What Are Typical RV Loan Terms? - Changing Gears (2023)

FAQs

What are normal 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.

The average RV loan has a higher interest rate than the typical car loan, and also tends to be longer. According to data from S&P Global, the average RV loan's interest rate is 6.17% for a new RV purchase and a 36-month loan term, and 6.15% for a 60-month loan on a new RV purchase.

For an RV purchase, using cash is probably best unless you can get a low-interest personal loan with comparable rates to a mortgage (under 5% APR is ideal). Also keep in mind that RVs come with ongoing costs, such as campground rental rates and maintenance.

In general, RVs are going to continue to decrease in price in 2023, due to an incleased supply of RVs and a decreasing demand for them. Class Bs might be the exception to this, as demand for them from Gen Z, Millenials, and Boomers continues to rise.

Prepayment penalties: Paying your RV loan off early can save you a substantial amount of money you'd otherwise pay in interest. But that interest is how lenders make money, so some charge a penalty for paying your balance off before the end of your loan term.

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.

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.

As with any loan product, the better your credit score, the better the rate you'll typically be offered. In order to qualify for the best RV loan rates, you should aim for a credit score of around 700 or higher. Of course, there are many lenders who also offer RV loans to those with bad credit.

Is an RV a Tax Write-Off? Yes, your RV can be a tax write-off, no matter how long you've owned it. New and used RVs are both eligible for tax deductions in many states. If your RV is your home, certain deductions may also apply.

What is the best month to buy a RV? ›

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 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.

The ten-year rule at RV parks. “The Ten Year Rule” is a code that's enforced at many upscale RV parks around the country. The rule implies that RVs older than 10 years are too weathered and worn and should be prohibited. The rule is often enforced regardless of how pristine the RV actually is.

34% are between the ages of 18 – 54 and 66% are 55+.

The short answer is that the average lifespan of an RV is around 20 years or 200,000 miles, whichever comes first. But the answer isn't quite that simple. That number can vary depending on the class of your motorhome, how well you take care of it, and a few other factors.

RV sales peaked in 2021 at just over 600,000 units. The Recreational Vehicle Industry Association said that 493,268 units were sold in 2022, a decrease of -18%. However, units sold really decelerated as the year went on, down -50% in December. For 2023, the RVIA has projected wholesale sales of 379,000-404,000 units.

The RV Lifestyle Is Plateauing, But 2023 Is Not a Good Time to Buy. There's no doubt about it: RVing is likely going to experience a downturn this year. But the effects of the switch don't necessarily mean great things for RV shoppers. Even if you're a savvy shopper, 2023 is not a good time to buy!

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.

Save a down payment

Most RV companies require a down payment of at least 10 percent of the purchase price, and many prefer 20 percent down. A larger down payment will help lower your monthly payments, and you may even qualify for a lower interest rate.

Most lenders that offer recreational financing will require that your debt to income ratio be less than 40%. You can calculate your DTI ratio by totaling up your monthly recurring debts (total of all of your monthly payments for installment loans and revolving loans), then divide that number by your monthly income.

Is living in an RV a good way to 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. There's no right or wrong here.

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. He, however, thinks buying new is a bad idea unless you have so much money that you aren't affected by the depreciation.

It's better to put your travel trailer up for sale at the beginning of RV season rather than at the end of summer. Always avoid selling around the holidays and if you have an RV show in the area, it may be a good time to put your RV on the market as your travel trailer will be priced more affordable than newer RVs.

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.

Because RVs are considered luxury vehicles, the process to get funding tends to be more complicated compared to regular personal loans. Additionally, repayment terms typically range from one to 15 years — longer than most personal loans.

How Hard Is It to Get RV Financing? If you have a good credit score, it will be easier to get financing for your RV loan. Good credit indicates a low risk to lenders. Having good credit shows a history of making payments on loans and regular monthly bills.

If you took out a loan on your RV, you may be able to deduct the interest on it. To do this, your RV will need to qualify as either a primary or secondary home. Then, your RV loan is treated as effectively the mortgage on your home. This qualifies you to deduct the interest that accrues on your RV loan.

Again, the short answer about keeping your RV plugged in all the time is – no. The risks include battery damage from overcharging and frozen refrigerator coils, as most RV refrigerators need to be periodically cycled off and thawed.

The common rule of thumb for changing your RV tires is anywhere between three and six years. If you are on the road often, and you think your tires need to be changed, then it may not be possible to last as long as six years.

Can you write off an RV if you live in it? ›

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. As long as it contains the required facilities, you can claim it as your main home on your taxes.

In November, RV shipments from manufacturers to dealers tumbled 50.4% from the same period a year earlier to 24,445, according to the RV Industry Association (RVIA). For the first 11 months of 2022, wholesale RV shipments totaled 472,691, 15.6% below the year-ago figure, the trade group says.

There is one that is even cheaper! That state is Montana. Montana has no sales tax and no personal property tax.

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.

Cash Isn't King

In reality, RV dealers don't want cash. They make money with financing, which is just easy income to them on top of the initial price paid. The tip here is to negotiate, but do not commit to financing or tell them you're paying cash until the paperwork is delivered.

We have seen monthly full time RV living budgets from fellow travelers as low as $1,600 and as high as $5,000. If you really want to go minimal, you can easily live this life for around $1,000 per month by finding a free spot to park your rig for extended periods or by becoming a camp host.

So, recapping, the RV 3-3-3 rule broken down is to 1) drive no more than 300 miles each travel day, 2) arrive no later than 3:00 p.m. and 3) stay parked for 3 days. This RV driving rule helps to make your RV adventure safer.

The RVing 2/2/2 rule is a safe and effective way to plan your travel. It means drive no more than 200 miles a day, stop every 2 hours, and stay 2 nights in each place. Some RVers also put an appendix on the rule encouraging drivers to arrive at an overnight destination by 2:00 p.m.

With recent social and economic changes, the RV lifestyle has become more challenging. RV prices, fuel prices, and campground prices have jumped. Yet, somehow, campgrounds are still overcrowded to the point of making it difficult to get a reservation.

What is the downside of owning an RV? ›

The number one con to owning an RV is definitely the cost. And there are many other costs involved in owning an RV than just the price of the RV. There is maintenance, storage, insurance, and many other costs as well.

The average RV roof will last around 20 years before it needs to be completely replaced or repaired. During that time, you can usually expect some leaks around 10 years, sometimes 5 depending on the usage and conditions the roof endures. Leaks at 5 years, and a new roof at 20.

Maintenance Costs

Just as with a car, your RV requires annual and seasonal maintenance. To keep your RV in tip-top condition, you'll probably need to spend somewhere between $1,000 to $2,000 a year, less if you perform some of the maintenance yourself.

The logic is simple: When you can borrow money at a lower interest rate than you can earn on money you invest, it's cheaper to take a loan than to pay cash.

While they are not auto loans, RV loans do have some similar features. Like an auto loan, for instance, the vehicle is used as collateral for the loan. “An RV loan is typically a simple interest loan, similar to an auto loan, generally with longer terms,” Greene says.

The typical timeframe to repay an RV loan is between 5 and 10 years, though a loan term can be as long as 20 years for newer, more expensive vehicles. With a new RV or motorhome, you may have more financing options available, as the collateral will be more valuable and reliable for a lender.

That would make for a bad end to a good camping trip. Slide outs can make your RVing experience all the better in terms of comfort, livability and overall enjoyment. They do need regular maintenance, but with regular checkups and care, they will serve you well for years to come.

A new trend we've seen since vehicle shortages started is dealers not accepting cash or even your own financing when buying a new vehicle. The reason? Dealerships make money financing cars. With far fewer vehicles to sell, they want to maximize every dollar of profit, so some will not take your check.

What should you finance first? ›

With the avalanche method, you pay down the debt with the highest interest rate first, then move on to the next highest interest rate and so on. Over time, those who choose this method will pay less in interest by knocking out those high interest ones first.

“Car dealerships want you to finance through them for two main reasons: They can make money off the interest of a car loan you get through them. They may get a bit of a kickback if they're the middleman between you and another lender (commission).

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.

Securing financing for an RV could be more difficult than getting approved for a car loan. In fact, depending on the length of your loan term and the amount you're borrowing, qualifying for an RV loan could be similar to qualifying for a home mortgage.

If you are the owner of an RV you can no longer afford, there are a few ways to get out of the RV loan. You can sell your asset, surrender the vehicle, or refinance your loan. Refinancing allows you to keep your RV and get more manageable loan terms! Borrowers can refinance their debt with secured or unsecured loans.

RV financing is easier than ever with flexible payment plans. Loan terms for both new and used large RV's now extend up to 20 years. The minimum down payment for an RV is typically between 10% and 20%, but some finance companies also offer “No-Money-Down” loan program options to qualified applicants.

As for monthly payments, the average monthly payment for an RV will be anywhere from $225 to $650 monthly. This average is based on a $35,000 vehicle with $0 down and varying interest rates. Most lenders who offer RV loans will require a minimum down payment of 10%, while others require 20%.

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.