Why do rv dealers want you to finance

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Last updated: April 8, 2026

Quick Answer: RV dealers want you to finance because they earn significant profits from financing arrangements, typically receiving commissions of 1-3% of the loan amount from lenders. For example, on a $50,000 RV loan with a 2% dealer reserve, the dealer earns $1,000 in addition to the vehicle sale profit. This practice became widespread in the 1980s as manufacturers like Winnebago and dealers expanded financing partnerships to boost sales during economic downturns. Financing also helps dealers move inventory faster and secure repeat business through service contracts and extended warranties tied to loans.

Key Facts

RV dealers typically earn 1-3% commission (dealer reserve) on financed loans from lenders
The average RV loan amount in 2023 was $45,000 according to industry reports
RV financing became widespread in the 1980s during economic recessions
Approximately 85% of new RV purchases involve financing arrangements
Dealers can earn additional $500-$2,000 per sale through financing commissions

Overview

RV dealers promote financing because it represents a major profit center beyond vehicle sales. The recreational vehicle industry has relied heavily on financing since the 1980s, when manufacturers like Winnebago and Fleetwood partnered with financial institutions to make RVs more accessible during economic downturns. Today, approximately 85% of new RV purchases involve financing, compared to about 55% for passenger vehicles. The average RV loan amount reached $45,000 in 2023, with terms typically spanning 10-20 years. This financing dependency developed as RV prices increased dramatically—from an average of $15,000 in 1990 to over $40,000 today—making cash purchases less common. Major lenders like Bank of the West (now BMO) and credit unions established specialized RV lending divisions during the 1990s, creating the infrastructure that allows dealers to earn commissions on arranged loans.

How It Works

When customers finance through a dealer, the dealer acts as a broker between the buyer and lender. The process begins with the dealer submitting the customer's application to multiple lenders, who compete by offering different interest rates. The dealer then marks up the rate—typically adding 1-3 percentage points—and presents this higher rate to the customer. This markup, called "dealer reserve" or "participation fee," becomes the dealer's commission when the loan closes. For instance, if a lender approves a 6% rate and the dealer presents 8%, the 2% difference (approximately $1,000 on a $50,000 loan) goes to the dealer. Additionally, dealers bundle financing with profitable add-ons like extended warranties (costing $1,500-$3,000 with 50% dealer margins) and service contracts. Some dealers receive volume bonuses from lenders for directing a certain number of loans monthly, creating further incentive to push financing over cash sales.

Why It Matters

This financing model significantly impacts both consumers and the RV industry. For buyers, dealer-arranged financing often costs thousands more over the loan term compared to securing independent financing—a $50,000 loan at 8% versus 6% adds approximately $5,000 in interest over 15 years. However, it provides convenience and immediate approval. For the industry, financing drives sales volume, allowing dealers to maintain inventory turnover and manufacturers to produce higher-priced models. The practice also creates customer lock-in through loan terms that average 12 years, ensuring long-term service revenue. During the 2008 financial crisis, RV sales dropped 30% as financing tightened, demonstrating how crucial accessible credit is to the industry. Consumer advocates recommend comparing dealer rates with credit union offers, which are typically 1-2% lower, to avoid overpaying.