What is an RV loan?

Rebecca Betterton

Key takeaways

  • An RV loan can be used to finance anything from a trailer to a luxury class-A motorhome.

  • Secured RV loans provide lower rates and more flexible eligibility requirements but use your vehicle as collateral.

  • Unsecured RV loans require a better credit profile but don’t come with the same risk if you default.

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 an RV loan is

An RV loan is a type of installment loan used 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 some are 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 to the fact that luxury RVs can cost about as much as a small house.

Secured RV loans vs. unsecured RV loans

Both loan types offer different benefits and drawbacks when looking into purchasing an RV. The amount you need, your credit profile and how you’ll use the RV will all affect which is best.

Pros and cons of secured RV loans

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. Since the lender is taking on less risk in this scenario, you generally receive a lower interest rate than an unsecured RV loan.

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Green circle with a checkmark inside

Pros

  • Possible lower interest rate.

  • Higher loan amounts than unsecured RV loans.

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Red circle with an X inside

Cons

  • Lender can take your RV if you fail to repay the loan.

  • Some lenders may require a down payment.

Pros and cons of unsecured RV loans

Unsecured RV loans, on the other hand, don’t require you to use the RV as collateral. Because of this you may need a stronger credit profile to qualify.

Green circle with a checkmark inside
Green circle with a checkmark inside

Pros

  • Lender can’t immediately repossess your RV if you default.

  • Application process is usually quicker than applying for a secured loan.

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Red circle with an X inside

Cons

  • Typically higher rates than secured RV loans.

  • May be difficult to qualify with bad credit.

How RV loans work

Larger RV loans are most often secured, meaning the cost of the loan is backed by collateral. In this case, the collateral is 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 20 years.

RV loans might 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 financing and buying in one place.

Online lenders

Securing your RV via an online lender usually comes with the option to apply for loan preapproval. This allows you to walk into a dealership with cash in hand, which can speed up the purchase process. When comparing online lenders, consider any special features offered, such as rate discounts or the ability to skip a payment.

  • Best for: Those who want to compare options before they arrive at the dealership.

Bank or credit union loans

Loans from banks or credit unions offer the benefit of working with 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 you may qualify for lower interest rates.

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

Current interest rates for RV loans

As of December 2023, RV loan interest rates range from around 7 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 co-signer 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 potentially 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.

Also, consider the RV’s age. Weigh an older used model against a newer one with more advanced features but faster depreciation.

The monthly cost also goes beyond just the sticker price. Insurance, upkeep and storage will all add to your monthly RV expenses.

2. Save for a down payment

Ahead of exploring loan options, it is smart to save for a down payment. Lenders offering secured RV loans may require a down payment of 10 to 20 percent. A down payment lowers your overall loan cost, lowering how much you have to borrow.

3. Check your credit

An excellent credit score is one of the most important factors when it comes to securing competitive rates for all loans, RV loans included. A score that falls in the mid-700s or higher will likely 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 idea of 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.

Frequently asked questions

  • What are typical RV loan terms?

    Secured RV loan terms are longer than auto loans due to the higher loan amounts. Most RV terms range from two to 10 years, but they can be anywhere from one and 20 years.

  • Is an RV loan the same as a mortgage?

    They are not the same, but there are similarities if you choose to live in your RV.

  • What credit score do you need for an RV loan?

    To get the best interest rates and terms, you’ll need a credit score that is at least in the mid-700s. But no outright minimum is needed to get an RV loan, as requirements vary by lender.

  • How fast can you receive funds for an RV loan?

    An RV loan may be disbursed within a business day of approval, depending on the type and amount you take out.

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