Sunday Review: Financing When Broke

Yes, you can get financing for an RV even when you are poor and/or broke.

First I'll give you a quick rundown of what we did. Then I'll go into some more details on what you can and/or should be doing.



We were in an apartment. Lyndsay was working contract and I had a part time job. We could only rely on my credit for any loan applications, which meant we could also only rely on my income.

In all of our loan applications, we shunted all normal expenses - including rent - to Lyndsay. So on paper, I had zero monthly expenses; not even a phone bill. This opened up my entire income for use on loan applications. This is perfectly legitimate and legal to do; an adult living at home with parents while working part time and going to college is not uncommon and may have no expenses. How expenses are divided up in a household is up to you, not the bank.

The RV loan is the hard part. RV's are considered luxuries while vehicles are considered necessities. This means that without collateral your credit threshold for getting an RV loan needs to be higher than it is for a truck (if you are going with a 5th wheel or travel trailer). We went in with a cosigner from the start, which got us the loan.

In the same week as getting the RV loan, we got the truck. It takes one to two weeks for your credit report to be updated. Getting the RV and a truck in the same week radically increases your chances of getting both loans as the banks will not see the other loan and your credit score will still be at its highest point.

So, what can you do?

Step one is have good credit. Sorry, but that's just the way it is. You need to have a credit history and it has to be good. My credit score is over 700 and I still needed a cosigner on an RV. The only way to get much higher than my current credit score is to have a mortgage. If you do not have a good credit score, you can start now.

Learn to budget; there are often free courses available at non-profits both in person and online. Just throw it into Google: "free online budgeting course Canada". Learn how to eat healthy cooking at home; our family of two adults and one child spends $50 per week on groceries and we eat healthy. You must be good at saving money in every way that you can. Again, Google is your friend. All of this information is readily available online for free. Don't assume that you know anything about budgeting, finances, or eating healthy; your financial knowledge largely came from your parents and if they were bad at it there is a decent chance that you are bad at it and don't know.

Step two is to figure out what you can pay in loans and budget accordingly. Are you going to go back and forth between seasonal jobs? Move to a warmer area like Vancouver Island or the BC Coast permanently? Work from home? Follow festivals? It is mandatory that you know how you will be making money and the budget that you can afford both for loans and for renting parking space when needed. We took a few risks and it nearly sunk us.

If you have the high credit score and the chops to cut costs, income and a budget, you can move on to looking for your RV. As long as you have a biweekly paycheque with a three month work history or two years with contracts at the same place, you can get your loans. I will go on the assumption that you like us have a family and will be getting either the 5th wheel or travel trailer. If you are going with a motorhome and a small car dragged behind it, modify accordingly; but still get the RV first (or have a paid-off car already).

Look very hard for the RV you want and can afford. This is going to be a long process. Go to RV shows. Go to dealers. You will have to become good at dealing with pushy salesmen. Ask to look at things that they don't think you would want. Don't let them tell you otherwise, you know what you need, they don't. After you find the RV that you want you will now know its gross vehicle weight rating and therefore know what kind of truck you need to haul it.

Get a truck with a towing capacity well over your RVs GVWR. You want to avoid stressing your transmission and differentials. The GVWR on our trailer is 8300 pounds, but our truck can tow up to 12,300.

Be very detached when you are negotiating prices. The more detached you are and more willing you are to walk away, the bigger the discount and free bonuses you can get out of the salesmen. Go to more than one dealer and compare vehicles between them. They will try to do whatever they can to keep you in the store and you just have to walk out so that you can go elsewhere and have the ability to compare. This is true even if you are going to different dealers of the same auto maker. Markups on used vehicles are vastly greater than on new ones, so you will have plenty of room to negotiate, far more than you realize.

After you have selected both the RV you want and the truck you need, only then do you apply for financing. Unless you know you are getting a better rate through your own bank or credit union (we couldn't), going through the dealer finance department will often get you a better rate as they will send the application off to as many places as possible and then offer you the best rates available. Apply for both in the same week, preferably both on Monday or the RV on Monday and truck on Tuesday. Apply for the RV with a cosigner if you want absolute certainty that you will get the loan.

Don't worry about taking time to buy; the chances of someone else buying either the truck or the RV while you're getting everything prepped are slim. Those vehicles sit on the lot for months. If it does happen, it is most likely to happen with the truck and you have far more options there to find a different one.

Hopefully that helped! Feel free to leave questions in the comments and I will do my best to answer.