Depending on the type of RV you want, prices can range anywhere from $5,000 to over $1 million. As a result, most people finance these large purchases. One way you can do this is by taking out an RV loan.

An RV loan is a financing option that can help you cover some or all the costs of an RV’s purchase price. Gaining a better understanding of how these loans work can help you decide whether they’re a good fit for you.

Current RV loan terms and interest rates

On average, RV loan interest rates start around seven percent and go up to about 36 percent, with terms ranging from 12 to 84 months. Loans for larger RVs may have longer terms. Your rate and terms will depend on a few factors, including your credit profile and the type of loan you choose.

How RV loans work

RV loans work similarly to other types of personal loans. If you qualify, a lender will give you a lump sum to pay for your RV. You then repay the loan in fixed monthly installments, including interest.

An RV loan can be unsecured or secured. Some personal loans used to purchase RVs can be unsecured, meaning a lender doesn’t require you to pledge the recreational vehicle as collateral. Since lenders can’t take an RV to satisfy the debt if you fail to repay it without a court’s permission, they generally have higher interest rates than secured loans.

On the other hand, secured RV loans operate similarly to auto loans, requiring you to pledge the RV as collateral. If you fail to repay the loan, a lender can seize your RV. Also, unlike unsecured RV loans, some lenders may require a down payment of at least 10 percent or more of the RV’s price. An RV inspection may also be required.

How RV loan interest rate and terms work

RV loan interest rates vary by lender. The interest rate you’ll receive if you qualify depends on the repayment terms, age of the RV, loan amount, credit score and other factors.

Average RV rates for borrowers with excellent credit scores can be under 8 percent, depending on the lender. Borrowers with less-than-perfect credit scores are more likely to pay higher rates — and, by extension, significantly more interest.

RV loan terms vary but generally range from two to seven years, though some lenders might offer terms as long as 20 years. If you need a small loan for an RV, you might be able to use a personal loan — this option typically has much shorter repayment terms.

How to decide if an RV loan is right for you

Whether you should finance an RV with an RV loan depends on your unique financial situation. Consider how it’ll affect your finances to assess whether it’s right for you.

If you can comfortably afford to repay an RV loan, using one might be a good idea. But if an RV loan would stretch your budget too thin, it makes more sense to explore alternative options.

Where to get an RV loan

Several types of lenders provide RV loans. The best place for you to get one from will depend on where you have existing accounts, how much you want to borrow and what you qualify for.

  • Banks. Banks can offer RV loans, and if you have an existing relationship with one, you might qualify for an interest rate discount.
  • Credit unions. Many credit unions offer RV loans, and rates are often lower than traditional banks since they are member-owned not-for-profit institutions.
  • Online lenders. Online lenders typically offer RV loans with fast funding — some lenders can send your funds as soon as the same or next business day.
  • RV dealerships. When shopping with an RV dealership, they may offer you in-house financing or financing through a partner lender.

How to get an RV loan

The RV loan application process varies by lender, but here are the basic steps to get an RV loan.

  1. Figure out how much you need to borrow. Shop for RVs with desired features and review your finances to see if you can afford the purchase. You can use a loan calculator to estimate your monthly payments and total borrowing costs. Remember to factor in ongoing RV-related expenses like gas and maintenance when determining your budget.
  2. Research and compare lenders. Next, compare rates and terms from as many lenders as possible to find the best deal. Some lenders will allow you to prequalify online to see estimated rates. But note that prequalifying doesn’t guarantee loan approval.
  3. Submit a formal loan application. After you find the best lender for you, submit a loan application. A lender may ask you to share information, such as your Social Security number, birth date, W-2s, tax returns and recent pay stubs.
  4. Review and sign loan agreement. If approved, a lender will send you a loan agreement. Review this agreement carefully to see if you agree with the terms before signing.

Prequalify before you apply

Although an RV loan can help you get your dream RV, it’s important to consider how the cost of the loan will affect your budget before taking one out. If you believe an RV loan is right for you, prequalify with at least three lenders to compare rates and terms you might receive if approved. Doing so can help you find the best RV loan option for you.