Good Sam RV Travel Guide & Campground Directory

A Practical Guide to Financing Your RV

Melinda Baccanari



You've finally found it! After weeks or maybe even months of research, RV sales showroom walk-throughs and test-drives, you've chosen the perfect RV for your family. Before the negotiation process even begins, your spouse has planned your first trip in the new rig, and the kids have placed dibs on where they'll bunk. Yet surrounding all the excitement looms the question: RV Financing - how are you going to pay for it?

The astute consumer is prepared for this question before even beginning to shop. Armed with a solid understanding of the financing process, you can drive away with your dream RV – and keep your budget intact.

Pay Cash or Finance?

If you have the means, it may be tempting to avoid monthly payments and purchase your RV with cash. However, that's not necessarily the most sensible option.

Cash buyers sometimes mistakenly believe they're saving money by avoiding interest payments. However, consider the loss of earning power from the money you put into a RV. For example, any income derived from liquidating an asset may incur a capital-gains tax. Or, if your money is in a bank certificate of deposit (CD) that has not yet matured, you may incur a penalty for early withdrawal.

With affordable interest rates and flexible payment options, taking out an RV loan may be a smarter option. Financing your rig frees up your assets to invest your money in real estate, stocks, bonds or high-yielding saving plans.

A good RV loan affords greater flexibility and can yield lower monthly payments. Financing might even allow you to purchase a larger RV than if you paid with cash.

Determine Your Price Range

The easiest way to determine how much you can spend on an RV is to evaluate your monthly income and outflow then figure what you can afford to spend each month.

There are many websites that offer online tools to help you calculate the loan amount and monthly payments, including the Woodall’s Finance Center. Simply go to www.essexcredit.com/woodalls and click on the “Loan Calculator” link. You can find the Woodall’s Finance Center’s current interest rates and request a custom rate quote.

Loan Options

RV financing is easier than ever with flexible payment plans. Loan terms for both new and used large RV’s now extend up to 20 years. The minimum down payment for an RV is typically between 10% and 20%, but some finance companies also offer "No-Money-Down" loan program options to qualified applicants.

Be Prepared and Get Pre-Approved

Having a loan approval in hand before walking into an RV sales showroom is like having an ace in the hole. The process is simple. Many finance companies offer free quotes and no application fees, so it's a safe start to your purchasing process. Once pre-approved, you'll know exactly how much you can afford to spend.

Before applying for a loan, it's helpful to know your credit history. Having a good credit rating may make it easier for you to get loans and lower interest rates. And lower interest rates may translate into smaller monthly payments. You're entitled to a free copy of your credit report once every 12 months. To order your free credit report, go online to www.annualcreditreport.com or call (877) 322-8228. The Federal Trade Commission (FTC) offers free credit advice to consumers. To contact the FTC, either go online to www.ftc.gov or call (202) 326-2222.

Tax Benefits

Did you know you might be able to take advantage of IRS tax deductions while enjoying your new or pre-owned RV? Remember that purchasing a RV can be like purchasing a second home and the interest payments on a financed RV may be tax deductible. To qualify, interest expense deductions on the RV must exceed the taxpayer's standard deduction. Some of the other requirements are, the RV must be used as security for the loan and have basic sleeping, toilet and cooking facilities. Other requirements apply and can affect your ability to take the deduction. Please consult your tax advisor for information concerning your specific situation.

To learn more, you can contact the Internal Revenue Service at (800) 829-3676 and request two booklets that cover the tax deductibility of RV loan interest: "Publication 936 – Home Interest Deduction" and "Publication 523 – Selling Your Home."

Whether you purchase from a dealership or a private party, now is a good time to purchase or refinance your RV or boat. For the Woodall’s Finance Center’s current interest rates and to apply for pre-approval, contact the Woodall’s Finance Center at www.essexcredit.com/woodalls or call toll-free (866) 377-3906 and a loan specialist will be happy to assist you.

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