Whether you are purchasing a new or used RV, understanding how RV loans work can save you both time and money. With many RVs costing nearly as much as a house, RV loans are a bit more complicated than auto loans.
These tips for how to get a loan for an RV will help you walk into the dealership with the knowledge and confidence you need to put yourself in a solid financial situation.
The Two Types of RV Loans
RV loans are used to purchase an RV. Much like auto loans, RV loans are installment loans where you repay the borrowed amount plus interest over a set period.
However, RV loans end up being a little more complex than car loans. Let’s face it: RVs are typically a bigger purchase, and you can also live in them. Many RV owners have found that their RV loan is more like a mortgage than a simple car loan because of the interest rates and higher costs.
There are two main types of RV loans: secured and unsecured. Secured RV loans use the RV as collateral, typically resulting in better interest rates and longer terms. Unsecured RV loans, on the other hand, do not use the vehicle as collateral and often come with higher interest rates and shorter terms.
Secured RV Loans
- RV acts as collateral
- Lower interest rates and longer loan terms (up to 240 months)
- Offered by dealerships, banks, and credit unions
Secured RV loans are the most common type of RV financing. When you purchase from a dealership, the type of financing they offer will be a secured RV loan.
With these loans, you can get lower interest rates, flexible terms, lower monthly payments, and a more manageable path into RV ownership. The downside, of course, is that if you don’t make your payment, you can lose the RV as it is the collateral.
Keep in mind that although longer loan terms can mean lower monthly payments, you’ll pay more interest over time. So, take a close look at the amortization schedule and make sure you are comfortable with it.
Unsecured RV Loans
- RV is not required as collateral
- Higher interest rates and shorter loan terms (typically capped at 7 years)
Unsecured RV loans do not require you to use the RV as collateral. Without this arrangement, the lender is at a much greater risk. Anytime you are in a loan relationship where the lender has more risk, expect higher interest rates and less flexibility in the loan terms.
Unsecured RV loans are really for those folks purchasing a less expensive or older RV, i.e., a pop-up camper, compact travel trailer, and sometimes older used RVs.
Personal loans can serve as unsecured loans. One thing to keep in mind here is that if you have poor credit and are looking to obtain an unsecured RV loan, interest rates can run higher than 30%.
Steps to Get an RV Loan
You should be aware of a few steps when securing an RV loan. These steps include:
- Checking your credit score
- Determining your budget
- Saving for a down payment
- Comparing lenders
- Prequalifying with multiple lenders
Check Your Credit Score
Your credit score is one of the most important factors in securing an RV loan with favorable terms. Before applying, check your credit score and take steps to improve it if necessary. Paying down debt and correcting any errors on your credit report can enhance your score and potentially lower your interest rate.
| Credit Score Range | Rating |
| 800-850 | Excellent |
| 740-799 | Very Good |
| 670-739 | Good |
| 580-669 | Fair |
| Below 580 | Poor |
Determine Your Budget
First, set your budget, and then stick to it as you go through this process. Begin by identifying the type of RV you want to purchase, as costs can vary widely depending on the class, model, and condition.
Use loan calculators like this one to estimate monthly payments and ensure they fit within your budget.
Remember to account for additional costs such as insurance, maintenance, and service contracts, which can add to the overall expense of RV ownership.
Sample costs:
- New Class C Motorhome: $60,000 – $150,000
- Used Class C Motorhome: $30,000 – $100,000
- Maintenance (per year): $1,000 – $3,000
- Insurance (annual premium): $500 – $2,000
- Campground Fees (per night): $20 – $80
- Storage (monthly): $50 – $300
Save for a Down Payment
Saving for a down payment is a critical step in securing an RV loan. A typical down payment ranges from 10% to 20% of the RV’s purchase price. Making a substantial down payment can result in lower interest rates and reduce the risk of owing more than the RV’s value.
Compare Lenders
If you want to get the most favorable terms from RV lenders, do some research and compare rates. Various lenders, including banks, credit unions, and online lenders, have different eligibility requirements, interest rates, and repayment terms. Use an RV loan calculator to compare the impact of different loan terms on the total cost of borrowing.
Pro tip here: Don’t blindly finance with an RV dealership without first researching other options to secure the best RV loan rates and RV loan terms.
Prequalify with Multiple Lenders
As a best practice, prequalify with multiple lenders for a better (and clearer) view of your purchasing power, which will enable you to make a more informed decision. In addition, you’ll have a little negotiation power when you walk into the dealership.
The Application Process
The RV loan application process involves gathering personal and financial information, completing the application, and reviewing and signing the loan agreement. This process is similar to applying for an auto loan but often has stricter requirements due to the higher loan amounts involved.
Complete the Application
Completing the RV loan application requires you to provide proof of identity, such as a passport or official ID, and proof of address, like a utility bill or lease agreement.
If you’re self-employed, be prepared to submit additional financial documentation, such as tax returns, to verify your income. Always make sure your information is accurate, as it will be fact-checked.
Review and Sign the Loan Agreement
Before signing the loan agreement, thoroughly review all terms, including payment amounts and due dates. If you’re caught up in the thrill of purchasing a new RV, you’ll likely fixate on the positives (and overlook the negatives). But keep two feet planted on the ground and make sure you know what happens if you miss a payment or run into financial trouble. Understanding the fine print helps avoid misunderstandings about interest rates and repayment conditions.
Factors Influencing RV Loan Approval
Several factors influence RV loan approval, including your credit history, income and employment stability, and debt-to-income ratio.
Factor #1: Credit History
A strong credit history is crucial for securing an RV loan with favorable terms. Most lenders require a FICO score of at least 670, and the best rates are typically available to those with scores in the mid-700s or higher.
If your credit score is not in this range, start doing some things to prepare for your RV purchase. You can make payments on time, increase your income, and pay off old debt.
Factor #2: Income and Employment History
Stable income and employment history significantly increase your chances of RV loan approval. It’s a best-case scenario if you can provide proof of a long-standing career with plenty of stability. At a minimum, you’ll want to have something steady and reliable for at least two years before your loan application.
Factor #3: Debt-to-Income Ratio
Lenders use the debt-to-income ratio (DTI) to assess your ability to manage monthly payments and repay debts. A DTI below 36 percent, even after accounting for the RV loan, is generally preferred. To improve your DTI, focus on reducing overall debt or increasing your income.
Where to Get an RV Loan
RV loans can be obtained from various sources, including banks, credit unions, online lenders, and RV Dealerships.
Banks and credit unions are known for having lower interest rates, personalized service, and flexible loan terms. Credit unions typically offer secured RV financing based on the relationship that you have with them.
Online lenders offer RV loans that tend to have a quick and convenient approval process. Some even offer same-day funding if your credit scores are strong.
Online Lenders
Online lenders provide a convenient and quick approval process. If you are looking to make a quick investment, they even offer same-day funding at times. Lenders may provide secured loan options for individuals with both good and bad credit, giving borrowers the flexibility to access the funds they need.
However, it’s important to compare rates and terms carefully, as online lenders might charge higher interest rates compared to banks and credit unions. Consider using a lender network like My Financing USA to explore multiple options.
RV Dealerships
Financing through RV dealerships can be convenient since they often handle most of the paperwork and have relationships with multiple lenders. With the loan application paperwork taken care of and the ability to handle both purchasing and financing in one place, you can streamline the buying process.
However, dealership financing may have higher interest rates and additional fees than banks and credit unions. Therefore, it’s essential to compare these offers with other lenders to ensure you’re getting the best deal.
Summary
Now that you have officially bought a brand-new (or new-to-you) RV, you’ll need a place to store it. The average RV is 8’ 6” wide. If your two-car garage measures around 18 feet wide, your RV will take up close to half of your available garage space–leaving you with little room to store your car, yard equipment, and/or power tools.
But if you don’t want to spend hundreds of dollars on RV storage each month, consider Neighbor. Neighbor is a peer-to-peer RV storage marketplace with RV storage that’s up to 50% cheaper than traditional storage options. Neighbor has storage options in all 50 states. You’ll even find storage spaces in your very own neighborhood.
Frequently Asked Questions
What Credit Score Do I Need to Get an RV Loan?
You’ll generally need a FICO score of at least 670 to qualify for an RV loan, but higher scores, especially in the mid-700s or above, can get you better interest rates and loan terms.
Can I Get an RV Loan With Bad Credit?
Yes, you can still get an RV loan with bad credit, but you may face higher interest rates and fees. It’s advisable to work on improving your credit score before applying.
Should I Finance My RV Through a Dealership or a Bank?
Always compare rates from multiple lenders to ensure you get the best deal for your RV financing. Dealership financing may come with higher interest rates and additional fees.
Are There Any Tax Benefits to Using a Home Equity Loan for RV Financing?
Yes, if the RV is classified as a second home, you may be eligible for tax benefits by deducting the interest on a home equity loan.
