What is an RV loan?
An RV loan is a type of long-term financing used to purchase a motorhome, travel trailer or camper. The cost of an RV can range from as little as $10,000 to more than $1 million, so most RV buyers rely on financing.
Many lenders offer RV loans for both new and used recreational vehicles. You may be able to find RV financing through an online lender, a bank, a credit union or the RV dealership where you purchase the vehicle. The RV itself will usually serve as collateral for the loan, just like when you purchase a car.
While an RV loan is similar to an auto loan, loan terms are generally longer and the transaction is oftentimes more complicated, like a mortgage. Most RV loans feature repayment terms that range between one and 15 years
. However, some lenders and financial institutions may offer RV loans that stretch as long as 20 years.
Depending on the amount you need to borrow, your lender may be more stringent. Similar to a home loan, your lender may want to see other documentation, such as tax returns, financial statements and detailed credit history.
A good credit score for a car loan is around 660 or higher, but for an RV loan, credit scores of 700 and above will help you get a favorable interest rate. The lender may also require an inspection, which can range from $150 to $1,200, depending on the RV.
How does an RV loan work?
While an RV loan is typically specific to the purchase or refinance of a recreational vehicle, it works like any other consumer loan. A financial institution or lender provides the funds for the purchase, and you pay back the money with interest over a specified time frame. RV loans are secured loans
, meaning they’re backed by collateral — usually the RV itself.
Once you’ve decided on a lender, you’ll complete an application and, if approved, sign an agreement outlining the terms of the loan.
The type of RV and trailer style can determine which lender is best for you. Not all lenders will finance every type of RV. You’ll also need to let your lender know if you plan to use your RV as a primary residence.
What are typical RV loan terms?
Because RVs are more expensive than regular cars and trucks, lenders typically offer longer terms for RV loans than auto loans.
Some lenders offer terms as long as 240 months, or 20 years. However, borrowers who can afford higher monthly payments can find shorter terms.
For example, LightStream
offers terms ranging from 24 to 84 months, while USAA
offers terms as short as 12 months. If you can afford the payments under these shorter terms, you’ll pay less in interest over the life of the loan.