Excellent credit score doesn’t guarantee RV financing

[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

 

[Jbrieker]

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.

I was surprised how easily we got financing on our 2014 Bounder last April with Bank America. 20% down for 20 years at 6% fixed. Good luck.

 

[bpaikman]

Problem here. I’ll check again with spouse, but he was kinda miffed about the credit turn-down, and now is determined to save up and pay cash, which will only take a few months at this time. He’s the one who especially likes Newmar (I lean to Tiffin), so I’ll have to run this info by him.

 

[bpaikman]

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

I sent a message this morning to see if the coach is still available. and it is. They say others who tried to buy it had the same problem. Another thing - from what I read, when they checked into our credit, THAT lowered our score a bit. It’s still excellent, and I don’t know why it’s not PERFRCT, lol, but it’s nothing to be ashamed of. it comes back to us not having had large payments as we prepared for retirement.
Also, I think that lending institutions probably budget their available funds for lending, and with the increased demand for RV loans these past 2 years, they might have nearly exceeded the amount they want tied up in these unsecured assets. So they raised the bar, and limited the amounts. And DPs are a tad more expensive than Rpods, etc. ?
Who would have thought of Covid, back in 2017, when we started planning and saving for retirement? If it hadn’t been for a couple of windfalls (God’s provision, I can plainly see), we couldn’t even consider it anymore.
But right now, I’m wondering what God’s doing in our lives. .
1 Kings 18:33-34
I don’t want to pull a “Hagar” on Him and run ahead.

 

[Jireh Financial]

Not every lender has a good RV or boat lending program. Some of the largest banks don't even play in the game. Banks make money by lending money. Writing more loans means more profit. The only type of lender that I have seen "balance" is Credit Unions. They come and go and run hot and cold with this type of loan.
During 2020 some lenders did raise some minimum scores they service but you can't blame them for that. At one point unemployment was over 14% so things like job security and history gained importance. Those things are not really "scorable" but do factor into approvals.
Let me know how we can help.
Thank you,
Ken

 

[Joe Dutchstar]

Banks in general are tightening their lending practices, especially for loans they hold.
This is an area of interest as I was a lender to this industry and others for the majority of my career.
There is a tremendous amount of uncertainty in the economy for a number of reasons. The government actions have generated lots of distortion in pricing and demand as has the reaction to the plandemic.

 

[FL-JOE]

I recall back before Covid hit we had been doubling up on our Newmar payment (Alliant Credit Union financed) deciding that if we were going to keep it we might as well just pay it off. Interest rates were down so we figured it was better to refinance for a 5 year term instead.

Tried going through Good Sams first because they were bragging about the best rate. The first problem was the moron that was submitting it put down our monthly income as the annual amount and not the monthly amount. We were refused credit based on the fact we "owed more than we could afford to pay". I freaked out and contacted them when I got the letter. He claimed he corrected his mistake and sent it through again representing our 6 figure income, but they found another reason to refuse us and that was with a credit score of over 800. I was so upset we didn't try anyone else plus it caused our credit score to drop a little.

Everything does happen for a reason I guess because a year later the used prices of coaches went up and we were better off selling anyway.

 

[MapNerd]

When you credit is pulled for a loan, that is called a “Hard Inquiry” and it is perfectly normal for your credit score to drop a couple of points because this is “credit seeking behavior”.

What many assume however is that their credit score is dropping with each “Hard Inquiry” performed by a potential lender and that the more lenders they check with, the more their credit score will drop. This is not the case.

FICO and other scoring systems understand perfectly well that consumers often shop their loans around and that in order to do so, multiple lenders must perform “hard inquiries”. If you have several “Hard Inquiries” within a short period of time, your score will drop slightly but no more than it would drop from a single “hard inquiry”. Additionally credit scores recover relatively quickly from these “hard inquiries” but sometimes people see their score drop more significantly after allowing those “hard inquiries” from multiple lenders in order to get approved for a loan.

Mistakenly, consumers tend associate that score drop with those multiple “hard inquiries” but the truth is that such score drops are more likely related to the fact that you now often have a new line of credit (new accounts can cause a small ding), with a high loan:value ratio (especially if you bought new) and your debt:income ratio has now also increased - all of which are negative factors for a credit score. That said, make your payments on time and everything should recover pretty well within 6-12 months.

If you had multiple “hard inquiries” but didn’t end up taking a loan, then your score should be back to normal within 60-90 days.

 

[Jireh Financial]

When you credit is pulled for a loan, that is called a “Hard Inquiry” and it is perfectly normal for your credit score to drop a couple of points because this is “credit seeking behavior”.

What many assume however is that their credit score is dropping with each “Hard Inquiry” performed by a potential lender and that the more lenders they check with, the more their credit score will drop. This is not the case.

FICO and other scoring systems understand perfectly well that consumers often shop their loans around and that in order to do so, multiple lenders must perform “hard inquiries”. If you have several “Hard Inquiries” within a short period of time, your score will drop slightly but no more than it would drop from a single “hard inquiry”. Additionally credit scores recover relatively quickly from these “hard inquiries” but sometimes people see their score drop more significantly after allowing those “hard inquiries” from multiple lenders in order to get approved for a loan.

Mistakenly, consumers tend associate that score drop with those multiple “hard inquiries” but the truth is that such score drops are more likely related to the fact that you now often have a new line of credit (new accounts can cause a small ding), with a high loan:value ratio (especially if you bought new) and your debt:income ratio has now also increased - all of which are negative factors for a credit score. That said, make your payments on time and everything should recover pretty well within 6-12 months.

If you had multiple “hard inquiries” but didn’t end up taking a loan, then your score should be back to normal within 60-90 days.

I agree with MapNerd that pulls are often overrated for harm to a bureau. We do see it happen more with auto dealers that "shotgun" an app to all the lenders they use and run with the first approval that comes back. Each pull does cost points but not as many as some think.
That being said - we do have 1 major lender of ours that will auto decline an application strictly for too many hits over the last 6 months. Auto decline means that nothing else on the application matters. Not score, not down, not pricing or even unit information. In this instance, strictly the number of pulls is a reason for an instant decline. That means the decline happens in the computer, never makes it to an underwriter. Rate shopping can be harmful. Most of the errors are made by trying lenders that really don't have good programs for what you want to buy. Knowing what lenders are in the business does help.
Let us know how we can help.
Ken

 

[KellerMike]

Just wanted to give a big public THANK YOU to Ken over at Jireh Financial for hooking me up with the right lender. I do not have perfect credit but ours is considered in the good range. Had a few items on there from several years ago that impacted lenders decisions. We received multiple declines followed by and mixed in with 10-12% APR and egregious terms and or unrealistic down payment amounts. We walked away from our dream of having a travel trailer after exhausting what we thought were all available options. I reached out to Ken and was (still) shocked at the deal he found us. I consider our new rate and terms to be right there in line with someone in the excellent credit range. Unbelievable really. Very happy... very excited to be part of the camper / RV community now and move forward. Again - HUGE thanks to Ken and his team!! Top notch team over there... Cheers!

 

[bpaikman]

We too are grateful that Ken found us a good deal and enabled us to buy our motorhome - soooo happy! It's so funny - before we got our motorhome, it was me doing all the dreaming and planning. Now we have our motorhome, My sweet Bob is the one dreaming up the plans - I'm not kidding he's got some BIG trips in mind, from one end of the US to another and up to Alaska.
I'd be happy doing half the stuff he mentions.