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by Michael H. Yeaw
Last time we talked a little about some
investigations you might want to do before What we didn't talk about last week is the deductibility of RV loan interest. We probably should have since it does enter the affordability equation. The IRS allows you to deduct the full amount of your loan interest from your income taxes as a second or vacation home (subject to specified income limitations). At a minimum, to qualify your RV must:
Most RV' s we know of have these accommodations and much more. For more information, call the IRS at 800.829.3676 and ask for "Publication 936-Home Interest Deduction" or download it directly or consult your personal tax advisor. What does it take to get an RV loan? Where do you look for financing? As mentioned above, you will find RV loan specialists in the RVing magazines. Another alternative is the Good Sam Club - they offer financing for members. What can I expect in the way of down payment
requirements? The used RV down payment percentage will be quite a bit higher than the new, but because of the higher initial depreciation rate, the cost will be much less. In any case, new or used, the financier wants to be sure that you have enough of your own cash invested in the hopes that you will give many second thoughts before defaulting. What about loan terms and interest rates? As you may expect, the used market requires higher interest and shorter terms. On a used large RV, you may expect to pay between 12% and 15% over a term of four to eight years. Again, due to the lower prices of the used RV's, the monthly impact might not be as bad as you might expect. So what are my recommendations? Lastly, avoid loans that limit your use or
enjoyment of your purchase, such as high interest rates, ie., in excess of 15%;
limits on the movement of the RV; second mortgages on your home; long loan
terms, especially on used rigs and dealers that are more interested in your
ability to finance than finding the right rig for you. These are only a few of
the "red lights." There may be others depending upon your situation.  Other Resources:
This is the last in my series So You Want To Buy An RV. I hope that you have some new insight into the how-to's of evaluating and buying an RV. Until next time, keep on rolling! Some images copyright www.arttoday.com |
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attempting to get financing for your RV. During these
investigations, you discovered some things about your credit worthiness and what
the monthly payments for various financing plans would be. Although it doesn't
concern many of us, certainly not me, the pros and cons of a cash deal were
discussed. Now we are ready to go ask someone to lend us a lot of money. Let' s
take a look at a few statistics and some things you might want to avoid in the
RV financing world.
Be the security for the
loan.
There are a variety of terms and interests out
there, enough to suit almost anybody or any situation and ample hungry lenders
to help you out. Competition is keen. Second, get pre-approval for a loan. If
you know what you have in hand in terms of financing your RV, you have an
advantage. It's almost like working a cash deal. You are in a better negotiation
position. You are not depending on the dealer to find you financing. You are
"driving" the deal. This is a good thing.