What Do RV Financing Lenders Look at When Deciding How Much to Loan?


Quick Answer

RV financing lenders consider the applicant's credit, debt-to-income ratio, liquidity and loan value when deciding how much to loan, as stated by Best Rate Financial Services. The debt-to-income ratio is the factor that really indicates how much money an applicant has available for monthly payments.

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Full Answer

Getting a loan for a recreational vehicle is more difficult than other types of loans, according to Bankrate. Lenders look more closely at applicant's finances, since this is an expensive purchase intended for travel and fun, but which also has a tendency to depreciate in value with use. Lenders look at a variety of factors to determine how much money to approve for a loan.

Factors RV lenders consider

The RV financing company looks at certain factors to determine how much of a loan the applicant can afford and even if the applicant can qualify for a loan. They usually look at the applicant's credit rating, debt-to-income ratio, liquidity and the value of the loan compared to the sale price of the RV. The credit rating is very important to lenders as it determines the interest rate that the applicant will get, which can affect the loan amount dramatically.

Debt-to-income ratio

The debt-to-income ratio is the foundation on which a loan is built. This ratio gives lenders an idea of how much spending money the applicant has to pay the mortgage on the RV each month. Usually, RV lenders prefer that applicants have between 42 to 45 percent of their income available after paying other monthly debts.

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