Gdetrailer wrote:
wapiticountry wrote:
Small loans are likely to viewed more as a nuisance than an opportunity. It costs the lender the same amount of money to process a $20,000 loan as it does a $200,000 one. Therefore the actual costs of $20,000 loans are ten times higher than $200,000 ones from the lender's point of view. If I was underwriting an RV loan, I would be very concerned that someone wanted to get a 15 year loan on such a low balance. It would raise a red flag that the borrower had cash flow issues.
Not really.
Take into consideration that banks use the property that you are buying as collateral. Collateral assures the bank that if you default on the loan that they WILL take ownership of the property and resale it to get the loan paid.
Homes on average gain value over time provided you do upkeep.
RVs even with up keep lose value over time, banks are less interested in a asset which loses value..
They are taking chances with RVs and the longer the note, the better chance that if you default they are stuck with a unwanted RV that they will have a difficult time reselling and most likely result in loss of banks money..
Short loan terms under 12yrs on depreciating assets banks will not bat an eye at.
I was in banking for many years, most of it in at the executive level in consumer lending. I don't think it would even take all the fingers on one hand to count all the repossessions where we broke even. On top of that, a little known provision in the law requires the lender to return to the borrower any proceeds of a repossession sale that exceeds the balance on the loan. So even if you have paid your Newell down to a $25.00 balance when we repossess it and then we sell it for $500,000 we had to write you a check for the difference, less fees and that pesky $25.00 balance. On top of that, we had to document how we arrived at that sale figure, which is why almost all repossessions are sold at auction. That way no borrower could claim we gave a sweetheart deal to an insider.
We also always paid close attention to terms. The longer the loan term, the greater the scrutiny. Our internal scoring system reflected that and we would often grant a conditional approval based on a term shorter than the term requested. Anything that moves is basically lousy collateral. The collateral value of an automobile is heavily weighted towards the transportation and ego values. People need their cars to get around and they don't want their friends to know their car was repossessed, which is easy for those neighbors to conclude when one day a Lexus is in the driveway and the next day they are driving a Pinto. With luxury items, not so much. You don't need an RV to get to the liquor store and you can tell your neighbors you just got tired of RVing. Hence, RVs are greater risks, so the bank needs higher interest to offset that risk.
