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Recreational vehicles — RVs and campers — can be pricey. Some may cost hundreds of thousands of dollars or up to $1 million for the most luxurious or high-end models. Because of the high cost, it’s not unusual to need an RV loan in order to complete the purchase. While getting an RV loan is similar to getting an auto loan, lenders often offer longer loan terms. Loan qualification might also be more like getting a mortgage than buying a car.
What is an RV loan?
RV loans are a type of financing offered by online lenders, banks and credit unions for the purchase of a motor home, travel trailer or even a camper. While these loans are similar to a loan you would obtain to buy a car, the underwriting requirements are typically far more stringent, comparable to a mortgage. That’s because RV loans are often in greater amounts than a typical car loan. Some lenders provide as much as $100,000 for RV loans.
In order to obtain an RV loan, you may be required to provide tax returns, bank statements and other documentation of your personal financial history. And because RV loans typically involve borrowing a significant amount the repayment term is longer, often around 15 years, but in some cases may even stretch to 20 years.
These loans are also secured loans, backed by collateral, which is usually the RV.
1. Know how much RVs cost
On the low end, you can find a towable pop-up camper for as low as $5,000. High-end new RVs can cost more than $1 million. Before you start shopping, figure out what you want in an RV and what you can reasonably afford.
The age of the RV will also impact its price. A new RV will naturally cost more than a used model. But while it may come with sleek features, you will likely face steep depreciation, just like with a new car. On the other hand, a used RV will have similar features but cost significantly less. You can also find RVs that are decades old — they won’t have nearly the amount of features as a recent model, but they will cost significantly less.
|Class A||$100,000 to $1 million||$10,000 to $600,000+|
|Class B||$100,000 to $300,000||$15,000 to $300,000|
|Class C||$100,000 to $750,000+||$10,000 to $300,000+|
|Travel trailer||$15,000 to $200,000||$5,000 to $150,000+|
|Fifth wheel||$10,000 to $250,000+||$5,000 to $150,000+|
Takeaway: You can find financing for both new and used RVs, so knowing how much they cost will help you set a budget and stick to it.
2. Set a budget
First, consider how large you need the RV to be — a small camper is less expensive and easier to park, but it may not be the right choice if you have a large family.
“Beyond the sticker price, you’ll also want to ask yourself how often you plan on using your RV and where you plan on taking it,” says Joe Pendergast, vice president of consumer lending at Navy Federal Credit Union. “Consider mileage, safety, make, model and drivability. Don’t forget to include any recurring costs in your budget, such as maintenance, fuel, storage and insurance.”
Repayment terms are also important when developing your budget. On average, RV loan terms range from one to 20 years. Make sure you’re comfortable with the monthly payments before you sign up. A 10-year loan will have higher monthly payments, but you’ll pay the loan off faster. A 20-year loan is more affordable on a month-to-month basis but will ultimately cost more in interest.
Takeaway: When creating your RV budget, remember that there’s far more to the cost of the vehicle than the sticker price.
3. Save a down payment
Most RV companies require a down payment of at least 10 percent of the purchase price, and many prefer 20 percent down.
A larger down payment will help lower your monthly payments, and you may even qualify for a lower interest rate. Current average RV loan interest rates start around 4.49 percent and go as high as 11.89 percent but the rate you get depends on your credit and other factors.
“If you have enough in savings but don’t want to spend it all at once, you might consider putting a portion of the expense on a credit card,” says Todd Nelson, senior vice president of strategic partnerships at LightStream. “However, be cautious of high interest rates and hidden fees if you are unable to pay off the balance in a timely manner.”
Takeaway: Be prepared to put at least 10 percent to 20 percent down on your RV purchase.
4. Check your credit score
You’ll need a high credit score to qualify for an RV loan with low-interest rates. A credit score in the mid-700s or higher will likely secure the best rates.
“Before you plan to purchase, check your credit score and take any actions you can to improve it,” Sharapata says. He adds that you can always add a co-signer if their score will help you qualify for a lower rate.
It’s wise to check your credit reports with Experian, TransUnion and Equifax, as you typically won’t know in advance which report a lender will use when evaluating your loan application.
You can claim a free copy of all three credit reports once every 12 months from AnnualCreditReport.com. You may claim one free report per week from each credit agency until April 2022.
Takeaway: Your credit score is a key factor in determining how much you pay for an RV, so know your score in advance and do what you can to improve it.
5. Decide which type of loan you want
Consider whether you want a secured vehicle loan or an unsecured personal loan. Both have their benefits:
- Unsecured personal loans can offer fast funding, and you won’t risk having your RV repossessed if you fall behind on payments.
- Secured vehicle loans tend to have lower rates and may be easier to acquire if you have below-average credit.
You can use the Bankrate personal loan calculator to help you figure out what you can afford for a personal loan.
Takeaway: You don’t have to lock yourself into a traditional RV loan to finance your vehicle. It helps to research which type of loan is best for you.
6. Compare lenders
Before you choose a loan, it’s wise to compare offers from multiple lenders. You can apply with banks, credit unions and online financing companies, or even the company you bought the RV from.
Shopping around for the best deal on financing might save you thousands of dollars over the life of your loan.
With mortgage loans, for example, a Freddie Mac study found that getting five rate quotes helps borrowers save an average of $3,000 over the life of the loan. The savings potential on an RV loan could be just as significant.
The terms of the loan may also vary significantly from lender to lender.
“Consumers should know that some lenders restrict the maximum term of their RV loans,” says James Barron, former senior vice president of sales and business development at Bank of the West. “And, some lenders will have a minimum loan amount that they will finance. Lenders may also restrict the type of RV loan, based on use. For example, a lender may view a horse trailer with living quarters differently than an RV used as a full-time residence.”
Takeaway: Doing your research and shopping around for the best loan terms can save you thousands over the life of an RV loan.
Just as you would negotiate when buying a car, be prepared to haggle with your RV dealer. RV dealerships will expect it, and you could save yourself a nice chunk of money. Research prices on sites like RV.com, RVT.com and RVTrader.com to get a handle on the current market.
If you’re considering dealership financing, don’t be afraid to ask if a better deal is available on the loan side of the transaction as well.
Takeaway: Don’t be shy about asking for the price you want, and do your research ahead of time so you know what other dealers are charging.
While it is important to find an RV that’s right for you, it is equally important to find the right RV loan. Understand the cost of new and used RVs, know your budget and find reputable lenders — all before submitting an application. Be prepared to negotiate and get quotes to make the most of your RV purchase.