RV Loans And Mobile Home Loans

Interested in taking a road trip and doing some camping along the way? Maybe you’re looking for an easier, cheaper way to set up a summer home without building or buying a cottage. Either way, purchasing an RV, mobile home, or travel trailer might be the way to do it.

The only issue is that most recreational vehicles can be pretty expensive and may require lots of maintenance throughout the years. Don’t worry, because there are loans that can help you accomplish your goal of owning an RV or mobile home. 

What Are RV Loans? 

An RV loan is a type of financing to cover the cost of an RV, motorhome, or trailer purchase. RV loans differ somewhat from auto loans because the loan amounts are usually much higher, usually ranging from $25,000 to $300,000 or more. The RV purchase process itself is also more complex compared to the average auto loan

Loan terms can range from a few years to 20 years or more. Generally speaking, the higher the loan amount, the longer the loan term. 

What Are Mobile Home Loans? 

A mobile home loan is a type of loan used to finance a mobile home purchase. Since mobile homes are considered personal property (as opposed to real estate), financing is typically acquired with a personal loan. 

That said, the exact type of loan that lenders provide will depend on whether the mobile home is new or used, and whether the land that the mobile home is located on is owned or leased land.

RV And Mobile Home Loan Options

The loan options you may be eligible for depends on a few factors, including whether the land that the mobile home is owned or leased, as mentioned, and whether the property will serve as collateral for the loan.

Below are the loan options you can choose from to help finance your purchase. Some of them may be more suitable to you than others, so be sure to understand them clearly before making your final choice.

In-House Financing From An RV Dealer

Like with most vehicles, you may find a variety of financing packages through an RV dealership. So, rather than applying with a bank or other traditional lender, you would send installments directly to the dealer until your repayment plan is finished, with the vehicle’s title serving as collateral the whole time.  

In-house financing can be advantageous because many dealers are open to negotiation, especially if you have a strong income, a high credit score, and a solid down payment. This can help you obtain a lower price, an affordable interest rate, and save you the trouble of qualifying for a normal loan. You may even be able to score a better deal by showing up with a pre-approval offer from another lender. 

Learn how to improve your credit score to help with approval here

Auto Loans

If you’d prefer to avoid in-house financing, you can also apply for an auto loan through a conventional lender, then use it to finance almost any new or used RV. Here, the vehicle’s title may again be used as collateral until your repayment plan is complete. 

While an auto loan can offer up similar benefits if you have healthy finances, qualifying may be slightly more challenging because, like most vehicles, RVs and mobile homes quickly lose value over time. If you cannot make payments as agreed, the lender may need to repossess an asset that they would have less chance of reselling in the future. 

Unsecured Installment Loans

Although both of the vehicle-based loans above have benefits, a simple unsecured installment loan might be a safer choice, since no collateral is required. In fact, almost every lender in Canada will offer this kind of loan, which appears as a lump sum of cash in your bank account (via direct deposit) after approval. 

However, an installment loan that’s large enough to purchase an RV can be a significant amount of money, so you would again have to present excellent financial health in order to receive the best approval odds and loan conditions.

Conventional Mortgages

If the mobile home you buy is situated on land that you buy and own, a traditional mortgage may be an option for you. Traditional mortgages are ideal because loan amounts are usually higher and interest rates are lower than other mobile home financing options. 

Chattel Mortgages

A chattel mortgage is a type of loan used to cover the purchase of personal property that can be moved, such as a mobile home. Even though you may live in your mobile home, you likely won’t be able to take out a traditional mortgage to buy one, especially if the land it sits on is leased. In this case, a chattel mortgage may be more appropriate. 

The chattel, or personal property, serves as collateral for the loan. This differs from a traditional mortgage in which an immovable item, such as a house, secures the loan. Even if you move the mobile home to a different location at some point, the chattel mortgage will still stand. 

It should be noted that interest rates are usually higher with chattel mortgages compared to traditional mortgages.

Auto Financing 101

Can You Finance A Mobile Home Or An RV With Bad Credit?

While having a bad credit score of 300 – 600 can limit your options slightly, you will likely have access to the same range of products as you would when applying for regular RV financing. However, any loans you are approved for are likely to be smaller and come with higher interest rates. 

If the RV dealerships in your area only offer bad credit loans that are out of your price range, you may have better luck applying for a secured financing product, such as a:

  • Home Equity LoanThis type of loan is secured against the equity of your home. Be careful, as the lender will have the right to seize your asset if you default on too many payments.
  • Guarantor Loan This is when you find a stronger borrower to cosign your application and agree to take over your RV payments when you can’t afford them. Make sure they know what they’re getting into before they sign, as those payments may also be too expensive for their finances.
  • Secured Installment Loan – Although the RV itself would be used as collateral in most cases, you can also apply for a traditional bad credit installment loan by offering one of your other valuable assets, such as a second vehicle. 

Essentially, the more security you can provide, the less risk you impose on the lender if you go into loan default. As a result, you will have an easier time qualifying for more money, a lower rate, and a better repayment plan.

RV And Mobile Loan Application Process

To apply for RV or mobile home financing, follow these steps:

Step 1: Review Your Finances

Before you start searching for an RV or mobile home to purchase, consider how much you can afford to spend and how much of a loan you can qualify for. Crunch the numbers to determine how much money you have leftover every month after paying all your current bills. This will give you an idea of roughly how much you can dedicate to an additional loan payment.

Also, find out what your credit score is, as this will determine your eligibility for a loan, your loan limit, and your interest rate. If your score is currently lagging, take some time to give it a boost. That way, you may qualify for a lower rate to make your loan more affordable. 

Step 2: Save For A Down Payment

RV and mobile home loans typically require a minimum down payment of about 10% of the purchase price. Some lenders may require even more. Depending on the purchase price of the RV or mobile home that you plan to buy, this can translate into a hefty amount. 

As such, it’s important to start saving as early as possible so you have enough to cover your down upon loan approval. And the bigger the down payment, the lower your monthly loan payments will be. 

Step 3: Compare Lenders

To finance an RV or mobile home purchase, you can either use the dealer’s in-house financing options or an independent lender. Dealers that are partnered with lenders make financing more convenient, as there’s no need to shop around for a lender. However, the rates offered are usually not the best.

Traditional or alternative lenders are another option. If you choose to go this route, you’ll want to compare the loan terms and rates of different lenders to ensure you’re getting the best deal possible.

Regardless of which way you go, it’s helpful to get pre-approved for a loan first before applying. Having a pre-approval letter in hand will prove your financial ability to handle loan payments and will give you more negotiating power to wheel and deal on a better price. Being pre-approved will also help get the final loan approval process moving along faster.

Step 4: Complete Your Application

Once you decide which lender to work with, all you need to do is complete the loan application and supply the required documents your lender needs.

What To Increase Your Chances Of Getting An RV Or Mobile Home Loan?

Just like most financing products, RV and mobile home loans can range in all sizes, terms, and rates. In fact, if your vehicle is big enough and equipped with all the amenities of a normal house, many lenders will consider it in the same way that they would a mortgage, so applying will be more expensive and complicated.  

When applying for your RV loan, these factors can help your odds of approval:

  • A Steady Income: Be sure you have proof of income and stable job.
  • A Down Payment – As previously menitoned, RV and mobile home loans typically require a down payment. So, be sure to save up for a sizeable down payment.
  • Debt-To-Income RatioPay off or consolidate any existing debts to reduce your debt-to-income ratio.
  • Credit Score – Get your credit score as high as possible (660 – 900 is ideal). You can check your credit report for errors. Resolving these issues can quickly boost your credit.

Check out this guide on loans in Canada to help you get a loan.

How To Compare Your RV Financing Options

Any RV or mobile home can be pricey, even without a loan being involved. Not to mention all the different costs you’ll have to deal with once the vehicle is in your possession. So, it’s important to thoroughly compare all financing options that are available to you.

Consider these factors before you apply: 

  • What kind of vehicle/home you want
  • If you would like to purchase it new or used
  • Whether or not you’re comfortable using it as collateral
  • The credibility of your potential lender’s business
  • How large of a loan you would qualify for, given your finances
  • How much your interest rate would cost during the repayment period
  • What the lender’s administrative fees might add up to
  • How many months or years you may be in debt for
  • How you prefer to pay your installments (cash, credit card, etc.) 
  • How you would handle your payments and other necessary expenses if you become unemployed or experience a financial crisis.

Consider The Overall Cost of Owning An RV Or Mobile Home

Remember, recreational vehicles can come in a wide range of makes, models, and prices. You can purchase a fold-out trailer that’s simply used for sleeping or you can go for a full-sized mobile home that you can live out of for months at a time.

No matter the capabilities of your RV or mobile home, it’s sure to cost you a bundle throughout the years, not including your installments, interest rate, and loan fees, which will also range in price depending on where you apply and what your finances look like. All these costs may be added on top of the car you already own.   

So, prior to applying, be sure to consider and budget properly for the other expenses that may be necessary for the average RV owner, such as:

  • Down Payment experts recommend that you put down at least 20% of the vehicle’s total cost, which could be more than $5,000 – $10,000. 
  • Gasoline and/or propane – While some RVs only require propane for heating and cooking, others need premium or diesel gasoline to function, which can cost hundreds, even thousands of dollars more a year than regular unleaded. 
  • Driver’s License – If your RV is closer to the size of a bus, you may need to pay for an extra Class-A license each year, on top of your normal Class-D. 
  • Insurance & Registration – Since an RV is bigger and more expensive than a car, your insurance rate and registration fees will also be higher. Larger RVs may even require special insurance, similar to a mortgage. 
  • Utilities – Many campgrounds and trailer parks will charge you for electricity, water, and plumbing. You may even want to hook up cable TV, internet, GPS navigation, or satellite radio. 
  • Repairs & Maintenance – Obviously, the more advanced your RV is, the more extensive any upkeep will be. Although a basic trailer may only need a tune up from time to time, an RV that’s driven regularly will go through a lot more wear and tear over the years, especially if it’s a second-hand vehicle.

RV Loan FAQs

Can I get a cosigner for my RV loan?

Some lenders allow cosigners, while others do not because it could be a sign that you won’t keep up with your loan payments. You’ll need to inquire with the lender to verify whether or not a cosigner is permitted in your particular case. 

How much should I put as a down payment on my RV?

Lenders typically recommend at least 20% down, though some allow as little as 10%. Keep in mind that new RVs can depreciate in value quickly, even by as much as 20% within the first year. If you plan to sell your RV in the near future, you might not be able to recoup enough money to repay your loan.

What factors are considered for an RV loan?

Lenders who provide RV loans look at similar factors compared to car loans and mortgages, such as your credit score, income, debt-to-income ratio, and employment history. 

Can I use a traditional mortgage to finance my mobile home?

You may be able to secure a mortgage to finance your mobile home if it is located on land that you own. That said, it might still be more difficult to get a mortgage to finance a mobile home purchase. You may have better luck with a chattel mortgage or unsecured personal loan.

Can I borrow Using my RV or mobile home?

Finding the cash for an emergency medical bill or an unexpected car repair isn’t always easy, so many individuals turn to loans to fill gaps in their financial plans. A complete lack of credit history makes it just as hard to get an unsecured loan as a bad credit score. However, you aren’t out of luck if you already own valuable investments like a recreational vehicle. RV title loans allow you to use your travel trailer or mobile home to secure the money you need for big expenses that aren’t covered by limited personal loans.

Want to Finance Your RV or Mobile Home?

No matter where you live in Canada, having the right mobile home, trailer, or fifth-wheeler can bring some much-needed adventure into your life. Don’t worry, because Loans Canada can help you hit the road by putting you in contact with the best lenders in your area. Just call us today or check out our website for more information.

  

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