RV Financing Options: Understanding Loans And Rates - Team Camping (2023)

FAQs

What are typical RV loan terms? ›

On average, RV loans range from 10-15 years, but many banks, credit unions and other finance companies will extend the term up to 20 years for loans of $50,000 or more on qualified collateral. Get a loan term up to 15 years¹ (180 months) for fixed RV loans with Mountain America Credit Union.

There are several factors to keep in mind when considering an RV loan. The best RV loan interest rates currently start around 4.49 percent for borrowers with excellent credit. However, the actual rate you receive depends on factors such as your credit score, debt-to-income ratio and annual income.

The specific credit score you'll need to qualify for an RV loan will vary from one lender to another, with the most common score being 660. This is considered an average score, and many people will have no problem meeting this requirement.

Yes, in most states, the interest on your RV financing is tax-deductible. This is typically available whether your RV is your primary or secondary home, though some states may have their own requirements.

Most RV loans are long-term, which can help keep your monthly payments low. Terms will vary depending on several factors, including the RV's age, credit history, et cetera. As for monthly payments, the average monthly payment for an RV will be anywhere from $225 to $650 monthly.

The answer is, it varies greatly. The RV financing industry-standard ranges from about 660 to 700 FICO score, but there is a possibility your search for “RV financing with 650 credit score” can be fruitful because there is financing available for credit scores in the 500 to 600 range.

Most RV and marine lenders look for a maximum debt-to-income ratio of approximately 45 percent or less, however some will go as high as 50 percent or more with excellent credit.

Is an RV considered a mortgage? No. An RV loan is a type of installment loan. While similar to a fixed rate mortgage in that there are fixed monthly payments for the life of the loan, it is not considered a mortgage.

For example, never tell an RV salesperson that you're new to RVing and are buying your first rig. This may lead the salesperson to try to get you to buy something you don't need. You'll be spending more money than necessary.

What does Dave Ramsey say about buying an RV? ›

Dave Ramsey thinks living in an RV full-time is a fun idea, but he doesn't necessarily think it's the best financial decision. Ramsey believes living in a trailer or motorhome works financially if it's a temporary move, especially if you pay cash for a used RV and have saved plenty of money.

Typically, most banks will finance a RV (motorhome or travel trailer) that is 10 years old or newer and in good condition. Some will extend the maximum age to 12 years for well-maintained towables, but very few banks will offer financing for RVs older than 10-12 years.

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

Financing allows nearly anyone with a decent credit score and a saved-up down payment to purchase the RV of their dreams. You can set a monthly payment that's well within your budget so that you can confidently pay off your RV over a period of months or years, rather than having to have all the money for it at once.

Declaring your main home

The IRS allows taxpayers to designate one residence only as a main home at any one time. Your main home is the one where you ordinarily live most of the year. This can be a boat or RV even if it doesn't have a permanent location.

SALES TAX DEDUCTION

The same goes for your RV. The beauty of this deduction is that, unlike the mortgage interest deduction, you can deduct the sales tax even if you paid cash for your rig. Also, keep in mind that the sales tax deduction is one-time only. Though, even at that, it can be a significant amount of money.

Loan or Mortgage Interest Deduction

That means your RV could likely qualify as a main home or a second home and you may be able to deduct the annual interest paid on a loan or mortgage as long as your motorhome contains a bed, bathroom, and kitchen.

On average, motorhomes and travel trailers are at their cheapest at the end of the year. You can also benefit from good deals in the neighboring months of November and February — after the high season ends and before the next spring season starts up.

It is financially smart to live in an RV. Living in an RV means living a lot smaller with a lot less stuff. You have less room for everything – clothes, toys, tools and more saving you a lot of money. Along with less space, you save on utilities and home-improvement projects if you own your home.

People usually get loans to buy an RV through dealers, a bank, or an online lender. These financial products are far more varied than car loans since they can be secured or not. Having a secured loan means that if borrowers do not make their payments, the lender repossesses the motorhome.

Can you get a 30 year loan on an RV? ›

Unsecured RV loan terms are usually two to seven years, while secured RV loan repayment terms can be up to 20 years. You can enter any repayment term into this calculator. You'll pay more interest overall with a longer repayment term, while a shorter repayment term means higher monthly payments.

A credit score around 700 or higher will make it easier and faster for you to get an RV loan. If you have such a high score, lenders are likely to perceive you as low credit risk.

An RV loan will be secured – like and auto loan – with the RV serving as collateral in case you default on the loan. However, unlike a car loan, you will most likely need to make a down payment, typically between 10 to 20 percent of the purchase price.

50% or more: Take Action - You may have limited funds to save or spend. With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unforeseen expenses. With this DTI ratio, lenders may limit your borrowing options.

Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.

There's not a single set of requirements for conventional loans, so the DTI requirement will depend on your personal situation and the exact loan you're applying for. However, you'll generally need a DTI of 50% or less to qualify for a conventional loan.

Rates: Most RV loans have a fixed interest rate, so you'd pay the same at the end of the loan term as you would at the beginning. However, you may find financing options that have variable interest rates, meaning your payments could fluctuate over time.

A few additional reasons it's wise to finance your RV purchase: RV loans are simple interest. All things being equal, you'll come out ahead by paying simple interest on your RV loan while compounding your investment dollars. (Check with your financial planner to run specific numbers and scenarios.)

The main difference is that a personal loan is unsecured – you're not using the RV or any other property as collateral for the loan. This is most common when buying a used vehicle, since the value of the RV is more likely to fall below the balance owed on the loan at some point along the way, making it poor collateral.

Inflation and a continuation of the supply and labor shortage that lingered from 2022 have been keeping prices from falling back to pre-pandemic numbers. However, as 2023 continues we expect prices will continue to fall and we might get there. You just might have to wait a bit longer.

How much can you talk RV dealer down? ›

For some RVs, you may be able to receive a discount of 20% to 30% or sometimes even more off of the sticker price depending on the circumstances. For others, you may not be able to receive more than just a few thousand dollars off. It's all about supply and demand.

Your RV value over time will largely depend on what type of RV you have. Class A motorhomes, Class C motorhomes, and fifth wheels have the highest depreciation rates. It's safe to say that the larger your rig is, the more quickly it will depreciate.

One of the best ways to ramp up the value of your RV is to have plenty of sleeping spaces. You might like the look of a modern sofa or freestanding table, but unless it can convert to a bed, it will only decrease the attractiveness of the vehicle.

Usually, the late fall and early winter are going to be the best time to purchase your new (or new to you) RV. Off-season purchases are going to get you the best deal. If you can save money on your purchase, you will have more to spend on upgrades and adventures.

34% are between the ages of 18 – 54 and 66% are 55+. 59% of travel trailer owners are female while 40% are male. 30% of travel tailer owners are employed full-time while 43% are retired.

In terms of mileage, this often corresponds to 100,000-300,000 miles. Of course, that's a wide range, but most owners should expect their RV under average use to last at least a decade, if not significantly longer.

Living in an RV can be cheaper than traditional home ownership because RVs require less space and utility usage, resulting in lower costs for heating, cooling, and maintenance. Additionally, RV living encourages a simpler and more minimalist lifestyle that can lead to fewer expenses related to possessions.

The RV Lifestyle has no age limits. As long as you are healthy and have the desire and physical health, don't let your age slow you down!

How to get 900 credit score? ›

A perfect score generally requires years of exemplary financial behavior, like making on-time payments, keeping a low credit utilization ratio, and maintaining a long history of credit accounts. A wide credit mix and only a few hard credit checks also play a role in boosting your credit score.

An 850 FICO^® Score isn't as uncommon as you might think. Statistically, there's a good chance you've attended a wedding, conference, church service or other large gathering with someone who has a perfect score. As of the third quarter (Q3) of 2021, 1.31% of all FICO^® Scores in the U.S. stood at 850.

While some lenders offer RV loan programs for borrowers with rocky credit, these lenders will likely look at a number of other factors, such as debt-to-income ratio, employment history and income. Having a lot of debt or a lack of income are among the issues that could prevent you from being approved.

The answer is, it varies greatly. The RV financing industry-standard ranges from about 660 to 700 FICO score, but there is a possibility your search for “RV financing with 650 credit score” can be fruitful because there is financing available for credit scores in the 500 to 600 range.

RV loans generally work the same way as auto loans, but loan terms and interest rates may vary compared to new or used car financing. The monthly payment for RV loans tends to be higher, and the maximum and minimum loan amount for an RV loan may also vary.

Round Up Monthly Payments

Pay more than the monthly payment amount if you have extra money to spare. Increasing the amount you pay to the lender will shorten your loan and help you save money. Pay as much as you are able! For example, if your RV loan is $185 monthly, try rounding it up to $200.

It's called NADA, or the National Automobile Dealers' Association, and they list prices and values for motorhomes, travel trailers, and even truck campers and park models. Platforms like RV Trader, which help people buy and sell RVs, are also a great resource for getting an approximate value of your rig.

If you live thoughtfully, you can absolutely save money while living in an RV, even while traveling. But, if you're the kind of person who wants to stay at luxury RV parks and spend money on food and experiences, you might find it just as pricey (if not more so) than stationary life.

Is an RV a Financial Investment? The short answer is no. With the exception of some in-demand vintage models, the value of an RV depreciates over time. An RV is an investment in a lifestyle, but you can mitigate the expense by renting it out when not in use through a third-party rental site like Outdoorsy or RVshare.

Can you write off an RV as a second home? ›

RV as a Second Home: RV Tax Deduction

As long as you spend the greater of 14 days or 10% of the days that the RV was rented out in the rig, it qualifies as a second home. In this case, you can deduct the interest on your RV loan just as you would if your RV was your primary residence.

Your car payment won't go down if you pay extra, but you'll pay the loan off faster. Paying extra can also save you money on interest depending on how soon you pay the loan off and how high your interest rate is.

Paying off your loan early can save you hundreds — if not thousands — of dollars worth of interest over the life of the loan. Some lenders may charge a prepayment penalty of up to 2% of the loan's outstanding balance if you decide to pay off your loan ahead of schedule.

Because interest is calculated against the principal balance, paying down the principal in less time on your mortgage reduces the interest you'll pay. Even small additional principal payments can help.

There is no Kelley Blue Book for RVs, but many use another website and database to help determine a used RV value. You have many factors and multiple data points to consider when pricing a used RV, but you can start with the vehicle NADA (National Automobile Dealers' Association) Guides by JD Power.

Brand-new RVs start losing value as soon as they're driven off the lot and continue to lose value throughout the first year rapidly. The RV depreciation rate increases at a steady rate after that until your RV hits double digits in age. Once an RV is ten years old or older, its value drops more rapidly.