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NEWS

Joe Bruno Says . . .
Exploring More Financial Options may help make your dream a reality!

An RV Loan can cost you less if you give more personal financial information!

SUMMARY
This topic is very important to me since I have a large loan on my motorhome at this time. From my personal and industry experience, I hope to help you by offering a few guidelines to follow when financing your dream.


12/6/10

The RV industry probably would not exist today if it were not for the Finance Industry. While on the other hand, The RV Industry almost collapsed over the past couple of years because of the near collapse of the Finance Industry. Moving forward, I believe that the responsibility for the near collapse of the RV Industry is due to a combination of lapses from both the borrowers and the lenders. We thought we could afford our boats, cars or motorhomes because of our home equity and investments. After 2008, many of us had suffered a severe downturn in the valuation of all of our assets including our coach, which as a norm, depreciates in value. The bank. however had a deflation-proof piece of paper (note) that was worth the amount borrowed less the principle paid off each month. Banks were not concerned with depreciation since they held the note.


As borrwers, We were slammed into a very uncomfortable position as we watched our home equity, Investment Portfolio Values, and Motorhome Values Plummet with the economy since late 2008. The domino effect was in play as The banks stopped lending, The Buyers Stopped buying, the manufacturers stopped building, The dealers almost stopped selling completely for a few months.


What's Next for Borrowers and Lenders ?

The current and most likely, the future, of RV lending may hopefully become a completely transparent, dual responsibility, where the borrower and lender can share the responsibility of clear and concise information transfer in order to transact business. The RV Industry has many finance options for prospective buyers. I am bringing to the forefront some guidelines that may help make your RV purchase more efficient, rewarding and enjoyable.

Once you find your RV and picture yourself in it, either driving it down the road or towing it behind you, you must understand that it is not a house that you are buying, it is considered buy the bank, a vehicle. There are no special programs for families with lower incomes to borrow money to purchase a "Recreational Vehicle".

Dealers will bend over backwards to get you a loan. They really want to sell you that RV so they can stay in business as a dealer. However, they have to represent you to the lending institution. They need to ask all sorts of personal information to help you in what is probably one of the largest financial decisions you will make.

Please Be Prepared to answer important questions!


Information Requirements:

The RV dealer has a finance manager who will be required by the banks to ask many questions about your personal financial condition, just like a doctor asks questions about your body's current condition and medical history. There is also a database that is kept by 3 credit reporting agencies on your payment history and other issues related to your borrowing habits. The more information you give, the lower the risk for the lender. This may make you eligible for lower rates if your history meets the minimum requirements for each rate tier level.

The Following Information Is Usuaully Required to get a RV Loan:

If Employed or Retired on a pension:

Personal information:

Co-applicant information (if a joint Application) Personal financial statement including all investments that will support up to the value of the RV being purchased. (By showing this, you are showing the lender that you do not need the loan as the only way to finance the purchase, which may help get a lower interest rate)

Past Two years current 1040 Federal Income Tax returns complete with all schedules, including W-2's. ( Your income must meet monthly debt to income standards which are normally 35% - 40% of your monthly Income with the RV loan being no more than 25% - 30% of monthly income. Some banks through "Participating Dealers" may offer loans under a certain dollar amount without proof of income if your financial statement meets their minimums.

If Self Employed, loans can be more complicated. As a borrower, you must understand that a loan is considered a business agreement by the lender who is in business to make a profit based from the level of risk they are taking. The more information you supply them, the lower their risk is in loaning or investing the money in you and your depreciating asset.

Business Financial Statements

Two years Corporate Federal Income Tax returns.

RV Purchase Agreement

Documentation explaining and/ or support any unique situations.

Remember, the more informaton the lender has on you, your spouse, your business, your liquid assets and investments, the less risk they are taking loaning you money. This may result in a lower rate or payment on your dream.

Do NOT assume that this means you get a great rate. Shop around and do not take the first rate you hear as gospel. Negotiate, negotiate, negotiate! No winners or losers....Just Be Fair!

Whether your are a cash buyer or finance buyer, Please buy within your means. Instead of a new coach, buy a coach that is a few years old until you know that this is what you want to spend time doing. Then, go for it. It is at this point where your recreational vehicle may become your retirement vehicle and a business with a great personal return that you can not put a price on!