This is a small video relating to the basics in good credit and rv loans. RV financing can be very complicated. Good credit customers are always telling me that interest rates are too high. We can get 0% on a car, why not a RV. this video helps answer those questions
Welcome back to the channel this is your honey badger here giving you two straight about the rv business every day as usual and today i’m going to go over rv loans with good credit what we’re going to go over are things you’re going to want to write down i did not bring the whiteboard today i’ve decided i’m just going to sit here and chat and not do a bunch of
Cuts and edits i want to just talk to you directly if you are a first timer to my channel i have 12 years of experience in the rv business for the last four months i have not worked for a dealership so all i’m doing is just passing on that knowledge hopefully not getting blacklisted from the rv business as i go along with this so let’s define good credit in the
Rv business good credit is not always about score score helps that’s one of the things that helps determine it however what really determines it is a few things number one is that you have no bankruptcies no repossessions no 30-day lates no charge-offs nothing of that nature if you have any bankruptcies you have any charge offs any of that nature it doesn’t
Matter what your credit score is you are considered a subprime candidate the next thing they want is they want you to have a mortgage or a couple of car payments that you have made so let me go over that real quick the first thing that they look at is they look at the highest dollar amount of a car a truck a boat an rv what they call an installment loan what’s
The highest loan that you’ve had on that the dollar amount and then after that they look at how many payments you make for example good credit customers in a bank’s mind is if you the customer have let’s say you’re trying to borrow 50 grand on a rv and you had a 35 000 car payment you’ve made 36 payments on that car payment or on that car note it may be paid off
But you made 36 payments that’s good credit now let’s go the other way let’s say you leased or you bought a hundred thousand dollar truck but you only made three payments on it and paid it off that’s not considered good credit that’s considered hey he was just getting a bridge because he already had the cash so let’s go over that the highest amount of credit
Installment loan car boat something of that nature and something that you’ve made at least 36 payments on this includes a mortgage so if you had a mortgage okay and you’ve made three years of payments on it so far that counts as an installment loan it doesn’t count towards the amount that they’ll lend you most of the time they want to go off whatever car payments
You’ve made okay now the biggest one i get all the time is what is the best interest rate in the business well if i’m answering you directly what’s the best real rate you can get probably around 5 or 4.99 now there are rates lower than that i’ve seen rates at 399 but let me tell you what actually happens with those loans number one it’s determined by the amount
Financed so let’s say that you’re borrowing 250 000 i’m going to get you a better interest rate than if you borrow 25 000 okay the other one that determines is the balance of a down payment so those that put let’s call it 20 down plus tax and license so probably around 30 percent down will get a lot better rate than somebody that tries to put only 10 percent
Down and then finally credit score and all credit score does is determine the tier you’re in all right it doesn’t determine anything else so the tier for for a tier one credit you need to be in 800. so in this you’ll go 800 plus will be tier one 780 to 799 will be tier two i’m sorry if you’re hurt by that tier three would be 760 to 779 tier 4 would be 740 to
759 and anything below that is realistically subprime so if you’re let’s say a 739 you’re going to get a subprime rate somewhere around seven eight nine percent on a loan depending on the bank and depending on all that now whatever the dealership pulls you at or whatever your phone says you are doesn’t determine what your real fico score is this is something
That people get upset about a lot my phone says your phone doesn’t mean anything what matters is what the bank pulls here’s what i’ll give an example of i’ve watched a guy 30 years in the navy he shows me his fico score on his phone and says 7 35 when i pulled him on experian at the dealership he was 804. i sent him to five banks all five banks declined him he
Was below a 680 so it doesn’t matter what you see on your phone it’s what the bank will prove and what the bank score is i’ve seen it the opposite way i’ve watched a guy who had a 670 score and i threw him through a bank and he came out at tier one which means he came out 800. that’s incredible so whatever you see on your phone is nowhere near the truth what you
Really need to use the phone for or the credit karma or experian.com is to track your uh your credit make sure that nothing’s on there that’s supposed to not be on there meaning like make sure medical bills those affect your credit score guys they may not affect it on your phone but medical collections affect your credit score it affects your ability to buy an
Rv even if it’s the principal thing even if it’s a twenty dollar bill i know i’m going a little off subject here but guys medical collections just pay them medical bills just pay them they kill your credit when it comes to buying boats and rvs all the time now i’m going to go into a little bit of a awkward subject you are a good credit customer that’s why you’re
Watching this video you are the reason why the rv business makes any money i’ll repeat that again you are the reason why an rv dealership makes any money if everyone came in with a subprime credit to buy an rv a dealership will close because there isn’t enough money from the banks to supplement what the dealership needs to pay out in salaries okay let me explain
That to you i have i explained a little bit of this and the cash not king section and that video is right there if you want to click on it but if right now for this sake i’m going to go over it briefly with you when you take out a loan let’s say you take out a 50 000 loan and let’s say that that 50 000 loan is through the dealership they get a kickback from the
Bank and they’re between three and four percent on average of the amount financed for giving the bank that loan so fifty grand and four percent that’s two thousand dollars okay so that’s one reason why i always tell folks that you get a better negotiating power with a dealership if you finance with them if you go get outside financing you have no negotiating
Power on the price well if you finance through the dealership you have a lot more power of negotiation because of that money that kickback money from the banks now you may not think two grand is a lot of money but two grand and let’s say that’s the average loan right now 2 000 and you make 20 loans that’s 40 grand that pays a lot of people salaries that pays
A lot of that pays for a lot of technicians that pays for the dealership to stay open and be able to keep hiring people so don’t overestimate that not to take anything away from a credit union but your if your score is under 740 they’re probably sending you to a credit union anyway because a lot of banks want to see at 740 plus score so 739 below will probably
Be a credit union anyway at the end of the day that is how you negotiate a selling price of vehicles you tell them that you are financing and you will finance through them imma go a little more off subject just one more time and this is going to be about good credit customers stop negotiating the price price does not matter until you’ve actually established
That you’re financing with them until you’ve actually established what you’re willing to pay monthly and your down payment those are the two things that matter the most in the rv business when you’re buying one it’s a complete opposite of the car business it’s more like when you go in to do a house right right now housing is at a premium there is no negotiation
So all you’re trying to worry about is how much out of pocket and how much monthly you’re doing the same thing with an rv however when you’re negotiating a deal on rv and you negotiate the down payment of payment and you make a low ball offer on both of those you will have to have the price come down i’ll explain that in another video good credit customers also
Need to understand that interest rates are not below 4 they’re just not the dealership can tell you they’re getting 199 or 2 and a quarter or 2.49 what you’re doing is you’re overpaying for the vehicle to get that premium rate let me explain that in a car sense when you go down to ford and they offer you 0 for 60 months you are vacating all of the factory cash
Or rebates so the lender can buy down the rate from 3.49 which is the standard rate right now in a truck down to zero okay so you lose all the ability to have any kind of discount whilst if you took the regular rate you would have the rebates the same thing goes in an rv even though there is any uh rebates or cash back or anything that nature in this business
The one thing you will realize is that if you hit take the 4.99 rate which is the average rate right now in the rv business with outstanding credit and at least 20 percent down then you’re getting the lowest price possible because if you want anything lower than that let’s say you are not going to buy unless you have 1.49 because that’s what you’re quoted at
Your credit union and you find out your credit union’s only do it for 36 months or 24 months or whatever the case may be then the dealership buys down the rate down to whatever that rate is and that means you are paying more for the coach than is necessary okay zero percent interest does not exist as a real rate in the rv business hope you enjoyed this video this
Content don’t forget to subscribe if you have any questions please leave them in the comment section or you can also contact me on my social media page thank you so much have yourself a wonderful day we’re midway through march and almost to spring
Transcribed from video
Understanding RV Loans for Good Credit By HBRV Lifestyle
