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Are you wondering how to take out an RV loan? Read on to find out about the different RV financing options available to you.
RVs are a unique hybrid of a home and a vehicle. Their sales have grown drastically over the last few years as frequent travelers have invested in their home on wheels, ranging from luxurious rigs to retro campers. Buying an RV is an important financial decision since it is closer to buying a home than a car. While some people can afford to buy an RV upfront, many turn to RV loans to finance their motorhome purchases.
The prices of RVs can vary according to each make and model, its features, and its facilities. However, despite the variety of prices, rest assured that RV loans work much as car loans do. If you are looking to buy an RV and need a loan, fear not. Here is all you need to know about RV loans and financing.
What is an RV loan?
An RV loan will help you finance the purchase of an RV that you cannot afford to buy outright. Because RVs come in a range of sizes and conditions – new, used, camping trailer, motorhome, fully equipped, you name it – RV loans are conditional on the RV as well. And because RVs are larger and slightly more complicated purchases than cars, their loans too are typically larger. Once a lender agrees to loan you the money to buy an RV, you will pay back that money over an agreed time, with interest. The time and amount will both depend on the RV you buy. You can find RV loans of $25,000 that have to be repaid in a few years, and you can also find loans amounting to $300,000 that have to be repaid in 20 years.
How does RV financing work?
You can get your RV loan from a bank, credit union, or a lender associated with an RV dealership. As with any other loan, borrowers will first need to submit an RV loan application that the lenders will review and evaluate. Several factors will be looked at to decide your eligibility and the loan’s interest rate, such as your credit, the size of the loan, and the down payment. Apart from your credit, your income, net worth, employment, housing, and cash flow may also be reviewed for the lender to better assess your financial health. For larger loans, the borrowing requirements can be stricter, so the amount of documentation required will also depend on the lender and the loan size.
If you are eligible for the loan, the next step will be to decide on the specifics of it. These can include the amount of time you have to pay back the loan - known as the loan term, the annual percentage rate, and how much the monthly installments will be. Because this is a heavy investment, make sure to do your market recce before settling on a lender so that you know you have got yourself the best deal. Different lenders offer different interest rates and fees, so be sure to compare multiple options.
The last thing you should know is that RV loans are secured loans, which means that the RV itself is signed as the collateral. So as long as you are paying back the loan, your lender will have a financial stake in your RV. If you are unable to pay back the loan, the lender is entitled to take possession of your RV.
What are Typical RV Loan Interest Rates?
RV loan interest rates depend on how good your credit score is. A healthy score could mean interest rates as low as 3%, while poorer credit will indicate higher interest rates. Listed below are a few known lenders and their interest rates:
Rate: starts at 5.75%
Terms: 12 to 180 months
Loan minimum: $5,000
Rate: starts at 5.50%
Terms: 84 to 180 months
Loan minimum: Not specified
Rate: 4.99%–6.62%
Terms: Up to 240 months
Loan minimum: $58,301
Rate: Starting at 8.09%
Terms: Up to 180 months
Loan minimum: Not specified
What are the Best RV Loans?
The best RV loan lenders are those that offer competitive rates, help those without perfect credit too, and finance both new and used RVs. We have evaluated the best RV loans of this year, take a look below!
GreatRVLoan: Best Overall
​ | Standard RV Loan | ​Bad Credit RV Loan |
Loan Amount | $10,000 to $2,000,000 | $10,000 to $75,000 |
Starting Interest Rate (APR) | 5.24% to 6.99% | 6.95% to 17.95% |
Maximum Loan Term | 240 months | 180 months |
Minimum Credit Score | Expect to need good credit | 550 |
Maximum RV Age | 20 years old | 15 years old |
Alliant Credit Union: Best Overall
Loan Amount | Up to $400,000 |
Starting Interest Rate (APR) | 5.09% to 5.24% |
Maximum Loan Term | 240 months |
Minimum Credit Score | Expect good credit to be required |
Maximum RV Age | 15 years old |
Permissible RV Use | Recreational or full-timer (primary residence) |
Approval Speed | Usually the same day |
Bank of the West: For Good Credit
Loan Amount | $10,000 to $2,000,000 |
Starting Interest Rate (APR) | 4.74% to 10.04% |
Maximum Loan Term | 240 months |
Minimum Credit Score | Good credit (at least 680 preferred) |
Maximum RV Age | No older than a 2011 model |
Permissible RV Use | Recreational or full-timer (primary residence) |
My Financing USA: For Bad Credit
​ | Good Credit | Bad Credit |
Loan Amount | $10,000+ | $10,000+ |
Starting Interest Rate (APR) | 3.99% | 7.90% to 17.95% |
Maximum Loan Term | 240 months | 180 months |
Minimum Credit Score | 680 | 550 |
Maximum RV Age | No older than a 2010 model (older case-by-case) | No older than a 2010 model (older case-by-case) |
Permissible RV Use | Recreational use only | Recreational use only |
Approval Speed | 24 hours | 24 hours |
Southeast Financial: Used RVs
Loan Amount | $12,000+ |
Starting Interest Rate (APR) | 2% to 4.75% for new and 2.25% to 5% for used |
Maximum RV Age | No restrictions - any year |
RV Financing in 5 Steps
If you are ready to buy your own motorhome, follow these steps for an easy start to your journey.
Set a budget
No RV has the same price tag as the next one. Their costs vary significantly, depending on the type, the class, the age, and the size of the vehicle. This is not counting any additional features or interior design yet - two factors sure to inflate an RV’s price tag. That is why your first and most crucial task has to be deliberation: know what you need in an RV, how much you will be traveling, what seasons, and alone or with family. Once you know your requirements better, you should set a budget for the vehicle. RV lifestyle can be expensive, and you have to make sure you can afford it. Your budget will need to cover the purchase, the payments, the maintenance, fuel costs, storage, insurance, and the daily expenditures that come with living on the road.
Check all the Loan Requirements
Your credit can make or break your RV financing. An important part of your loan term is the APR. This can dictate the lenders that will approve your application. Traditional loan lenders are stricter than others and may reject applications with lower credit. On the other hand, recent years have seen lenders like My Financing USA that specialize in bad credit applications. So make sure to be aware of your credit score and know beforehand whether it meets the loan requirements of the lender you are approaching.
Research Different Types of RV Loans
While most automobile loans are secured, there is another option on the table as well. You can avoid signing your RV up as collateral by getting an unsecured loan. This is only possible with smaller RVs, which will allow the owners to take the loan as a personal loan. No collaterals are required in personal loans, only good credit history. However, an important thing to remember is that secured loans with collateral are less risky to the lenders, and will therefore have a lower interest rate than unsecured loans.
Compare Lenders
A good way to go about shopping for a lender is to go to an RV dealership for your RV financing. The dealership will guide you by giving you information on their partner lenders and the loan options they provide. Some dealerships may offer in-house services as well, and while they may be lenient with credit, they may have high costs. Your last option is the traditional one - a private lender. Whichever one you choose, remember to compare their rates and requirements.
Negotiate the Rate
Your last and most important task is to make sure you are getting the best deal for yourself. Dealerships and lenders may mark up RV prices by as much as 50% and expect customers to haggle too, so you may be able to get the price 20% to 30% below the price tag. Purchasing the RV at a reduced price will assist you in cutting back the overall costs of financing, and you may be able to invest it in setting up your RV.
Conclusion:
Don’t let any financial worries hinder your RV journey from starting! With the right research, you could find a loan that suits you in no time. Use this guide to navigate your RV financing journey and bring that RV home!