CHICAGO — Jade Beckman of Mountain America Credit Union offered would-be lenders a set of rules to keep in mind when it comes to lending on RVs and other non-auto vehicles.
• Rule #1: CUs are financing toys. Beckman pointed out that while nearly everyone needs a car, no one needs an RV. He added that while RV borrowers are often well-qualified, it's important not to make many stretch deals.
• Rule #2: Options can add up. Additions to RVs can drastically inflate the vehicle's value-and fast. But those items can also disappear quickly if the vehicle has to be repossessed. Beckman recommended making the occasional interview call to double-check with borrowers on what items they're adding to the purchase before approving the loan.
• Rule #3: RVing is a lifestyle. Beckman suggested watching out for first-time RV buyers, because the vehicles are so expensive to own, operate and maintain. He said MACU likes to see previous RV experience when underwriting deals.
• Rule #4: Baby steps. Beckman noted that when MACU does its underwriting it prefers to see buyers that have gradually upgraded with each RV purchase, rather than first-time buyers starting out with a top-of-the-line model tricked out with expensive add ons.
• Rule #5: Values are arbitrary. It's just as important to believe in the borrower-and that borrower's commitment to and experience with the RV lifestyle-as the collateral, because the value of the vehicle may drop significantly between purchase and repossession.
• Rule #6: Don't be afraid to ask for cash down. On deals of $50,000 or more, MACU looks for at least 20% cash down, but Beckman said the CU will sometimes accept less based on the borrower's qualifications, previous RV experience and history with the credit union.
• Rule #7: Multiply Rules 1-6 by three when dealing with boats.
• Rule #8: Repeat rule #1. Don't forget, these are big toys.Beckman stressed that overall the same underwriting rules apply to RVs as apply to cars: credit, collateral and capacity to repay the loan.
