J&J Camper RV Secrets

The Secrets to RV Financing - There is NO Magic Bank!

What I am telling you, is when you get 0% or 2.9% or 4.5% financing when the going rate is 6.99%, nobody is doing you a favor.

There are programs for dealers to "Buy Down" the rate (i.e. A dealer can pay a bank up front to lower your interest rate). The fees vary but are into the thousands of dollars. Usually 1% of the total amount financed equals .25% decrease in interest.

Example:
6.99%
Regular Rate $50,000.00 financed
To get this rate reduced to 3.99% the dealer would need to pay $6000.00 to the bank up front.

Three things:

1st- A dealer doing this is going to charge you that $6000.00, plus his profit. Most dealers aren't making $6000.00 on a $50,000.00 unit anyways.

2nd- The interest you pay can be used as a tax deduction in most cases.

3rd- A lot of "Buy Down" rates apply to only the 1st, 2nd, maybe 3rd year of the contract then revert to standard annual percentage rate (APR)

There are Generous Banks

Occasionally a bank will create a show rate or coupon. Usually good for .25% rate deduction. This may happen once a year, maybe a couple times, maybe never. However generous banks are, they will not reduce rates by a full percentage point or more. Sorry, it just doesn't happen. Also you should note there are strict laws concerning disclosure of this type of financing that need to be properly followed by your dealer. Ask questions!!
-F&I Managers = Finance & Insurance Managers-

The reason a dealership has an F&I Manager is not to help the buyer get a better rate!

True- They may help a marginal credit customer get financing.
True- They get paid commission by financing a customer. A bank offers 6.5% to outstanding applicants. Your rate depends on a customers credit score, the better score, the higher approval tier, the lower the rate.
A customer with great credit, equity on the deal & down payment may receive an additional .25% discount- that's it!!

How an F&I Manager makes his money

If a customer gets approved at a certain tier and at a certain rate, the dealership can finance the RV at a rate above approval. This allows the dealership to "reverse buy down and actually earn... you guessed it... 1% of the total amount financed for every .25% rate increase! Some banks cap the dealer reserve at 6%-7% or $10,000.00 total.

Example:
Loan amount- $75,000.00
approved rate- 6.5%
dealer puts you at 7.75%
1x .25%= $750.00 = 5x.25%= $3,750.00 additional income for the dealer.

Most F& I Managers make more than the salesman!

While it's true RV dealers usually have the lowest rates and longest terms, especially compared to non-RV banks... make sure you are getting your best deal.

Check back often for more tips!!