RV travel is more popular than ever, and many people want to answer the call of the open road with their own RV. Even if times have been tough for you in the past, you may have a bad credit score that is standing in the way of you finding financing for the RV of your dreams.
You may even be wondering if buying an RV with a bad credit score is possible?
The good news is that even with a somewhat poor credit score, it is possible to obtain financing for an RV. However, the amount of credit you can get, the interest rate, and other important details depend on how low your credit score is and what you can do to improve it.
To find financing for a mobile home with a poor credit score, it’s important to be strategic by identifying the cause of your poor credit score and being strategic about what you can do to improve it. Once you have addressed these concerns, you can set out to find the right lender to buy the RV of your dreams.
What credit score do you need for an RV loan?
The lowest credit score you can have and still hope to secure RV financing for a credit score is about 650 to 660. However, the interest rate will likely be uncomfortably high. If possible, you should bring your credit score to at least 700 or higher to get a reasonable percentage rate.
Most lenders and underwriters consider a credit score of 700+ to be a sign of a strong credit score, resulting from consistent payment history and low account utilization.
How to determine your credit score before contacting a lender
The three major credit reporting bureaus, Equifax, Experian, and TransUnion, offer you the ability to query your credit score once a year for free. Other credit scoring services, such as Credit Karma and Mint, pull your credit score from the major sources but provide you with an average, estimated score.
The actual credit score used by a potential lender is derived from a compilation of information obtained directly from Equifax, Experian and TransUnion.
How are mobile home loans structured?
One of the advantages of mobile home loans is that they are structured more like a home mortgage than a vehicle loan. This means you can often spread the payments over a much longer term.
This lowers your monthly payment so you can add more RV loans to your debt portfolio, making a lender more likely to approve them.
Tips for buying a mobile home with a bad credit score.
There are a few things you should know, and a few things you can do to improve your chances of getting financing for a mobile home, even if you have a bad credit score.
If you take the time to learn the ropes, you can make the process much easier and avoid any unexpected surprises.
1: Settle outstanding collections & debts
Outstanding debts and collection efforts levied against you will significantly affect your chances of obtaining mobile home financing. When you check your credit score, you’ll get a credit report that includes outstanding debts.
Sometimes there are surprises you didn’t realize you had, such as an outstanding damage deposit on an old home from 5 years ago or a missed credit card payment you forgot about.
If you approach a lender with these entries on your credit report, they may reject you out of hand. So you need to clean up and pay off these old debts before you approach a lender.
2: Understand how self-employment income affects lending.
Many people have “side jobs” that count as self-employment income. Although this is a convenient way to supplement your regular income, a lender will only consider self-employment income if it has been earned stably for at least two years.
Whether you deliver groceries on the side or give people rides in your car as an Uber or Lyft driver, if you want this income to be considered, you must have at least two years of income history to prove it.
3: Use a loan calculator to estimate a realistic payment
There are all kinds of online loan calculators you can use to determine a real payment you can actually afford. Most lenders will not approve a loan if the additional monthly payment would be more than 50% of your net monthly income for loan payments.
4: Come up with a good down payment
The absolute minimum down payment for a mobile home these days is 10%. However, some lenders insist that you make a down payment of up to 20% when financing a new mobile home.
This down payment serves as collateral that credit examiners immediately require before approving a mobile home loan for someone with poor credit.
5: Research RVs
Once you have a realistic idea of the monthly rate you can afford, you can get a better deal on the type of RV you want. Not only will this save you a lot of time visiting RV dealerships, but it may also result in you having to get pre-approved at multiple dealerships.
Especially since your credit score will deteriorate slightly each time a lender checks your credit. If you know what RVs are available in your area and how much you can pay for them, you can go to the best RV dealer and only have to get pre-approved for your credit once.
If you wander from RV dealer to RV dealer, getting pre-approved at each, you risk inadvertently having your credit score lowered to the point where your percentage on the final loan suffers.
Where to find RV financing when you have bad credit
There are a few different places you can go when trying to get approved for financing for an RV with bad credit. It’s helpful to check out each of the following options to find the best possible interest rate and terms.
1: Talk with your bank
Your bank is most familiar with your credit and loan history. It knows all the dishonored checks, overdrafts, and other eyesores in your file. It can often retrieve this information without an extensive credit check.
If you are summarily turned down, you may be in more trouble than you think. They will probably give you some approximate terms and rates if you have an honest chance of getting financing. Sometimes you can even lock in that rate for up to 30 days, giving you time to explore other financing options for your RV.
2: Check with mobile home dealers
An RV dealership is the next best place to get financing for an RV with a bad credit score. The dealership lives and dies on new sales. They have years of experience in identifying obstacles to bad credit and ways to help you get the financing you need to buy your new RV from them.
Keep in mind that they will have to check your credit, and that credit check will affect your credit score a bit. Also, the terms they offer you are based on you buying an RV from them and only them.
If you can’t find the make, model and floor plan of the RV you want and go to the nearest RV dealer, they will have to start the process all over again. That means another credit check and another hit to your credit score.
So if you decide to go with an RV dealer, do your research thoroughly beforehand. Make sure they have more than one of the RV floor plans you want before you talk to a salesperson or use words like “pre-qualify.”
The salesperson will want to pre-qualify you to make sure they are not wasting their time trying to sell you a model. So it’s best to convincingly rehearse the phrase “I’m just looking around” when you see a salesperson approaching you from a distance.
Lending institutions that will help you buy a mobile home with a bad credit rating
It pays to explore your options beyond your local bank and the mobile home dealers you’re eager to pre-qualify.
In fact, some national lending institutions have helped people buy an RV with poor credit in the past. Keep in mind, however, that they will also run a credit check that will affect your credit score.
1. Good Sam
Good Sam is a membership service designed to meet the needs of RV enthusiasts and campers throughout the North American continent. Recently, Good Sam has expanded their service offerings to include RV financing and RV insurance. They offer the best possible rates allowed by their RV insurers and know the industry like the back of their hand.
You should also keep in mind that any RV lender will require you to purchase additional RV insurance throughout the life of the loan. If you already have your RV financing through Good Sam, you can also bundle the rate to get your RV insurance through it as well seamlessly!
4. Southeast Finance
Southeast Financial is a lending institution with a history of helping people with bad credit get the financing they need on all kinds of things. This includes mobile home loans for people with bad credit. They have a bevy of online tools and loan calculators that will help you dial in your loan details before you contact one of their representatives.
While they may not always offer you the friendliest terms, they have a history of working with people with bad credit. This includes helping you understand what kind of payments you can afford in the real world, which will frame your RV shopping experience.
3. Camping world
A fast-growing national chain of RV dealers, Camping World has recently expanded into its own affiliated RV financing services. This includes friendly terms for people planning to buy from their dealer.
Even if you have to go directly to a local dealer to find financing, Camping World is one of the largest dealers in North America. Sometimes they can even have a particular model shipped from one of their other dealers to your local dealer for little or no fee.
4. National power sports
National Power Sports is another leading RV lending institution that has a history of helping people with bad credit buy the RV of their dreams. They even offer credit counseling services to help you improve your credit score in the short term. They also specialize in low rates with payments you can handle in the real world.
Because National Power Sports is a large national lender, the company may also be able to work with you to tap existing equity in other properties you own or have paid off a large portion of. The company can also help you finance other recreational equipment such as boats, dirt bikes, etc.
How much RV can I afford with bad credit?
The type, age and price of the mobile home will directly affect your monthly payments and terms. Most financial institutions will not allow your total monthly payments to exceed 50% to 60% of your average monthly income.
So how much RV you can afford with a poor credit score depends largely on the available borrowing power you have left in an average month.
Let’s say you currently have a net monthly income of $4,000. 50% of that is $2,000. Let’s further assume that your mortgage, credit card payments, and other monthly debt payments cost you an average of $1,500 per month.
This means that you can be approved for a maximum monthly payment of $500. However, a payment of $300 per month is wiser and more likely to get approved if you have bad credit.
This will give you a little more wiggle room in the future to help shoulder with unexpected bills. This type of monthly payment is within reach for things like the Coleman Lantern 236 BH travel trailer or the Heartland Mallard M210 RB.
Getting an RV with bad credit – your bottom line.
It is possible to buy a mobile home even if you have bad credit. However, you should be aware of how much you can afford and what you can do to pay off existing debts. After that, you can focus on making a down payment of 10% to 20% and finding the right lender.
Your bank is a good first place to start, as they can often give you an approximate estimate of the mobile home loan you can get approved for without having to do a full credit check. This will give you a good idea of what kind of price tag you can buy with your bad credit.
If possible, wait to apply for pre-approved financing from an RV dealer until you know the make, model and floor plan of the RV you want is available. This way, you will also avoid having your credit score affected by multiple credit checks. If possible, try going to a national RV dealer like Camping World, which has a huge inventory available to help you find just the right RV for your credit score.
Some national lenders specialize in helping people with poor credit scores buy an RV. These include Good Sam, National Power Sports and Southeast Financial.