Can you prequalify for an RV loan?

Key takeaways

• You can prequalify for an RV loan. Many lenders allow you to prequalify for an RV loan to get estimated rates and terms.

• Prequalifying allows you to compare several lender offers without impacting your credit.

• Though prequalifying for an RV loan can be beneficial, it doesn't guarantee approval. Formal approval is granted once the lender does a hard credit check and is able to verify that the information provided is accurate and that you meet the eligibility requirements.

It is possible — and encouraged — to prequalify for an RV loan. Just like a regular auto loan, prequalifying gives you a chance to compare lenders without hurting your credit. It will guide you toward the right purchase and help you determine what you can afford to spend on your RV without tilting your finances.

How to prequalify for an RV loan

The prequalification process for an RV loan is the same as with any other loan.

Check your credit

You should always have an idea of what your credit score is — but knowing it is crucial when you want to prequalify for an RV loan. Every lender has its own minimum criteria when it comes to what credit it will accept.

If you know your credit score before you start filling out applications, you can save yourself some time — and headaches. That’s because you’ll be able to steer clear of lenders that won’t offer you the best rates or that don’t even offer loans to borrowers within your credit profile.

You can check your credit score in a variety of ways. Some banks and credit card companies offer credit monitoring services at no additional cost to its clients, so that’s an option to consider.

Aside from that, you can get a free copy every 12 months of your credit reports from all three major credit bureaus — Experian, TransUnion and Equifax — by visiting AnnualCreditReport.com. Though these copies won’t show your actual score, they will give you an idea of where you stand with creditors.

Gather your documents

When applying for a loan, make sure you have the following at hand:

• Proof of income, like W-2s or tax returns.

• Proof of identity, like driver’s license or Social Security number.

• Proof of residence, like bills or rental agreements.

These categories will be on almost every application. The exact documents you submit will depend on what the lender asks for, as well as the specifics of your finances. For instance, if you’re self-employed you may be asked to provide 1099 forms, in addition to bank statements or tax returns to corroborate your income. If you’re a full-time employee at a company, copies of your pay stubs and W-2s will probably suffice.

Compare lenders

RV loans are available from banks, credit unions and online lenders — and you can also apply directly through the dealership in many cases as well. Since they each have their own requirements, doing a thorough comparison of each will guide you toward a lender that will fit your needs.

When you’re ready to submit an application, don’t limit yourself. Prequalification doesn’t impact your credit. You can compare rates, fees and terms to choose a loan with affordable monthly payments.

Calculate how much you need

RVs run the gamut of prices, from cheap used models to top-of-the-line new models that can cost well into the hundreds of thousands. You likely already know what type of RV you want and how much it will cost you.

This is crucial as each lender has its own minimum and maximum loan amounts. Knowing this information can help you narrow down your list to lenders that offer the amount you need.

Bankrate tip

Use a loan calculator to estimate your payments. Loan calculators can also help you determine how much RV you can actually afford.

What is the difference between prequalified and preapproved?

Many times, you’ll see the words “prequalified” and “preapproved” used interchangeably. However, there is one key difference. When you’re prequalified for an RV loan, the lender has only performed a soft credit check to see what you may be eligible for — approval isn’t 100 percent guaranteed at this point.

When you’re preapproved for an RV loan, that means the lender has most likely done a hard credit check and has verified some of the information you’ve provided. That means you’re approved, as long as some of the conditions stipulated by the lender are met.

RV loan requirements

These are the common requirements to qualify for an RV loan:

• A good credit score. Although there are lenders that work with bad credit, this usually comes tied to high interest rates and fees. Most lenders prefer good credit to approve you for a loan and excellent credit for the lowest rates.

• Down payment. For more expensive RVs, you will need a down payment. This may be true for more inexpensive models as well if you plan on borrowing a loan secured by the RV itself. The down payment amount for an RV is typically between 10 to 20 percent of the purchase price.

• Sufficient income. Your income will need to be high enough to afford a monthly payment. Since RVs are pricey, you need to have the flexibility to cover a few hundred to a few thousand dollars a month.

• Other debts. Likewise, you need limited other debts. A debt-to-income ratio of 35 percent and under is key to qualifying for the most competitive RV loans.

Bankrate tip

Prequalify with at least three lenders before applying. To get the most out of prequalification, you should find multiple RV loans to apply for. It won’t impact your credit — and with three or more offers to choose from, you will be able to pick the right option for your budget.

The bottom line

Knowing your credit score and preparing your documents will help you figure out the lenders you should set your sights on. Overall, treat an RV loan like any other option. Do your research, and don’t start shopping until you know your budget.