| Cash is king, and so, especially in these times, | | | | to provide whatever documentation the bank may |
| conserving cash for emergencies and other | | | | need in order to determine whether to make the |
| unanticipated expenses makes sense. Paying cash for | | | | loan directly. Documentation usually includes pay |
| the purchase of an RV depletes cash that may well | | | | stubs, a financial statement, a credit check, and if |
| be needed later on. That is why financing the | | | | self-employed, several years of tax returns. How long |
| purchase of an RV is the way to go, especially in | | | | it takes for loan approval is strictly a function of the |
| these days of competitive interest rates. Using cash | | | | particular lender. Where comparing rates, ask how |
| to purchase an RV turns that cash into an "illiquid | | | | long it takes for loan approval and whether it is |
| investment," not readily available if and when the | | | | possible to get pre-approved for the purchase of an |
| cash is needed. | | | | RV. Loan approvals usually are for up to a specified |
| There are several ways to finance the RV purchase. | | | | amount and good for a certain period of time. Being |
| One way is to finance it through the RV dealer from | | | | pre-approved makes the purchase of an RV that |
| which it is purchased. This kind of loan is called an | | | | much easier and quicker. |
| "indirect loan." The dealer will quote an interest rate | | | | In deciding whether to finance the RV purchase, |
| for the financing, runs the credit check and | | | | there may be a potential tax advantage in doing so. |
| completes all the paper work, which is normally done | | | | Depending on whether the purchase is financed by |
| at the time of the purchase. Some time after the | | | | use of a home equity line of credit or a home equity |
| sale, the dealer then will sell the purchase contract to | | | | loan, interest may be deductible. So, in addition to |
| a bank. The payments due on the RV are then made | | | | comparing loan interest rates, consult a tax advisor |
| to the bank, as the dealer no longer has any interest | | | | for the best way to structure the purchase of the |
| in the purchase contract. | | | | RV. Other potential tax advantages may apply in a |
| Another way to finance an RV purchase is by a | | | | particular situation. |
| "direct loan." The RV buyer goes directly to a bank | | | | Unless absolutely flush with cash, using that cash to |
| or credit union or other lender, such as an automobile | | | | purchase an RV does not make sense. Interest rates |
| finance company, and finances the purchase | | | | for financing an RV are not much higher right now |
| "directly." | | | | than the interest rates paid on money markets, |
| Shopping around for the best rates to finance an RV | | | | certificates of deposit, and other places where cash |
| purchase is critical. Compare rates among banks, | | | | is stashed. Given the upturn in the stock market, |
| credit unions, and other lenders. "Direct" loans can | | | | available cash may be better put to use there than |
| take longer for approval, because the borrower has | | | | to deplete cash reserves to purchase that RV. |