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The term is the second biggest factor when it comes to how much an RV loan will cost. A long term may be tempting to keep monthly payments as low as possible, but it may result in paying thousands — or even tens of thousands — more over the course of your loan.
Typical RV loan terms
While it will vary by lender, the typical RV loan term is 24 to 84 months. Some lenders may still set a limit of 60 months, but most are now offering longer terms to help minimize monthly payments.
Larger, more expensive RVs may even have terms that stretch over 10 years. It all depends on the overall cost of the vehicle, your finances and the lender you work with. Since larger RVs may be in the same price range as a small house, longer terms that act more like mortgages can make buying an RV significantly more affordable.
How the term affects an RV loan
The longer your loan term, the more interest you will pay to your lender. Even low interest rates can result in paying thousands of dollars if you choose a long loan term.
For example, a 7.99 percent interest rate on a $50,000 RV loan will cost over $16,000 more for a 10-year term versus a three-year term.
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Loans with higher interest rates will result in a much larger difference. A $50,000 loan with a 17.99 percent interest rate will cost you around 8,072 in interest over the course of three years. If you bump your term up to seven years, you’ll wind up paying over $38,000.
How to prequalify for an RV loan
Prequalifying is a quick way to preview available rates and terms without impacting your credit score. To get started, you will need to fill out a quick application with a few lenders to compare offers that you may qualify with.
- Check your credit. Knowing your credit score will help you choose the right lenders to apply with. With good to excellent credit, you may be able to prequalify for low rates and have access to flexible term options.
- Compare lenders. To secure a reasonable monthly payment at a low interest rate, compare RV loans. This allows you to estimate your monthly payment and see the loan terms you are eligible for.
- Shop for an RV. Since you likely already know what type of RV you want to invest in, prequalifying for a loan gives you an extra edge during negotiations when you visit a dealership.
Only borrow for as long as you need to
You should always choose the shortest term that has a monthly payment you can reasonably afford. With an RV loan, this is even more important.
RVs are depreciating assets, which means they lose value over time — just like cars and trucks. If your loan term is too long, you may end up becoming underwater on your loan. And owing more than your RV is worth may put you in a difficult financial position.
Going with the shortest term will also help you avoid overpaying. It may mean adjusting your budget or opting for a less expensive model, but it will be worth it to keep your budget in order.