Mobile Home and RV Loans

Mobile Home Financing and RV Loan Options in Canada:

When you are in market for a mobile home or an RV in Canada you have a number of great options for financing. You first stop will likely be the dealership where you are buying the RV or mobile home from. You can also get financing through a bank, a credit union, or an online loan provider. Each of these lenders offer a number of RV and mobile home loan options and you should shop around to see where you can get the best deal.  Let us explain the different Loan types that could be used for your mobile home or RV purchase:

Financing through a dealership (Secured Loan):

You can work with the dealership where you are making the purchase, they usually have a financing team in-house or they work with a number of financing providers. This is definitely a convenient option and the dealership will be the most knowledgeable about RV’s and mobile homes, so they can walk you through making a payment plan. To pay the dealership back, you would send installments directly to the dealer until your repayment plan is finished, with the RV or mobile home’s title serving as collateral during the full loan repayment term.

The advantages of using In-house financing would give you some room for negotiation, because the seller ultimately wants you to purchase the RV or mobile home from them. If you have a high income and strong credit score and are able to make a sizeable down payment, you should be able to get good rates and a lower price, you will also have no trouble getting approved for a RV or mobile home loan with a wide range of lenders. Use this to your advantage when negotiating.

Mobile Home Refinancing:

If you already own an RV or a mobile home in Canada and are looking to upgrade or get some extra cash, you are able to use your mobile home as an asset that you can borrow against. Once your property is eligible it can be turned into a mortgage loan through refinancing. This will allow you to tap into your mobile home’s equity as collateral for additional funds. Refinancing your mobile home can help you save on interest rates for personal expenses.

If you want to refinance your mobile home, we have a loan partner that can help. Click here to apply.

How to Compare Your Mobile Home or RV Financing Options:

Most motorhomes can cost anywhere between $30,000 – $100,000 in Canada.  You’ll also need to keep maintenance and operational expenses in mind when buying an RV or mobile home. This is why it is so important to compare and understand all the financing options that are available to you.

Thing to Consider before you apply for an RV or Mobile Home:

• The brand of RV or Mobile home you are buying. Do they keep their value and are desirable on the market
• What type of home or vehicle you want
• What’s the total cost of it, including financing and maintenance
• Do you want to get it new or used
• Are you fine with using it as collateral
• Who is the lender that you’ll choose, are they reputable
• What amount can you qualify for and can you afford payments
• What would be the interest rate and term length of the loan
• Are there any additional fees associated with financing
• How much will insurance cost
• How will you pay the loan back (direct deposit, cheque etc)

How to improve your chances of getting approved for RV or Mobile home Financing?

RV and mobile home loans can vary based on the lenders that you choose. However, the price of it is fairly high and lenders will often look at financing them similar to how they finance mortgages, meaning they will take a deep dive into your finances.

The more financially prepared you are the better your chances of getting approved. Check out our checklist to increase your chances for approval.

• Make sure you are employed, and have consistent income
• Payoff existing debt
• Save for a healthy down payment of 20% or more
• Check to see if your credit score is high (650+) and that there are no errors on your credit report
• Budget for monthly payments and unforeseeable circumstances

How to budget for RV or Mobile Home Ownership in Canada:

Mobile homes and RV’s can vary widely based on brand, model, price, and add-ons that you get. The use of it would be a major factor in deciding what you’ll budget for it. Will you use it all year round and live in it, or will you use it occasionally to go on a road trip? Regardless of your situation you’ll need to plan and budget appropriately. Here are some of the standard expenses that you’ll need to plan for:

Initial Down Payment:

It should be at least 20% of the total purchase price. The more you can put down in the beginning the smaller your payments will be going forward.

Financing Cost:

Based on your agreement with the lender, you’ll need to pay monthly installment payments to pay back your purchase. Make sure you know what your payments will be with interest included.

Gas/Propane:

Depending on your usage this could be an expense of a a few hundred or thousand per month. Make sure you leave yourself a little cushion on usage.

Insurance:

Your RV or mobile home will require insurance. Depending on the total cost and price your insurance will vary. Make sure to get quotes from multiple companies before applying.

Driver’s License:

You’ll need a Class-D license to operate and RV. If it’s a big one, you’ll also need to invest into a Class – A license each year. Prices for a license vary by province. You can expect the price of a Class D license to be about $400 in Canada. A Class-A license test will cost you around $120 but you’ll also need to complete a 1-week course prior to taking the written and road test.

Repairs/Maintenance:

On average you can expect to spend somewhere between $500 – $5,000 on RV maintenance each year. The price and age of the RV plays a major role in determining what your maintenance costs will be.

Utilities:

Things like electricity, water, park admission fees, internet, and satellite TV or radio are added costs that you might incur over the life of your RV or mobile home.

Mobile Home or RV Financing with Bad Credit:

Having a bad credit will definitely limit your financing options for an RV or mobile home. You options might be limited to online lenders that are willing to take on riskier customers. You’ll likely have 3 main loan options if you credit is less than perfect. These include:

Home Equity Loan: for this loan type you can secure the loan against the value of your mobile home minus the balance that you still owe on your primary mortgage. In this case the lender has the right to seize your mobile home if you default on your payments. However, by using a home equity loan, you’ll get better interest rates when compared with unsecured loans.

Guarantor Loan: This loan type involves you using a borrower with good credit as a co-signer on your loan. They basically agree to take over your payments if you can’t afford them. The main thing to keep in mind with a guarantor loan, is that co-signer should be someone close to you and have the ability to make payments if you can’t.

Car Title Loan: If you own a car, you might be able to use your vehicle as collateral to finance your RV or mobile home purchase. Your car cannot be more than 7 years old and you usually have to own it outright. Car title loans are a popular option for bad credit borrowers.

Alternative to Buying a Mobile Home or RV:

If the initial investment of a mobile home or an RV is too expensive. You should consider renting instead. This option will be much more cost efficient; however you won’t own the equipment. If you only use it a few times a year then renting should be the way to go. You won’t be stuck with an asset that depreciates in value every year, and you can avoid many of the additional costs that are associated with owning it.

Frequently Asked Questions about Mobile Homes and RV Loans:

What documents do I need to obtain a Mobile home or RV loan?

While the exact requirements can vary by lender, the baseline requirements are:

1. Class-D License, and Class-A if the size of mobile home is large
2. Government-issued ID (e.g. driver’s license)
3. Insurance documents
4. Mobile home/vehicle registration
5. Proof of employment
6. Proof of income (e.g. bank statements and/or employment pay stubs)
7. Credit report

Where can I get a mobile home or RV loan?

You can get financing for a mobile home from a dealership, bank, credit union, or an online lender. Rates will vary based on the option that you choose. 

Is employment necessary for a mobile home loan?

While employment is not a stringent criteria, it is the most commonly checked factor to ensure that the loan will be repaid in time. Alternatively, if the borrower is not employed, then he/she will need to use the mobile home or RV as collateral. 

Can I get a mobile home or RV loan with bad credit?

Yes, you can. Your primary option would be online lenders as they are less strict with approvals. You’ll likely have to pay a higher interest rate, because bad credit means you are a riskier customer for the lender. Shop around to find the best rates you can get.

How much should my down payment be for a mobile home?

The best practice is to make sure that you are able to make a down payment of at least 20% of the total cost of the mobile home or RV. You need to make sure that the down payment is large enough for you to afford the monthly payments to pay off the remainder of the loan.