RVs are expensive and financing them can seem like a daunting task, but many RVers don’t have the cash to purchase outright, so you are not alone.
This article will go into detail about what is RV financing and which ones are best for you, as well as what you need to factor into your budget.
What Are RV Loans?
RVs are a fantastic way to relax and get away from everyday worries and problems. Unfortunately buying an RV doesn’t come cheap, so there are RV loans available to help finance your RV.
Luckily you there are a wide range of RV financing options that you can use to help purchase a new or used RV. Because there are such a wide variety of RVs out there from luxurious Class A’s to mini teardrop trailers, the loans available are also as varied. Read our ulitimate guide to RV types for more details which will help you pick the right type for you.
RV loans are different from auto loans because they are usually more expensive and purchasing an RV is more complex. You can get loans for $10,000 that are repaid over a few years or huge loans like $350,000 that are repaid over 20+ years.
Unsecured vs. Secured RV Loans
You can get unsecured personal RV financing from online lenders or secured RV loans from banks and credit unions.
Essentially unsecured loans are like personal loans and you don’t have to offer any collateral, they will offer you the loan based on your creditworthiness. Secured loans on the other hand will be secured against your RV, so if you fail on payments the bank can seize the RV. Secured loans are less risky for the banks and therefore you’ll tend to get better rates.
The rates and terms will vary by lender, so it’s important that you understand them and compare a few different lenders to make sure you’re getting the best rates. The terms you receive will depend on your personal financial situation and the RV you’re planning on purchasing.
Bear in mind that most financial experts don’t recommend taking out an unsecured loan for the purchase of an RV. Although unsecured loans will be a quicker process and don’t require a downpayment, they can have higher rates.
Where to Get an RV Loan
Typically you will have two main options when it comes to RV loans.
*remember to get a few quotes from each*
- RV dealership – this is the easiest and fastest option to finance your RV, the dealership will offer you a few financing options. Financing this way could give you more negotiating power to reduce the RV price or APR. Make sure you do some research before visiting the dealership so you can compare the rates.
- Traditional lender – you can also obtain financing through a bank or credit union. If you find a good deal this way, you can get pre-approved for a certain amount before purchasing your RV. This can be a good way to go, if you need a budget to stick to.
If you’re planning on buying an RV less than $10,000 then an unsecured loan (personal loan) is probably your only option. You can receive the loan in full before buying and purchase the RV outright. It’s worth noting that some personal loans can limit what the money is spent on, so make sure you check this before signing up.
How to Get an RV Loan
If you’re ready to hit the road in your new RV, follow this guide to get the best RV financing options.
- Stick to a Budget
With the huge range of different RVs out there comes a huge range of prices. Firstly you want to know which type of RV you are after. You’ll also want to know what finishes and add-ons you want, and if you are buying new or used. This can all add up fast.
Once you know what type of RV you want and what features it must have, you’ll need to research the average cost of these types of RVs.
When you have your ideal RV and the price in mind, it’s time for a reality check. Is the cost consistent with your financial situation? Reevaluate if necessary and remove some of those features if need be.
Another way around would be to determine your budget first, then see which RVs will fit your budget.
- Check Your Credit Score
Like any loan the rates and terms are in large determined by your credit score, the better your score the better the rates. Other factors will also influence the APR like the size of the loan, repayment term, and the condition of the RV, but if you have bad credit then you might not qualify for a loan. For example, Experian states a credit score of 700 or above is generally considered good.
You can improve your credit score by reducing your debt, always paying off your credit card, and paying bills on time. This may take a while to do.
- Save for a Deposit
Most RV dealerships will require a down payment of 10%, the more you can put down as a deposit the less loan you’ll have to take out. The bigger your deposit the lower your monthly loan payments will be so it’s worth saving as much as you can.
If you have a poorer credit rating then saving a larger deposit will increase your chances of getting an RV loan approved. It will show that you’re a reduced risk as you’ll need to borrow a lower amount.
- Get a few quotes
If you decide to use financing from the RV dealership, it’s well worth getting a few quotes from other lenders first. The dealership will offer you loan options from their partners, and although it is an easier option it may come at a price. If you know how much you will be paying elsewhere you can make the best decision for yourself.
You can choose to get finance from an online or traditional lender. Some online lenders just require you to put your details in online and you will receive a quote.
If you choose to get financing through a bank or credit union, you can complete the application online or by phone and get preapproved before shopping for RVs. If you get your financing pre approved, it will show the dealer that you are serious and can give you more bargaining power.
When you have found your perfect rig you will need to send the purchase agreement to the lender and they’ll finalize the loan. The funds will go straight to the dealership and you’ll have bought yourself an RV.
- Don’t forget to haggle
Some dealerships markup RV prices as much as 50%, they do this because they expect you to haggle the price down. Don’t miss this step out, you could walk away with as much as 20 to 30% off the price.
You could also negotiate for free extras and amenities that were on your wish list.
You’ll never know if you don’t ask!
Know the Actual Cost
It’s a common mistake for new RVers to think that the financing is the only monthly cost their new RV will have. Unfortunately that’s rarely the case. You’ll need to factor in all the other necessary costs before figuring out your budget.
Your new RV will have to be taken for a shakedown trip soon after you’ve bought it. The goal of the shakedown trip is to test every component of your new rig, to check that everything is working properly. RVs have hundreds of components and some can be faulty, it’s best to check this as soon as possible.
Repair costs can be expensive for RVs, so it’s always worth budgeting a set amount to put away every month just in case.
General maintenance and fuel will also need to be factored into your budget, as a rule the bigger the RV the more gas you’ll need. There’s also oil, chassis greasing, checking the seals and trims e.t.c the list goes on.
Not to mention all the RV supplies you’ll need, it’s like kitting out another house.
You’ll also have to pay insurance. RV insurance can vary from state to state so always find out what the insurance will be when planning your budget. Again shop around for insurance quotes for the type of RV you have your eye on as quotes from different companies can vary. If you’re a member of an RV club you could get a discount.
If you don’t have the room to store your RV at home, or HOA requirements don’t allow this, then you’ll have to pay for storage. This guide goes into more detail about storage options, depending on what you choose will depend on the cost. This cost needs to be factored into your budget.
Don’t max out your budget, you want to have a little room in your budget for emergencies. Make sure the RV payments, insurance, storage, maintenance and fuel costs don’t take up every spare penny you have.
Making Money with Your RV
Buying an RV is rarely going to be an investment. You can make some money back by renting out your RV when you’re not using it. There are a few good companies out there where you can list your RV and they screen renters thoroughly before approving them. It could be a good way to cut down on some storage and monthly payments. You might even be able to make a profit.
Final Thoughts
Obviously the best option is to buy your RV with cash, however it’s unlikely that it’s a realistic option.
Always remember to budget and not to leave yourself too short. Factor everything you can think of into your budget.
Remember to shop around and get a few different quotes in from financial institutions and insurance companies.
And finally, don’t forget to haggle for your RV you could get yourself a bargain.
