While traveling the world in a recreational vehicle (RV) can be fun, it often comes at a substantial cost. The price of an RV ranges from $10,000 to $1 million, depending on the type of RV you want. If you can’t pay for one in cash, taking out an RV loan is a possible solution.

But before you take out an RV loan, it’s best to familiarize yourself with the pros and cons so you can assess whether they’re a good fit for you.

What is an RV loan?

An RV loan is a type of installment loan that travelers can use to finance the purchase of an RV, camper or travel trailer. You can find these loans at various places, such as banks, credit unions and online lenders.

While this is relatively similar to an auto loan, the amount financed and loan terms are sometimes more reminiscent of the mortgage process. This is in part due the fact that RVs can cost about as much as a small house.

Secure RV loans vs. unsecured loan

A secured RV loan requires you to use the RV as collateral, which means the lender can repossess your RV if you don’t repay the loan as agreed. Since the lender is taking on less risk in this scenario, you generally receive a lower interest rate than an unsecured RV loan.

Pros

  • Possible lower interest rate
  • Higher loan amounts than unsecured RV loans

Cons

  • Lender can take your RV if you fail to repay loan
  • Some lenders may require a downpayment

Unsecured RV loans, on the other hand, don’t require you to use the RV as collateral. If you default on this type of RV loan, a lender can’t repossess your RV without getting a court’s permission.

Pros

  • Lender can’t take your boat if you fail to repay the loan unless it has a court’s permission
  • Application process is usually quicker than applying for a secured loan

Cons

  • Typically higher rates than secured RV loans
  • May be difficult to qualify with poor credit

How RV loans work

RV loans are most often secured, meaning the cost of the loan is backed by collateral, in this case, usually the RV itself. Although the specifics for each borrower can vary, it is handled like any other type of installment loan. The borrower will secure financing from a lender and then pay that money back over an agreed-upon time frame, usually between two and 10 years.

Rv loans can carry specific restrictions regarding the use of the recreational vehicle. Some lenders, for example, will not allow borrowers to finance a vehicle if it will be their main residence. When exploring differing lender options consider the type of RV you wish to purchase along with eligibility requirements.

RV dealership financing

Dealership financing allows buyers to handle payment directly through the RV dealership. After setting your sights on the RV of your choice, the dealer will likely talk you through various in-house or partner lenders.

Best for: Those looking for a simple process who would prefer to handle all finances in one fell swoop. Also great for a confident negotiator as it can be more flexible than traditional loan options.

Online lenders

Securing your RV via an online lender tends to come with the ability to apply for loan preapproval. This allows you to walk into a dealership with an offer in hand which can accelerate the purchase process. When comparing online lenders, be sure to consider any special features offered, such as rate discounts or the ability to skip a payment.

Best for: Great for the nervous borrower who is unsure what rates and terms they will receive based on a potentially low credit score.

Bank or credit union loans

Loans from banks or credit unions offer the longevity and convenience of an established financial institution. Similar to online lenders, preapproval may be available. This is especially a good option for those with previous bank or credit union relationships as lower interest rates will likely be offered.

Best for: Those who prefer a brick-and-mortar experience or have a longstanding relationship with a financial institution.

Personal loans

Singing off on a personal loan carries similar advantages to other financing options but likely the RV won’t be used for collateral. Keep in mind that these loans do tend to carry higher interest rates.

Best for: A buyer who wishes to finance a less expensive RV camper or towable.

Current interest rates for RV loans

As of May 2023, RV loan interest rates range from 4.94 percent to 11.89 percent for borrowers with stellar credit. If you apply for an RV loan with bad credit, you’ll likely receive a much higher interest rate. If that’s your situation, adding a cosigner with good credit and a stable income may help you qualify for a lower rate. You could also take steps to boost your credit score before applying to ensure you get the best rates.

How to get an RV loan

With a high price tag on the line, it is important to approach the shopping process for your RV loan with extra care. Pay close attention to available rates, terms and approval requirements.

1. Set a budget

RVs can cost up to $1 million dollars depending on the type — Class A, B, C, travel trailer or fifth wheel — so setting a strict budget is essential in sticking to your payments.

Here it is also smart to consider RV age. Weigh an older used model against a newer one with more advanced features but faster depreciation. Finally, remember that the monthly cost goes beyond just the sticker price.

2. Save for a down payment

Ahead of exploring loan options, it is smart to save for a down payment as most lenders require a down payment of 10 percent and prefer up to 20 percent. Not only will a down payment better ensure acceptance but it will greatly lower your monthly payment and could lead to a lower interest rate.

3. Check credit

Your credit score serves as the main determinant for competitive rates when it comes to all loans, RV included. A score that falls in the mid-700s or higher will secure you the best rates. Ahead of setting out, explore your credit standing so you can apply with an understanding of the expected cost. If your credit is lacking, consider adding a co-signer to help qualify for a better rate.

4. Compare lenders

After getting a firm stance on the type of loan you will best qualify for and what you can reasonably afford you can compare lenders. Apply for prequalification with at least three lenders before deciding on one.

The bottom line

With long road trips in your future, it can be easy to get excited and sign off on the first RV loan you come across. But this is a large financial commitment and you must approach it as such. Take the time to compare a variety of loan options so your home on the open road remains yours for years to come.

Frequently asked questions

  • RV loan terms are longer than auto loans due to the higher price. Most RV terms range from two to 10 years, but they can be anywhere from one and 20 years.
  • They are not the same, but there are similarities if you choose to live in your RV.
  • A score close to or above the mid-700s will offer you the best rates and terms. But there is no outright minimum needed for getting an RV loan, as requirements vary from lender to lender.