Are you dreaming of hitting the open road and exploring the great outdoors in your very own RV? Before you can embark on this journey, it’s important to understand your financing options. In this guide, we’ll break down the different types of RV loans and rates to help you make an informed decision when purchasing your home on wheels.
1. Introduction to RV Financing
Financing an RV is similar to financing a car or home, with a few unique twists. You’ll need to consider factors like your credit score, the loan term, and the type of RV you want to purchase. RV financing is typically done through banks, credit unions, and specialized RV lending companies.
Before diving into the details, it’s important to note that RVs can be expensive. However, with the right financing option, you can enjoy the freedom of the open road without breaking the bank.
2. Types of RV Loans
There are several types of loans available for RV financing. Each has its own advantages and disadvantages, so it’s crucial to understand which one works best for you.
A. Secured RV Loans
Secured loans require collateral, which is typically the RV itself. This means that if you fail to make payments, the lender can repossess the RV. The benefit of a secured loan is that it often has lower interest rates than unsecured loans.
B. Unsecured RV Loans
Unsecured loans do not require collateral, making them a higher risk for lenders. As a result, they typically come with higher interest rates. However, this also means that your RV is safe from repossession if you default on your loan.
C. Dealer Financing
Dealer financing is when you finance your RV purchase through the dealership itself. This can be convenient, but it may not always offer the best rates or terms. Be sure to compare offers from multiple lenders before making a decision.
D. Credit Union Financing
Many credit unions offer competitive RV financing rates to their members. If you’re already a member of a credit union, this can be a great option to explore.
3. Understanding Interest Rates and Loan Terms
Interest rates and loan terms are two critical components of RV financing. Here’s what you need to know:
A. Interest Rates
The interest rate is the cost of borrowing money, expressed as a percentage of the loan amount. Rates can be fixed or variable. Fixed rates remain the same throughout the loan term, while variable rates can fluctuate based on market conditions.
B. Loan Terms
The loan term is the length of time you have to pay off your RV loan. Terms typically range from 10 to 20 years, with longer terms resulting in lower monthly payments but more interest paid over the life of the loan.
4. Factors That Affect Your RV Loan Rate
Several factors can influence the interest rate on your RV loan:
- Credit score: A higher credit score can help you secure a lower interest rate, as it shows lenders that you’re a responsible borrower.
- Down payment: A larger down payment can lead to a lower interest rate, as it reduces the lender’s risk and demonstrates your financial commitment.
- Loan term: Shorter loan terms often come with lower interest rates, but they also mean higher monthly payments.
- Type of RV: Newer RVs may have lower interest rates than used models, and rates can vary depending on the make and model.
- Debt-to-income ratio: A lower debt-to-income ratio demonstrates your ability to manage your monthly debt payments and can lead to a better interest rate.
5. How to Get the Best RV Loan Rate
To secure the best RV loan rate, follow these tips:
- Check your credit score: Review your credit report for any errors and take steps to improve your score before applying for a loan.
- Shop around: Compare loan offers from multiple lenders, including banks, credit unions, and online lenders.
- Negotiate: Don’t be afraid to negotiate with lenders for better rates or terms.
- Consider refinancing: If you already have an RV loan, consider refinancing to take advantage of lower interest rates or better loan terms.
- Maintain good credit: Make all of your loan payments on time and keep your credit utilization low to ensure a strong credit score.
6. The Benefits of RV Financing
Financing an RV can offer several benefits, including:
- Affordability: With a loan, you can spread the cost of your RV purchase over several years, making it more affordable.
- Flexible repayment options: RV loans often come with flexible repayment terms, allowing you to choose a payment schedule that suits your budget.
- Tax benefits: Depending on your situation, the interest paid on your RV loan may be tax-deductible if you use your RV as a second home.
- Ownership: When you finance an RV, you own it outright once the loan is paid off, giving you the freedom to travel and enjoy your investment.
In conclusion, understanding your RV financing options is essential for making an informed decision when purchasing your home on wheels. By considering factors such as loan types, interest rates, and loan terms, you can secure a financing solution that suits your needs and budget. Happy travels!
7. Leasing an RV: An Alternative Financing Option
Leasing an RV is another option for those who want to enjoy the benefits of RV travel without the long-term commitment of ownership. Here are some key points to consider when looking into leasing an RV:
- Lower upfront costs: Leasing typically requires a smaller down payment than purchasing, which can make it more accessible for some.
- Fixed-term commitment: Lease agreements are for a fixed period, usually a few years. At the end of the term, you can choose to return the RV, purchase it, or lease a new one.
- Maintenance: Lease agreements often include maintenance coverage, which can help reduce the overall cost of upkeep.
- Upgrade potential: Leasing allows you to enjoy the latest RV models without the financial commitment of purchasing, making it easier to upgrade to newer models at the end of your lease.
8. Specialized RV Lenders
Some lending institutions specialize in RV financing, providing a variety of loan options tailored to the unique needs of RV buyers. These lenders may offer:
- Competitive interest rates: Specialized RV lenders often have competitive rates due to their focus on the industry.
- Flexible terms: These lenders may provide extended loan terms or other flexible repayment options to accommodate your budget.
- Industry expertise: A lender with RV industry experience can help guide you through the financing process and offer tailored solutions to fit your needs.
9. Pre-Approval for RV Financing
Before starting your RV shopping journey, consider getting pre-approved for financing. Pre-approval offers several advantages:
- Budgeting: Knowing your approved loan amount can help you create a budget and narrow down your search for the perfect RV.
- Negotiating power: Pre-approval signals to dealers that you’re a serious buyer, which can give you more negotiating leverage.
- Faster purchase process: Having pre-approval in hand can help speed up the financing process once you find the RV you want to buy.
10. Insurance and Extended Warranties
When financing an RV, don’t forget to factor in the costs of insurance and any extended warranties you may want to purchase. Here are some tips for choosing the right coverage:
- Shop around: Compare insurance quotes from multiple providers to find the best coverage and price.
- Understand coverage options: Research the different types of insurance coverage available, such as comprehensive, collision, and liability coverage, to determine what best suits your needs.
- Consider an extended warranty: An extended warranty can provide additional protection for your RV investment, covering costs related to mechanical breakdowns and repairs.
Take a look at our article on: RV Warranty and Service Options: Making an Informed Choice
11. Preparing for RV Ownership
Once you’ve secured financing for your RV, take the time to prepare for your new adventures. Here are some suggestions:
- Budget for expenses: Create a budget that includes RV loan payments, insurance, maintenance, fuel, and other travel expenses.
- Learn about your RV: Familiarize yourself with your RV’s features, systems, and maintenance requirements.
- Join RV clubs and forums: Connect with fellow RV enthusiasts to share experiences, tips, and advice on RV travel and ownership.
By understanding the various financing options and taking the time to research and prepare, you can make your RV dreams a reality and set off on the adventure of a lifetime.
Good luck, and happy camping!
Check out our article on: New vs. Used RVs: Weighing The Pros And Cons
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.What is a good interest rate on a RV loan? ›
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.What is the average credit for RV financing? ›
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.Are RV loans tax deductible? ›
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.What is the average monthly payment for an RV? ›
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.What FICO score do RV lenders use? ›
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.What is a good debt-to-income ratio for RV loan? ›
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 loan considered a mortgage? ›
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.What should I not tell my RV salesman? ›
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 not to do when buying an RV? ›
- Buying the Wrong Size. When it comes to RVs, bigger is not always better. ...
- Ruling Out Used RVs. ...
- Not Doing Enough Research. ...
- Not Considering the Towing Vehicle. ...
- Not Considering The Height. ...
- Not Asking Enough Questions. ...
- Getting The Wrong Insurance. ...
- Rushing Your Purchase.
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.What is the oldest RV you can finance? ›
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.What is considered excellent credit? ›
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.What are the benefits of financing an RV? ›
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.Does the IRS consider an RV a home? ›
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.Is it financially smart to live in an RV? ›
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.How do people afford RVs? ›
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.
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.What is a good credit score to buy a RV? ›
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.What is qualified collateral for RV loan? ›
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.Is a 50% debt-to-income ratio good? ›
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.How high is too high for debt-to-income ratio? ›
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.Is 50% an acceptable debt-to-income ratio? ›
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.Are RV loans fixed or variable? ›
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.Are RV loans simple or compound interest? ›
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.)What is the difference between a personal loan and an RV loan? ›
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.Will new RV prices go down in 2023? ›
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.
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.What type of RV depreciates the most? ›
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.How do you negotiate an RV deal? ›
- Get an RV Inspection. Having an independent RV inspector look at an RV before you sign on the dotted line is a great idea. ...
- Research Similar Models. ...
- Shop During the Off-Season. ...
- Buy at The End of an RV Show. ...
- Buy Used. ...
- Set a Budget and Stick to It. ...
- Use Negotiation Tactics. ...
- Ask for a Package Deal.
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.What is the best time of year to buy a camper? ›
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.How old is the average RV owner? ›
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.How long does the average RV owner keep their RV? ›
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.Is it cheaper to live in an RV or a house? ›
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.What is the average interest rate on a RV loan? ›
|2022 or Newer, LTV 100%||*APR as low as||*Approximate payment per $1000 financed|
|37 – 60 months||7.74%||$20.15|
|61 – 120 months||7.99%||$12.13|
|Older Used 2014-2017, LTV 75%||*APR as low as||*Approximate payment per $1000 financed|
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!
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.How to get 800 credit score in 45 days? ›
- Check your credit report. ...
- Pay your bills on time. ...
- Pay off any collections. ...
- Get caught up on past-due bills. ...
- Keep balances low on your credit cards. ...
- Pay off debt rather than continually transferring it.
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.Why is it so hard to get a loan for an RV? ›
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.Which FICO score is used for RV loans? ›
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.Is an RV loan the same as a car loan? ›
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.How can I pay off my RV loan faster? ›
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.Does living in an RV actually save money? ›
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 it financially smart to buy an RV? ›
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.
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.Is it better to pay off a loan in full or make payments? ›
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.Is it better to pay more principal or interest? ›
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.Is there an RV Blue Book value? ›
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.Does an RV hold its value? ›
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.