After searching for over one full year, we found only one motorhome that met our basic (non-negotiable) criteria and decided to purchase it. The coach was located at a big dealership so we traded in our existing coach.
Okay, being satisfied with the “deal,” we decided to finance part of the purchase since interest rates were low and this would allow us to leave investments in place. Simply, I can make more in interest on investments than I will pay on a note so it is beneficial to leave the investments in place.
Author Note… To finance about 48% of this purchase, I had to apply for a loan. I have NOT had any loans NOR any long-term debt for many years. So, I applied for a loan. You should note that we are, by banking standards, a perfect credit risk. We have a credit score of 820, there wasn’t a single negative in our credit history, NO other debt, and we could have written a check for the amount we were going to finance. Also note that I do not mention this to brag but to establish my credibility as a candidate for a loan. Simply, if a bank was going to look at a potential borrower, we are the ones they should look at.
The Financing Process
It was during the process of financing I got my first real surprise. We were told by two different financial services that banks no longer financed RVs for fulltime RVers but some other entities might. We were also told that no one would finance an RV purchase for an LLC.
The First Lender… We were working through the business office at the dealership and they assured us financing would NOT be a problem. Sure enough, within 24 hours we had approval from a lender. I was told their interest rate was 6.99% but (apparently due to some miracle) that had been reduced to 6.49% for 240 months. (Note that I only planned to have this loan about 12-16 months so long-term high interest was not a major factor for us.)
Then the surprise… After all the approvals and with the paperwork ready to sign, we learned that this lender required a one-time payment, equivalent to our ANNUAL insurance premium, and this amount would be retained by them until the loan was paid off! This money would NOT be used to pay the actual insurance premium (we would also have to pay that) but just an equivalent amount they would hold for the life of the loan. My first insurance ESTIMATE was $4,300 (we actually got our insurance for less than that). However, the $4,300 was the amount I was working with while considering this lender. So, I refused their “deal.” There was no way I would give them that money just to sit on and no reason for this lender to require this payment to give me a loan and just to hold onto more money. So, I refused their loan.
The Second Lender… The RV dealership’s business office then contacted Newcoast Financial Services and worked with them. They, in turn, found a source that would finance the loan even though we were fulltimers. The very pleasant news is that their interest rate came in at 4.74%!
While we were waiting on Newcoast to finish the paperwork, we got a call from the dealership about the first lender. The dealership told us that they had negotiated with this lender to eliminate the requirement for the equivalent insurance payment. Interesting. If this is truly a negotiable item, then this lender was simply trying to hustle money from us for no legitimate reason. From my perspective, they can take their loan and keep it.
Newcoast handled the funding on the loan by running it through a Federal Credit Union. During closing, I’m guessing we had to sign 25-30 times on a wide variety of forms. Signing took 90 minutes with very little messing around. Ridiculous, to say the least.
All this was classic bureaucracy (government) partially a result of the attempts to clean up the fiasco in the banking industry back in the day of “non-conforming loans.” Now, financial institutions are in full “CYA” mode by forcing you to verify everything you have verified and follow silly little “rules”! For example, we had to pay a down payment of $25,000 and they REQUIRED that the money be WIRED from our checking account! Again, I refused. If I had transferred $25,000 from an investment account to my checking account, multiple alarms would have likely gone off at the IRS! Plus, I can’t even dream up a legitimate reason for the recipient to mandate where the money comes from.
So I had the money wired directly from an investment account. Note that they didn’t refuse it, but then…
- We had to sign a form to verify that it was really our name that was on the account where the money came from.
- Sign another form to verify we actually had had that amount in the account so we could take it out to make the down payment we had already sent.
- The brokerage firm (that monitors our accounts) had to submit a statement stating what account was used.
- The brokerage firm also had to submit a statement stating there was ample money in that account.
…and it was my understanding that ALL this took place AFTER the $25,000 had already BEEN RECEIVED BY THE LENDER!!!
Why Is This Important?
We found three problems with financing an RV today. The first (A) is if you are a “real” fulltime RVer (don’t own any property). The second (B) is the financing “mess.” The third (C) is if you are planning to set up or already have an LLC.
(A) The first problem is that for true fulltimers (and that would include us as we sold our house back in 2003), the banking industry has apparently decided that since your RV is your home, financing it should meet the mortgage-lending laws (like you are buying a house). Since RVs cannot meet those requirements, banks have, in effect, chosen NOT to finance RVs for fulltime RVers.
I believe this is a true example of classic bureaucracy (government) with them supposedly attempting to protect me from myself.
My advice… buy the RV while you still have the house. It will be easier.
(B) Credit unions are not required to meet the same requirements as the banks for mortgage lending. So, some credit unions are still financing RVs. However, they are somewhat rare and you may have to use someone with contacts to find an entity that will finance your purchase for you. This is what Newcoast Financial Services did for us.
Also, you should plan to “jump through some hoops” regarding the requirements of any financial institution.
(C) If your plan is to form or use an existing LLC, our experience was that we should forget any financing. If you want to register your RV in an LLC, you will have to pay cash for the RV (not finance it). We used two sources (both very good) to research potential financing with an LLC and we could not find a single source that would offer financing.
I’m not saying that our experience will apply to everyone. I am saying that even with our excellent credit/financial history and current situation, the only negative that was mentioned was our fulltime status. Therefore, if you are planning on purchasing an RV, I recommend you check on this as early as possible. Doing so may make your transition less frustrating.
Yes, we were funded. That is, we qualified for the loan. As part of the requirements, the funding source required several “extra” documents and one (here is what they said, verbatim) was a… “Copy of recent utility bill (cell phone?)”
Since we started fulltiming in early 2003, our daughter pays our cell phone bill through some “family plan” but note that we have never even seen a cell phone bill!
Let’s go back to the future here so when we saw the requirement for the “Copy of recent utility bill (cell phone?)” our reaction was to tell them we had not had ANY utility bill of any kind for the past 13 years much less pay one! Even if you stay in a campground, utility costs are an integral part of the “campground fee.” So no “utility bill” exists in our lives. RVers understand this. Everyone else (especially in the financial world) apparently does not.
Note that somehow (I don’t know how), this “utility bill” requirement never happened. That’s good.
The deal went through and we ultimately moved from our existing coach (our trade-in) into our new RV while it was parked on the dealership’s “show pad” (where customers are shown how everything works, move in if appropriate—like us, try everything, and ultimately drive or tow it away). There, we started the process of checking/testing to ensure everything worked so the dealership could fix any existing problems, i.e., anything that didn’t work.
First, I am impressed with the dealership. We had them fix a LOT of things (big and small) that we found through staying in it (and testing things) while on their show pad. Additionally, they also found a number of items that needed repair and did those, too. My guess is that the previous owner traded in this coach with it needing a number of “fixes” and those surfaced when we started using it while still on their sales lot.
Again, I am impressed with the dealership. Their work ethic, philosophy, attention to detail, knowledge, and focus is impressive. The professionalism of their techs and supervisory staff is excellent. I would come back here again for additional work and would have no qualms about purchasing another coach from them in the future.
Second, I am also impressed with Newcoast Financial Services. They did what they said they would do, everything was handled efficiently, on time, the interest rate was excellent, and most importantly to me, they kept me informed of what was going on. I would go to them again for financing.
What We Learned
There were three different entities involved with our purchase.
- The RV dealer and specifically, their business office. They will have established some contacts with Financial Services or directly with certain lenders.
- The Financial Services company. As stated, we used Newcoast Financial Services and they were initially contacted by the RV dealer. Simply, the RV dealer put us together with Newcoast Financial Services. The Financial Services company usually has contact with and access to more and different lenders than the RV dealer.
- The lender. In our case, it was a Federal Credit Union.
The Financial Services company finds the lender (and helps you find the best interest rate), acts as the “conduit” between you and the lender, and makes the lending process go smoothly. Newcoast is one of the largest Financial Services companies for financing large boats/yachts. Therefore, they have established contacts with a wide range of lenders that will actually finance the purchase of recreational equipment like boats and RVs.
Plus, a Financial Services company can “put together” financing on a private sale, too, one not involving a dealer. Suppose you wanted to buy your neighbor’s RV. How do you finance it? Sorry, but your local bank is not likely to offer this service so you need help to find a good lender. This is the job of a Financial Services company.
So, even if you are going to buy an RV from your friend, I recommend you call Newcoast. Our contact there was…
Vernon J. Blanc
Marine & RV Specialty
Newcoast Financial Services, LLC
2600 McCormick Dr., Ste 200
Clearwater, FL 33759
Toll Free: 866-639-2627 x14552
Tell him Ron Jones told you to call.