Summer is approaching, and customers are in the market for RVs before they embark on cross-country road trips. When they arrive at your dealership, educate them on the best economical financing agreements and important warranty terms.
What RV Dealers Need To Know About Financing Terms
Customers are eager to search for their dream RV. While some have already done their homework and have a keen understanding of the RV leasing process, others should slow down and learn the several steps and key components of financing an RV. That’s where you, the dealer, comes in.
Help customers trust that you have the best intentions for them, financially—offer them beneficial tips and recommendations for properly financing an RV. Explain the buying process thoroughly, and don’t assume they’re aware of the ins and outs. Providing a clear explanation helps customers understand what to expect and sets intentions early on. When you offer a fair process, it’s a testament to not just your integrity as a dealer, but also your expertise.
Help Customers Secure the Best Possible RV Rates
Some customers are aware that they may get a loan from a financial institution. A bank or a credit union can pre-approve certain customers to borrow money before they come to your dealership. But some may not achieve pre-approval due to credit scores that need improvement or if they’re unsure of what they can afford, considering the RV size, amenities, model, and year.
Explain to them how the easiest way for customers to apply for a loan is at the dealership after they select an RV. Inform customers that when they finance through your dealership, interest rates will be closer to what the bank would offer with good credit.
After reviewing your customer’s income, credit score, and their wants and requirements, present them with the most reasonable options available. For this step, it’s beneficial to be partnered with several lenders, because it gives your customers the advantage of a wider variety of payment terms.
The Importance of Low Financing Term Lengths
The main difference between an auto loan and an RV loan is the term length. With newer RVs priced at $100,000 to $250,000, many have the option to finance payments up to 20 years. When explaining the customer’s financing options, tell them that lower finance terms make it easier to pay it off in a timely manner with consistent payments. Customers increase their likelihood of being upside down in the loan with extensive term financing lengths. Plus, inconsistent payment history or falling behind on payments leads to increased debt and will cause problems if they try to trade it in.
Recommend at Least a Five-Year Warranty
Since RVs are so modern and complex in their makeup, it’s important to explain the importance of purchasing a warranty. Encourage them to secure a five-year warranty as soon as possible, since the RV’s value depreciates as soon as it’s driven off the lot. With each passing year and each mile driven, the likelihood of a breakdown increases. The costs of repair and maintenance are higher—three out of every 10 RVs suffer mechanical issues by the second year. Also explain how expensive RV repairs can cost—on average, $300 per hour factoring in parts and labor. A warranty offers coverage that protects customers from these high out-of-pocket repair costs.
Explain the Necessity of Reliable Insurance Coverage
An RV is a large purchase, so insurance is a vital requirement. It’s wise for you to partner with an outsourced provider that negotiates the most fair and affordable pieces for your customers. Provide a suite of insurance options for your customers to review while they’re at your dealership—this ensures they’re covered and so are you.
Offer Transparent, Helpful Insights on RV Financing Key Factors
There are a couple of things customers should consider during their RV financing process. First, their credit score is an important factor. Credit scores of 670 and higher are recommended, while 800 is excellent for purchasing an RV. Costs also vary depending on the customer’s requirements and desired features. The model, age, and size of the vehicle each play a huge role in the final price point. Make sure customers know that if they’d like add-ons and extra amenities, the RV’s price will go up. There are also aspects out of customers’ control—one, for example, is how RV finance rates fluctuate with current market trends.
It’s great to highlight the advantages of buying an RV brand new. But you should also encourage customers to purchase a used RV that still offers great quality at a more affordable price. This creates a win-win situation for you and the buyer.
Pros of Buying New
Buying a brand-new RV is exciting for your customer if their budget allows. Tell them how they can receive a great return on investment with a new RV, thanks to benefits like:
- A full manufacturer warranty
- Custom options like color, room layout, and more
- Brand new means no maintenance or repairs are needed
Pros of Buying Used
Financing a pre-owned RV offers its perks, as well. Offer the customer an optimistic point of view with benefits such as:
- They’ll save a significant amount of money
- They can make it a fixer-upper project, adding upgrades and decorations at their own pace
- Lower insurance rates
Partner With Finance Solution
Finance Solution is proud to offer alternative finance and insurance, or F&I options. We partner with new and seasoned RV dealers to simplify their process and lead customers to the best possible financing options. Our outsourced F&I plans help dealerships get customers’ applications approved and move more units off their lots consistently. Call our experts today to begin your partnership with a reputable recreational vehicle finance company.
