How to get an RV loan
Key takeaways
RV loans are generally fixed-rate installment loans.
Some lenders require a down payment of 10 to 20 percent of the purchase price.
Compare multiple lenders to find the loan that best fits your needs and budget, including long-term recurring expenses.
Consider a personal loan if you don't qualify for or don't need an RV loan.
If you want to take your home on the road, you may be in the market for a recreational vehicle or RV for short. With RV prices ranging from hundreds of thousands of dollars up to $1 million for the most luxurious or high-end models, you may be wondering how to get an RV loan.
Financing an RV is similar to getting an auto loan, although lenders often offer longer loan terms to keep your payments lower. The qualification process for loans for RVs might also be more like getting a mortgage than buying a car, especially for expensive motorhomes.
However, you may not even need an RV loan if you only need a camper for warm-weather weekend getaways a few times a year.
1. Learn how RV loans work
Depending on the size of the loan you need, an RV loan may work like an auto loan or a mortgage. For smaller loan amounts of $50,000 or less, you’ll qualify primarily based on your credit score, income and the age, mileage, make and model of the RV you’re buying, much like a car loan. You receive all of your funds in a lump sum and make a fixed payment for a set time period.
For higher loan amounts of up to $1 million or more, lenders scrutinize your finances more thoroughly, in much the same way as when you get a mortgage. Your income, credit and total debt are reviewed. The lender may also dive deeper into the RV’s condition, specs and ownership history to approve you for a loan.
RV loans are typically secured by your RV, which means the bank could repossess your camper if you can’t make payments. Consider a personal loan if you want to buy your RV outright. Most personal loans don’t require collateral, which means you won’t lose your RV to a repossession if you can’t repay the loan. However, the rates may be higher than secured RV loans.
Takeaway
Deciding between a secured and unsecured RV loan will depend on how much you’re borrowing, your credit and whether you want to buy the RV outright.
2. Know how much RVs cost
The biggest decision you’ll make when it comes to an RV’s cost is whether you want to buy a used or new one. You could pay over $1 million for a brand new Class A motorhome with all the bells and whistles, while a 20-year-old towable pop-up trailer might cost you around $5,000.
Remember: RVs are motor vehicles, and like cars, they may depreciate after you take a new one home. A used trailer’s value won’t drop as much over time, but depending on how old and well-maintained it is, it may require more maintenance and repair costs. You may also pay a higher rate based on the condition of a used RV, so read the fine print on any loan offers you receive.
RV dealerships may mark up prices as much as 35 percent, which means there’s room for negotiation on the sticker price. If your heart is set on a new RV, use an RV finder or Kelley Blue Book RV pricing guide to see how much RVs are selling for in your area, and don’t be afraid to walk away from a dealership that isn’t willing to haggle.
Takeaway
Research RV costs using trusted sites, like Kelley Blue Book, to get a view of how much the initial price will be and whether it’s worth it to buy new instead of used.
RV cost by vehicle type
New | Used | |
|---|---|---|
Class A | $50,000 to $300,000 | $30,000 to $175,000 |
Class B | $70,000 to $150,000 | $40,000 to $115,000 |
Class C | $50,000 to $150,000 | $30,000 to $75,000 |
Travel trailer | $20,000 to $75,000 | $10,000 to $50,000 |
Fifth wheel | $35,000 to $125,000 | $30,000 to $100,000 |
Source: Camper FAQs
3. Set a monthly payment budget
Use a loan calculator to get an idea of how much your payment will be. Include ongoing costs for insurance, maintenance, mileage and gas in your figures. Don’t forget to add costs like campground fees, lot lease costs, and licenses, taxes and registration fees.
There are three factors that will directly affect your RV loan’s monthly payment; the loan term, interest rate and loan amount.
Loan term. RV loan repayment terms may be as long as 240 months, but there’s a catch: Longer terms are only available for higher loan amounts (over $50,000 in many cases).
Loan amount. You may find lenders that offer RV loan amounts as low as $10,000 and as high as $2 million. The more you borrow the higher your monthly payment will be.
Interest rate. RV loan rates range between 7.24% and 19.95% and are impacted by your credit scores, loan amount and loan term.
Takeaway
Longer-term RV loans usually come with higher rates, which means more interest paid over the life of the loan. However, rates typically start to drop on loans over $100,000.
4. Check your credit
Your credit score could be the deciding factor for your loan approval and interest rate on an RV loan. Lenders may limit how much you can borrow if your credit score is below 680. And the best RV loan rates generally go to people with excellent credit scores.
That said, some lenders offer loans for borrowers with credit scores as low as 550, but the rate and monthly payment will be much higher. And, depending on your income, you may not be able to borrow the entire amount you need to finance the RV.
Takeaway
Check your credit report well before you apply for an RV loan. If you file a dispute, the credit bureau has up to 30 days to reply. This means any corrections may not be made for a month or more.
5. Save for a down payment
Many RV companies require a down payment of at least 10 to 20 percent of the purchase price to qualify for an RV loan. A larger down payment will keep your payment lower and may even help you snag a lower interest rate.
Current average RV loan interest rates for borrowers with excellent credit start around 8 percent and go as high as 20 percent, but the rate you get depends on your credit profile and other factors.
Takeaway
If you don’t have the cash for a down payment, or are buying a less expensive used camper, check out personal loan options. The best personal loan rates may be comparable to RV loan rates.
6. Decide if you need an RV loan or a personal loan
Consider whether you want a secured RV loan or an unsecured personal loan. Both have their benefits, but the decision may come down to what type of camper you are.
When an RV loan makes sense
If you’re a full-time or avid camper, which means you travel year-round or vacation exclusively in your RV, you’ll probably need an RV loan to keep your monthly payment affordable on motorhomes with price tags that rival regular homes. RV lenders offer terms as long as 20 years with loan amounts up to $2 million.
But RV lenders can deny a loan if they don’t approve of the age or condition of a used RV. In which case you may be better off with a personal loan, since you can use the funds for any purpose.
When you should use a personal loan to finance an RV
If you’re like most RV users, you probably fit the RV Industry Association’s definition of “casual campers” — meaning your camping trips are limited to a few weekends per year. Nearly half of the casual campers prefer conventional travel trailers with an average cost of $24,000,
In that case, an unsecured personal loan may be a better financing fit. With terms of two to seven years and quick approval processes, personal loans could get you on the road in your RV faster and cheaper than RV loan options. Plus, you won’t risk having your RV repossessed if you fall behind on payments.
You can use the Bankrate personal loan calculator to help you figure out what you can afford for a personal loan.
Takeaway
You don’t have to lock yourself into a traditional RV loan to finance your vehicle. It helps to research which type of loan is best for you.
7. Compare RV loan or personal loan rates at several lenders
Whether you choose an RV loan or a personal loan for your RV, gather at least three quotes and compare the rates, costs and terms. RV dealerships, banks, credit unions and online lenders typically offer financing options for RVs, which gives you a broad range of choices.
Make sure you understand the down payment requirements on RV loan options to avoid any surprises at the closing table. Ask RV lenders how long the process takes, and how quickly you’ll get the money.
Check personal loan offers for origination fees and penalties for paying the balance off early. Shop your local bank, credit union and online comparison sites to get an idea of what you qualify for.
Takeaway
Get quotes from at least three lenders before you fully apply for an RV loan, regardless of the type you’re taking out.
