of our own.

 

[ww1wxradio]

Alliant Credit Union is also very good for financing . . . Had 2 different rigs financed with them with no issues what-so-ever. Our loan with them was approved within 1/2 hour.

 

[Jireh Financial]

Following a couple things here. Just for the record, we are not a lender. We do not approve or decline any loans. We work with several lenders who all have different taste for what type of buyer they want.
Part of the difference between financing new VS used if the ease in finding value. Terms and rates are calculated the same with all the lenders we use. With NEW, value is gathered either by MSRP (if available) and they lend a percentage below that, or from invoice (we gather those, not available to general buyers) and lend a percentage up from there. With USED, lenders need to use NADA and that takes a bit of work. Equipment differences do present some lenders with a challenge and knowledge of how NADA works. For used, we do the NADA work and submit to lenders as part of the application process.
When working with used, we ask for a copy of the listing so we can get an accurate view of the equipment.
Let us know how we can help.
Thank you,
Ken