Guaranteed Financing & Other Common RV Financing Scams Exposed

When it comes to purchasing an RV or travel trailer, there are a number of tactics that RV dealers use to draw potential customers to fill out a loan application including 'guaranteed financing'. The allure of 'guaranteed financing' can seem like a beacon of light for many, especially those shopping for bad credit RV loans. Unfortunately, an RV loan from these sources often mask the real conditions and terms that may not be in the buyer's best interest. This article aims to shed light on the truth behind guaranteed RV financing and highlights other dealership traps to avoid.

Is 'Guaranteed Financing' Real?

The term 'guaranteed RV financing' is frequently used by RV dealers to imply the promise anybody can secure an RV loan with them. This is especially directed at buyers with bad credit who may have dufferent a decline for a loan from another source. The reality, however, is that many of these RV financing options are far from guaranteed.

The reality is that all RV financing is contingent upon approval, which might include a substantial down payment, a loan with steep interest rates, or a restrictive payment plan. Although some recreational dealerships may have access to more lenient lending networks or in-house financing (we'll get to that later), it is important to understand that RV loans are always subject to specific conditions tied to your personal finance situation.

Common Financing Schemes Used at Dealerships

1. The Spot Delivery Scheme

This will begin with the RV dealership allowing you to take your RV or travel trailer home, suggesting that your loan has been secured. You might even sign on an affordable rate and be under the belief that the purchase is complete. Unfortunately, you then receive a call claiming that your RV financing fell through, but they've magically found another option to qualify you. This requires new paperwork which shows that you are paying a higher interest rate through a different lending company.

By this stage, many peopl eare emotionally invested and more likely to accept the higher interest rate and less favorable terms. Dealers may know from the outset that the initially agreed upon financing terms were unrealistic. This approval scam is especially common in the automobile world, as outlined in this article by HG.org.

2. Packed Payments

With packed payments, the dealer inflates your pre-approved monthly payment to include unnecessary add-ons or services. This approach maximizes your financing limit with extras you didn't request such as extended warranties or upgrades. Some dealerships will even include extras in their administrative or documentation fees in order to justify charnging hundreds of dollars extra. Finally, in the worst of cases, dealers may not even include the upsells that you believe you had paid for.

3. The "We'll Pay Off Your Loan, No Matter What You Owe" Scam

Dealers may promise to clear any existing loans on your trade-in RV or travel trailer, regardless of the amount owed. Unbeknownst to many buyers, this often results in the old loan's balance being rolled into the new financing agreement, thereby increasing overall debt. Lenders will consider your debt-to-income ratio and the asset's value, which means a significant negative equity could lead to a loan rejection or necessitate a large down payment.

4. Refinancing Schemes That Lead to More Costs

Some lenders and brokers out there offer guaranteed options to lower the interest rates on your current loans. While this sounds like a great way to save money, there are usually excessive fees involved. They will typically have you pre-approved for a lower payment without disclosing that they have actually extended your loan term to reach that number. The amount of debt that you'll be taking on in these guaranteed refinance schemes will leave the borrower deep in the red for many years.

5. In-House Guaranteed Financing

Dealerships love to advertise that they have the top in-house guaranteed RV financing options in Canada. A bold claim and a marketing tactic that is aimed to lure in bad credit buyers. The reality is that the vast majority of these dealerships are actually getting their contract fulfilled and bought by the same lending networks as eachother. There are very few in-house financing options in Canada, and virtually none of them offer a truly guaranteed option.

Why Are Dealers Allowed to Advertise Guaranteed Financing?

Dealerships have found many loopholes to legally advertise guaranteed financing as a lure to catch poor credit buyers. These guaranteed RV loan dealers will usually offer one of the following options to show that a customer is "pre-approved" even without a financing option through a major lender.

• In-House Payment & Layaway Plans: While a dealership advertising an in-house payment plan isn't inherently a bad thing, using these plans as a last resort for customers who are declined is deceptive. An in-house plan may 'prove' that the dealer can get anybody approved, technically, though these plans require the buyer to pay for the unit in full prior to taking the vehicle home. This leaves zero risk for the dealership and fulfills their obligation of 'guaranteed'.
• Excessive Down Payment Requirements: Another way that a guaranteed RV dealership might skirt the reality is by offering an option to borrowers with an obscenely high down payment requirement. While some bad credit RV loans might require some money down, the goal for the dealer here is to set a number that is far and above what most can afford; especially those with poor credit. While lenders may reconsider a declide with money down, the bulk majority will still not offer loans.
• They Lie and Ignore You: The final way that a dealer might skirt reality is through lying to you and ignoring you. As everybody in our industry knows that guaranteed financing does not truly exist, dealers still advertise it and will have their sales team either lie or push you away to protect their claims. They might get aggressive in their defense while they belittle or degrade you. Others might simply ignore you altogether for long periods of time until you give up trying to communicate.

Avoiding RV Financing Scams

As recreational lenders in Canada continue to evolve and expand, new finance schemes will innevitably continue to develop. It is important to stay vigilant in safeguarding yourself against these borrowers. Here are some bulletpoint tips to consider when locking in RV financing in Canada:

• Research the dealership online and avoid any example of guaranteed financing.
• Look at the dealership's website for any examples of promises that may not be legitimate.
• Thoroughly read and understand all financing documents and the full cost before signing.
• Avoid rushing into agreements and explore financing options through banks or credit unions.
• Consider reputable online RV lenders who may allow you to shop at multiple sources in the market.
• Know your credit score and current interest rates in Canada to set realistic expectations.
• Ensure that your financing approval is finalized before taking your RV or travel trailer home.

In Conclusion

The notion of 'guaranteed' financing for RVs and travel trailers is often misleading. Conducting in-depth research and approaching offers with skepticism are your best defenses against deceptive dealership practices. For those seeking transparent financing options, exploring our or consulting our guide to RV and travel trailer financing with bad credit may provide valuable insights. Stay informed and cautious to navigate the financing landscape successfully. Happy shopping!

For further reading, check out our other articles:

The Definitive Guide to RV Financing: Covering everything there is to know about obtaining the best finance deal from a legitimate source in Canada.

Our RV Loan Calculator Guide: This instructional guide goes over our RV financing calculator, the only honest calculator that you'll find online. Get an accurate financing quote before you purchase your RV.

Four Cant-Miss RV Destinations in Canada: This online resource proivdes some of the nicest RV destinations that you'll find in Canada.