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- Lenders look carefully at your credit score, income and debt-to-income ratio (DTI) when approving or denying the best RV loans.
- Be aware that your loan may be treated differently when your RV is for leisure versus being used as a primary residence.
- Even though large RV dealers often have financing available, you'll have a better idea of a reasonable rate and terms if you prequalify for a loan.
- Getting prequalified, comparing multiple loan quotes and checking reviews online can help you to narrow down which is the best RV loan lender for you.
Comparatively, choosing which RV will accompany you on road trip adventures is much more exciting than the less-than-glamorous RV lender shopping process. The latter could take time, effort and may require you to shop around a bit to find the best fit. But securing the best RV loan for your needs ensures you qualify for competitive rates and terms and guarantees full ownership of the vehicle down the line.
What to consider before choosing an RV lender
Just as you would when securing financing for products for home updates or buying a vehicle, there are specific factors to look out for in order to get the best deal on an RV loan. Consider the following when comparing RV loans from different lenders.
Loan approval requirements
Each lender that offers RV loans carries its own qualifications for loan approval. Aspects like your credit score and history, income and debt-to-income ratio are examples of variables that lenders use to determine your approval. These factors also influence which interest rate APR you qualify to receive.
Understanding potential requirements can help you get the best terms possible. If you have poor credit it is best to only apply to lenders catering to such, for instance.
Some lenders also do not allow borrowers to use their RV as their main residence unless you have a particularly high credit score, due to the risk involved for them. Consider this if you intend to live a nomadic lifestyle without a home address.
Available interest rates
The rates that lenders disclose are not always a guarantee; be aware if the rate being advertised is a promotional rate that changes sometime during the loan. To avoid signing off on interest rates that are too steep for your budget, compare actual quotes by prequalifying and choosing a lender before you choose an RV.
On top of this, calculate how any additional lender fees can increase the overall cost of your RV loan. These fees can range from origination fees to, less commonly, application fees.
Before setting out to compare the best RV lenders, it is important to know how much money you will need to purchase your RV. Recreational vehicles can range widely in cost, anywhere from $10,000 to $1 million. This is especially important as some lenders carry restrictions on the amount that you can borrow. Set your budget with all costs included, such as sales tax.
The repayment terms that you sign off on impact the amount of time you will be paying off your loan and your monthly payment. Longer repayment terms will mean a lower monthly cost, whereas a shorter repayment term will likely be more expensive each month. But a shorter term will lower the amount of interest you pay and allow you to own the RV free and clear sooner.
Depending on your comfort with technology, you might prefer to work with a brick-and-mortar lender where you can benefit from in-person support. Whereas if you like to handle your finances online, focus on online loan options. Customer reviews on third-party websites may also be useful, but keep in mind that people are more likely to leave negative reviews than positive.
Perks and special features
When evaluating two similar lenders look out for unique features that may be offered. A few questions to ponder include:
- Does the lender impose usage restrictions?
- Are there discounts, special programs or other forms of assistance available to borrowers?
- Do the benefits outweigh the borrowing costs or vice-versa?
Ultimately, you know how much loan you can afford and what financing options work for you. Be sure to compare loan quotes and run the numbers to confirm loan perks aren’t being offered at the expense of a good price.
How to secure the best RV loan
There is no perfect RV loan for borrowers but rather the right one for you and your needs. Once you consider the above factors it is time to set out on signing off on the best option for your financial background. Take the following steps to get your RV loan.
- Budget. Use your budget as your guiding light when securing your loan. Keep in mind how fees might impact your upfront and long-term costs.
- Understand your credit score. Take the time to check your credit score. This way can search for and apply to lenders that best match your credit background.
- Apply for prequalification. By prequalifying with a lender you will have a firm grasp on expected rates and terms — all without damaging your credit.
- Compare loan options. Consider borrowing from banks, credit unions and online lenders before settling on one. By exploring each you are more likely to find the right RV loan for you.
- Finalize loan application. After setting your sights on the right lender you will submit your application. To do this you’ll likely need to present personal identification and tax documents.
Choosing the right lender is just one step in the exciting process of getting out on the open road. To ensure you can enjoy your RV for years to come, pay close attention to approval requirements, interest rates, loan amounts, terms repayment options, customer service and special features.
It’s equally important to shop around, get prequalified and compare loan quotes to have a solid idea of financing options available to you. This way, you can select a lender with full understanding of your obligations and total costs.