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 $5,000 to more than $500,000, so most RV buyers rely on financing.
The RV itself will usually serve as collateral for the loan — if you default on the balance, it could be seized by the lender to satisfy the delinquent payments — 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 seven 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 with your term length, fees and approval odds. Similar to a home loan, it's likely that the lender will 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 to choose the best RV loan lender
For most, an RV is a hefty expense that requires financing so you want the lender you're working with to be the best for your current and future needs. When sifting through lenders to find your best fit, consider the following factors to ensure you're getting the best deal possible.
- Loan approval requirements: Every lender comes with a unique set of approval requirements. Those that specialize in RV financing will likely require a high credit score, a low debt-to-income (DTI) ratio, a stable, steady income and a clean credit history.
- Available interest rates: To avoid signing up for a loan with a sky-high interest rate, compare quotes (with no impact to your credit score) from lenders through prequalification. The rates advertised on the lender website are the minimum and maximum that anyone could qualify for, so it's important to know exactly what you're signing up for before you apply.
- Loan amounts: Before deciding on a lender, calculate exactly how much you need to borrow, including all costs like sales tax, insurance and possible maintenance and repair costs. If at all possible, only borrow exactly as much as you need so you can avoid interest accruing on money you're not using.
- Repayment options: The longer your repayment term is, the lower your monthly cost will be. On the other hand, the shorter your term, the higher your monthly payment will be but you'll accrue less interest. Consider the repayment options offered by each lender to determine what will best align with your financial goals.
- Customer experience: An important part of the lending process is your experience as a customer. Before signing on the dotted line, think carefully about what you prefer (in-person or a completely online experience) and make sure there are brick-and-mortar locations near you if that's something you value.
- Perks and special features: When evaluating lenders, look at the perks and benefits they offer. Some offer hardship repayment options, while others offer rate discounts for signing up for autopay. If a large discount or significant perks are offered, evaluate the price of the loan and compare it with other lenders to make sure the benefits don't come at the expense of a good price.
What can you use an RV loan for?
RV loans can be used to purchase a motorhome, travel trailer, RV and in some cases, transport trailers, like animal trailers. Even though they function like an auto loan, lenders are more strict on what the funds can be used for since the loan amount is often much higher
Every lender will differ on its requirements; however, it's a general rule of thumb that most RV loans can only be used to fund the vehicle or related expenses, like repairs and maintenance costs.
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