How to Finance an RV
Buying a recreational vehicle or RV can be a major investment — up to $1 million or more for a luxury motor home. On the other hand, a used trailer may only cost a few thousand. In any case, you may need an RV loan to finance your adventure in the great outdoors.
There are plenty of loan options for RVs, including dealerships, banks, credit unions and online lenders. Because RVs can cost much more than the average car, the application and qualification process may be more detailed.
What is an RV loan?
You may need a loan to finance all or some of the purchase price of a motorhome, fifth-wheel or travel trailer, pop-up camper or toy hauler. An RV loan is similar to an auto loan, but the annual percentage rate (APR) on RV loans is typically higher and longer repayment terms are available.
An RV loan can help you immediately enjoy an RV without covering the entire cost out of pocket, upfront. When you get an RV loan, the lender will issue the funds to pay the seller and you can pay the lender back over time.
How RV loans work
Although an RV loan is similar to any other loan in many ways, there are differences you should be aware of before you go RV shopping.
RV loans are typically secured by the vehicle, like car loans, with a fixed APR and set repayment term. Some lenders offer RV loans for up to 240 months or 20 years. If you’re buying an inexpensive used camper under the minimum RV loan amount, it may be smart to take out an unsecured personal loan instead.
It’s wise to make a down payment to reduce the amount of money you finance for the RV purchase, and some lenders may even require it. Depending on the vehicle type and the loan size, you may be required to have the RV inspected and appraised before the lender can approve financing.
In addition to the standard Department of Motor Vehicle inspection to register the RV, there are two levels of RV inspections. The Level 1 inspection is a visual check of the RV’s systems and parts to ensure everything is in good working order. This inspection can typically about half a day. The Level 2 inspection, also known as a prepurchase inspection, is more common on RVs with engines to spot potentially expensive problems. This daylong process includes taking fluid samples from the RV auto systems for a lab analysis. Processing the lab results may take up to two weeks.
The lender may also require an independent appraisal, similar to an appraisal for a home mortgage, to ensure that the RV’s value is appropriate for the loan amount.
How to get an RV loan
Applying for an RV loan is similar to any other loan. You’ll need to supply your personal and financial information, and you should have a reasonable estimate in mind of how much you’ll need to borrow to buy your RV. While the application process varies from lender to lender, here are the general steps you’ll take to get an RV loan:
Check your credit score
Your credit score is one of the biggest factors in getting a good interest rate. Start by checking your credit score with the three credit bureaus (Equifax, Experian and TransUnion) or your bank before applying for an RV loan. You can take steps to improve your score to increase your chances of approval and to secure a better rate.
Typically, the best APRs are reserved for borrowers with good credit scores. Some RV lenders offer bad credit RV loans, with some accepting credit scores as low as 550, but you can expect to receive a high interest rate.
Determine your budget
Shop around to determine the price range of the vehicle you’d like to own. It’s easy to fall in love with the newest RV with all the gadgets, but you could end up spending more than you planned.
Use an RV loan calculator to estimate your monthly loan payments, taking into account factors like down payment and APR. Don’t forget to include other costs of RV ownership, such as taxes, title and registration, insurance, storage fees, maintenance, fuel and campground fees.
Save for a down payment
Your lender may require a down payment of 10% to 20% of the purchase price. A sizable down payment will reduce the amount of interest you pay and could help you qualify for a better APR. Taking the time to save for a down payment could save a lot of money in the long run, leaving more to spend on your travels.
Compare lenders
Apply online and receive offers from multiple lenders. It doesn’t hurt your credit score to apply to multiple lenders for an RV loan any more than it does to apply to one, if you submit all applications within a 14-day period.
When comparing APRs and terms, use an RV loan calculator to understand the impact of longer versus shorter terms on the total cost of borrowing. It’s easy to be tempted by longer terms that result in lower monthly payments, but remember that you’ll pay more in interest over the life of the loan with a long term.
Find an RV
Looking for an RV is the fun part. Start by deciding the type of RV you’re interested in — do you want a luxury motorhome or a small, pop-up camper? Visit dealers in your area and be sure to consider used RVs as well.
Your lender will want to know which RV you plan to finance. Even towable RVs have vehicle identification numbers (VIN), which will tell the lender the year, make and model of the RV. Other important factors include mileage, condition, title status and vehicle history, such as whether it was in an accident.
Submit a loan application
Submit a loan application online or at the RV dealership. You will need the usual information, including Social Security number, residence and employment history, proof of income and the amount you want to borrow.
Where to get an RV loan
You have many financing options available when you’re shopping for an RV. While dealerships may offer the most convenient lending experience, be sure to consider banks, credit unions and online lenders for lower rates.
| Pros | Cons | |
|---|---|---|
| Online lenders | Competitive rates Online applications | May not have the lowest APRs No option for in-person customer service |
| Credit unions | May have a single rate regardless of credit score May offer options with no down payment | May have higher APRs for RV loans Must qualify for membership |
| Banks | Banking convenience Online and in-person customer service | May not offer longer loan terms Potentially higher loan rates |
| Dealerships | May have incentive offers One-stop shopping experience | May have hidden fees Potentially inflated APR |
Other ways to finance an RV
Personal loan
A personal loan may be the best option for less expensive RV options like a used pop-up camper. The application process is usually straightforward because the RV is not used as collateral for the loan — your eligibility for financing is based on your credit history. It can be a great way to take advantage of a reasonable price from a private party or a dealer.
Home equity loan
If you own your home, a home equity loan can help get you the RV you want. But if you can’t make the payments, your home could be at risk of foreclosure.
Frequently asked questions
RV loan interest rates may range from 6.24% to 19.95% based on credit factors, the amount borrowed and the length of the loan term. Excellent credit is required to qualify for the lowest rates.
You can find RV loan terms from 36 months all the way up to 240 months. While you may need a long loan term to keep the monthly payments on a high-end RV manageable, remember that you’ll pay more in interest with a long term. Many lenders allow you to pay off your loan early with no prepayment penalty.
The more you borrow, the stricter the requirements become. Like any loan, the lender will look at your credit score and history to see if you have a record of making payments on time. They will assess your debt-to-income ratio to see if the RV loan could make it difficult for you to pay other bills, given your monthly income. The lender will also look at the loan-to-value ratio of the RV to ensure it is worth the loan amount.