As Phil and I prepare to bring home our RV in a few short weeks, we thought it would be best to research and document our RV Financing experience and findings.
Most people require some sort of financing in order to afford the purchase of a RV, but we discovered many are unaware of the differences and requirements for RV loans. While they can be “considered” both vehicles and homes, they are not financed the same as either.
It’s not always clear how to go about getting a loan for a camper or other recreational vehicle, but there are institutions that specialize in RV financing.
After you choose a lender who is willing to provide the financing for your rig, you must consider the other factors such as down payment, RV age limits, income level restrictions, interest rates, collateral, and overall loan terms.
Phil and I didn’t want to lock ourselves into any bad deals, and we don’t want our fellow rvers to either. Thats why we’ve compiled all the information you should know about RV financing, and making the best decision for your financial situation and lifestyle.
After reading this, you’ll be prepared to begin searching for a RV that fits comfortably within your financial limits.
What is an RV Loan?
If you’re looking to buy a motorhome or travel trailer but don’t have the cash on hand, an RV loan is meant to help you make that purchase. You’ll be happy to know these loan amounts and durations for recreational vehicles mirror the widespread prices you can find amongst the spectrum of RVs.
Loan amounts for new and pre-owned RVs are typically between $20,000 and $300,000, with some lenders offering up to 2 million. Borrowing periods may range from ten to twenty years.
To understand this unique financing option, you can consider an rv loan the nice mix of a car loan and a mortgage (in terms of complexity). Given RV loans are in a niche market, not all financial institutions will offer financing for them though.
Purchasing a brand-new RV, such as a Class A motorhome or a large fifth wheel, can be a significant financial commitment. Without one of these loans, consumers would be priced out of the market due to the high upfront investment.
How Do RV Loans Work?
It’s pretty standard. Borrowers apply for RV loans just like they would any other type of loan, and the lender considers a number of variables before making a decision.
The size of the loan and the down payment all play a role in determining your eligibility and the interest rate. Lenders may also consider your credit score, assets, income, employment history, and where you live when making their decision.
And you guessed it, there will be some paperwork. The amount of paperwork needed to secure a loan might vary from lender to lender and loan amount to loan amount, but you will need to come prepared with your financial information when applying for any loan. More on that later.
The good needs is you can apply for and get pre-approved for a loan from a lender of your choice before you even start looking for an RV, if that’s how you want to finance your purchase.
The loan’s repayment schedule is up to you and your lender to negotiate, but the length you choose will impact your monthly bill and interest rate.
A 2-3 year duration is common for smaller rv loans, whereas 10-20 year terms are common for bigger RV loans. Interest rates on loans are typically fixed, ensuring that monthly payments won’t fluctuate over the life of the loan.
You most likely won’t be able to skip all of the upfront costs with rv financing though. Be prepared for a down payment of 10% to 20%, which is standard for the industry. An RV inspection, which can cost anywhere from $150 to $200, may also be required by your lender.
Unsecured Loans vs Secured Loans
When it comes to financing for your RV, you will see options to get a secured loan or unsecured loan. While the typical loan for a smaller rv is unsecured and works similarly to a personal loan, there are secured loans for the larger, more expensive RVs out there. These financing options are more similar to a home loan or auto loan.
Secured Loans
A secured loan for your RV means your RV will be used as collateral. These secured loans often have lower interest rates than unsecured loans since the lender perceives there is less risk. They’re less risky because the lender has the right to take back the RV if you ever stop making your payments.
Unsecured Loans
Given what we now know about secured loans, then it makes sense why this next loan is called an unsecured loan. An unsecured loan doesn’t require you to put your RV up as collateral. Because its for a smaller rv and the loan amount isn’t as high, you can get authorized for your loan based on your credit history alone.
You’ll find when researching your loan options that there are lenders like Truist Bank, who will finance your travel trailer purchases with an unsecured loan from $5,000 to $100,000. However, if you were buying a more pricey rig like a Class A or Class C motorhome, you’ll need to put up the title as security.
How to Apply for an RV Loan
The purchase of a rv presents a one-of-a-kind opportunity to see more of the U.S. while bonding with friends and family, but these experiences don’t come cheap. It is essential to select the best loan in order to ensure that you get the best possible price and you are able to afford the monthly payments.
To apply for an RV Loan, there are a few things you must do. One of which is making sure you meet the basic qualifications for the lenders you are looking at borrowing from. Then you need to save, speak with lenders, and negotiate terms.
Here, I’ll break it down a bit more clearly and then expand below.
- Review RV loan qualifications and see how you line up
- Save for your down payment
- Shop around for reputable rv lenders
- Negotiate the best terms that work for you
RV Loan Qualifications
As we touched upon earlier, these finance lenders will need some information about you before they can come to any terms on your loan. The following information is required before applying to RV financing companies.
Keep this info handy; you’ll need them while talking to any RV lenders.
- Income and employment history
- Credit score
- Estimated loan amount
- Ideal monthly payment
- Predicted down payment amount
- Collateral requirements
- RV age
- RV usage
Now let’s take a deeper look at each of these.
Income Requirements For RV Financing
When applying for any loan, the first items you’ll need to disclose are your income and job status.
Lenders will want to see evidence of your income and employment history, so be prepared to provide pay stubs or W2s. The standard minimum length of employment for RV financing companies is one year, but that isn’t always the case.
If you’re self employed, like we are, you won’t have any paystubs so you will need to show proof of consistent income for the last two years.
To those who worry they won’t qualify for an RV loan because of their low income: worry not. Lenders can sometimes help buyers whose annual income is between $25,000 and $30,000.
Credit Score To Help Determine RV Loan Terms
Lenders will determine your RV loan’s annual percentage rate (APR) based on your credit score and debt-to-income ratio. A credit score of 700–720 is typically required, but the higher the better.
Make sure to check your credit report before you start applying. Your credit score won’t be affected if you check it online or in an app for free. We use Credit Karma to keep up to date with ours.
It’s recommended to raise your credit score to at least 700 before applying for an RV loan (if it is lower than that).
However, there are financial institutions that focus on providing bad-credit RV loans. Southeast Financial claims that unlike most RV lenders, they do not have a minimum credit score requirement and instead evaluate each application on an individual basis regardless of the applicant’s credit score.
Credit scores can be raised by a variety of means, such as prompt bill payment and decreasing overall debt. It’s worth noting that if you sign up for automatic payments, some lenders may provide discounts.
Estimated RV Loan Amount
Costs for RVs are highly variable and depend heavily on factors including make, model, year, and size. The cost of even a very modest recreational vehicle can rapidly escalate due to optional add-ons and interior design changes.
Figure out how much of a loan you’ll need and how much your monthly payments would be before you start negotiating with RV dealers and financing lenders.
Think about your needs and your intended uses for the RV. Do you plan on taking off on extended trips, or will you be a weekend warrior at most? Is a winterized or off-road RV necessary because you intend to camp in a chilly climate or rough terrain?
Making a list of must-have and nice-to-have features and researching the average cost of RVs that match those needs is the next step after envisioning your RV lifestyle.
You can find plenty of good rv loan calculators online to help you test out different loan amount options and terms. This can help determine where your budget is and avoid wasting time looking at rvs that are just not affordable.
Your Requirements For RV Monthly Payments
When it comes down to it, the monthly payment is going to be the most important factor for most people.
While the RV price is certainly important, it isn’t the only factor. And after playing with the RV loan calculator, you’ll see that.
The total cost of an RV might quickly exceed your monthly budget once you factor in things like interest, registration and other fees, taxes and insurance.
You’ll need to determine what monthly amount you would feel most comfortable paying and ensure the lenders you are working with know this.
RV Financing Down Payment Requirements
It’s no surprise that when you go to get financing for an rv purchase, the lender will require a down payment. From what we have seen you can expect them to be between 10% or 20% of the total loan price. If you are looking to keep you down payment low, RV dealerships usually only require 10% of the purchase price.
That implies you’ll need between $4,000 and $8,000 in cash to get the sale rolling on a fairly priced $40,000 travel trailer. The less the price of the rv you’re looking to buy, the smaller your required down payment will be.
More often than not, a greater down payment will help you qualify for RV financing if your credit is on the low end too.
Dealers often add a markup of 30%-50% to the price of a new RV, so it is important to negotiate aggressively to get the best value and lower your down payment.
Collateral Requirements RV Loans
As we spoke about earlier, if you get a secured loan lenders will use the RV itself as collateral. The RV will be repossessed if the monthly payments are not made on time. Some RV finance companies offer unsecured loans, while others might ask for collateral such as your home.
Don’t get caught off guard by the application procedure by not knowing the collateral criteria of the lenders you’re considering.
RV Age Limits
In order to recoup some of their losses in the event of a loan failure, most RV lenders won’t finance a rv older than 10 years.
Unfortunately, financing options for an older rv may be limited. But you do have options. You could look into a personal or home-equity loan, or a lender who specializes in financing older models.
Full-Time or Part-Time RVer
RV lender restrictions may prevent you from securing a loan for a camper you intend to use as your primary residence, a point that most RV buyers aren’t aware of.
Most people shopping for an RV don’t give much thought to this potential deal breaker, but most banks won’t let you get a loan if you intend to use the vehicle as a permanent residence.
If living in an RV full-time is something you’ve always wanted to do, it will be more difficult to find a company willing to provide a loan – but not impossible. Thankfully, there are lenders out there that cater to the full-time rv community. It’s important to locate these lenders who are willing to help you before you start applying for any RV financing.
Follow these steps if you’re ready to finance a new or used RV:
Save a Down Payment
You should start saving for a down payment as soon as possible so that you’re prepared to make the purchase when you find the perfect RV for you. Your monthly payments, as well as the interest you pay and the cost of the loan as a whole, can all benefit from a greater down payment.
A greater down payment minimizes the total amount you need to borrow and the risk to the lender, both of which might boost your chances of being approved for an RV loan even if your credit is less than perfect.
If you intend to buy a new RV like we did for our Airstream. Then you could provide a small deposit to the manufacturer to begin building your RV and you won’t have to pay the full down payment until the completed rv is delivered. For us that took 9 months, which was great because that commitment made us really focus on saving as much as we could for our down payment.
Comparing and Finding a Lender
When comparing different RV lenders, there are a few distinct things that should be considered:
- Rates: If the interest rate is low, you will wind up paying a lower total amount over the course of the loan. Find a lender that can provide you with the best terms at the most affordable prices.
- Maximum amount of the loan: Because RVs can be significantly more expensive than other types of vehicles, you should look for a lender who offers maximum loan amounts that are willing to meet your purchase price.
- The loan terms: Loans for RVs typically have longer term durations due to their higher prices, but keep in mind that if you extend the period of your loan, you will end up paying more interest overall.
- Credit score requirements: There are some lenders who insist that potential borrowers have a specific minimum credit score. Before applying for a loan, you should work to improve your credit score to the highest feasible level if you want to be considered for the best rates.
RV dealers work with a variety of lenders who provide a variety of financing programs, and if you decide to finance your purchase through them, they will present you with those lenders’ offerings.
This will be the most hassle-free choice because they handle all the details of the loan process on your behalf, but they may not always offer the most competitive interest rates.
In-house financing may be available at some RV dealerships, but it often comes with higher interest rates and stricter requirements for approval too.
The vast majority of RV buyers, nevertheless, get financing from separate banks or financial institutions. To get pre-approved by a private lender before visiting a dealership, you can often fill out the application online or over the phone with a rep. This can show the seller that you are serious about making a purchase, which does strengthen your hand during price negotiations.
After deciding to purchase an RV, you will email the purchase agreement to the pre-approved lender so they can complete the financing paperwork. When everything is in order, the lender will send payment to the dealer. If you’re happy with your current financial institution or if you find a rate you can’t refuse, sticking with them can be the best choice.
Negotiate the Best Terms
If you’re going to buy an RV, make sure you shop around first. You want to be certain you’re getting a good deal, and the best way to do this is to get a bigger picture of the market. We would even suggest hopping on rv community forums and groups to ask others what they paid for their rigs.
To encourage buyers to negotiate, some dealerships add as much as 50% to the sticker price of their rvs. You might be able to negotiate a discount of 20% to 30% off the MSRP, depending on the RV and the specifics of your purchase. But we guarantee you will be a whole lot more comfortable at the negotiation table if you know what can and has been done before.
Sometimes if you can’t work the price down to the area you want it, you could work other “bonus options” into the deal that makes the asking price more reasonable. For instance, they could provide maintenance and upgrade deals.
Typical RV Loan Terms
While all the above is helpful in getting prepared, Phil and I also wanted to find out what is typical for an interest rate and loan duration so we didn’t accept any bad deals.
This is what we learned about APRs.
As it turns out, RV loan APRs can fluctuate between 4% to as high as 18%. And while interest rates are beginning to rise steadily, those with strong credit scores could still qualify to pay 6% or less.
They we read up on standard loan durations.
A typical rv loan’s payback duration can be as short as 48 months or as long as 240 months. However, payments for a more expensive and modern RV could be spread out over a even longer loan period.
While we can extend loans farther out to lower the payment, we’re not sure we’ll still want to be paying off our rv in 20 years. I mean most only last 7 years.
Where to Get an RV Loan
Ok, so we’ve been talking a lot about being prepared to meet with lenders and negotiating with them, but where are they? Who are they? There are a variety of options for getting RV financing, including dealerships, banks, and even online lenders.
Let’s talk about each of them.
Financing Through an Online RV Lender
In most cases, the most efficient way to finance a recreational vehicle is through a specialty lender. Although this may require a little extra homework on your part.
An RV financing lender can help you through the process since the rv industry is their specialty. You will be able to tap into their knowledge and tools and determine whether or not there are issues with the RV’s valuation or the current owner’s documentation.
Online lenders are able to provide competitive rates because they operate with far lesser overhead than brick-and-mortar banks. Some online lenders also provide the added benefits of quick funding and an easy-to-use application process.
This is a good option to get the financing you need because they typically offer lower APR, can provide larger loan amounts, have more flexible repayment options, and typically work with lower credit scores.
RV Dealership Financing
The majority of RV dealerships provide financing options for their clients. While some collaborate with outside lenders, there are some dealerships that offer in-house financing too.
Multiple RV-specific loan providers may be available to you through the dealer when you make your purchase.
The benefits of working through the dealership for your financing include more negotiation leverage for you, the convenience (because you are already there), increased efforts made by dealers to tailor loan payments to your situation, and typically a lower required down payment.
However, there are a few downsides. The APR is often times higher than what you can find somewhere else and a high credit score requirement is typically imposed.
Financing Through a Bank
Customers of larger banks can often discover loans available for their rv purchase. You should check with your current financial institution to see whether they offer loans for recreational vehicles or if they will allow you to take out a personal loan to complete the purchase.
The perk of working with your bank is simple. You already have history, so they can quickly offer an approval and it will be so easy to schedule automatic payments from your bank account.
And while the convenience is key here, it’s important to note banks will usually only offer smaller loans with short repayment terms and higher APRs.
If the bank you are working with does not offer rv specific loans, you can also consider a personal loan or home equity loan.
Personal Loan
Getting a personal loan is a good option if you don’t want to secure your RV loan with your RV as the collateral. Banks make these unsecured loans available to anyone with excellent credit or who are willing to pay substantially higher interest rates.
In most cases, a regular bank loan makes more financial sense, but in other cases, a personal loan may be preferable.
For example, if you want to buy a used RV, you might not be able to receive a typical bank loan.
In this instance, the bank has determined that the used RV is not valuable enough to serve as sufficient collateral. You won’t have to worry about this if you switch to a personal loan.
Home Equity Loan
This is an option only available to current homeowners. Homeowners may be able to receive RV financing through a secured home equity loan. The deal would be you can take out the loan using the equity you have in your home.
It’s possible to qualify for a sizable loan for your RV purchase if you’ve made significant mortgage principal payments or if the value of your home has increased significantly since you bought it.
If you are unable to keep up with the payments on this type of loan, you risk losing your home though. So its risky business…
Five Best RV Loan Companies
Even after all the information we provided above, we know the RV financing process still can be difficult to understand. That’s why we decided to look at over 20 different lending options to help you make a more informed decision and find the best loan companies.
We considered their ratings and reputation, interest rates, credit requirements, minimum RV ages, and more to pick our top five best rv loan companies. This is what we ended up with:
- GreatRVLoan
- Alliant Credit Union
- Southeast Financial
- Lightstream
- Bank of the West
GreatRVLoan
GreatRVLoan was picked as the best RV loan overall because they offer financing for RVs up to $2 million and motorhomes up to $10 million. Not only can you get a loan for a new or used recreational vehicle at reasonable interest rates, but there are also loan alternatives for folks with both good and bad credit.
Standard RV loan rates begin at 6.99% for balances under $25,000. A shorter loan term and a lower interest rate of 6.95% are available to those with less-than-perfect credit.
Standard loans for amounts above $50,000 have repayment durations between 60 and 240 months, whereas loans for borrowers with poor credit have repayment terms between 60 and 180 months. Borrowers with credit scores of 550 and above can qualify for a loan of up to $75,000.
Not a bad deal right?
Alliant Credit Union
With Alliant, you may get a loan for a new or used recreational vehicle, and even if you want to live in it full-time, you still have a good chance of getting approved.
With strong credit, you can get a loan of up to $400,000, and the decision will be made the same day in most cases. The organization provides attractive APR options and monthly payment durations of up to 20 years.
As of January 2023, rates start at a low 6.79 percent. Despite the fact that Alliant does not publish a minimum credit score criteria, a strong credit score is almost certainly necessary to qualify.
Alliant will not offer financing for 15 year or older rvs though, so if you are looking at older rigs you may want to scroll to the next lender on this list.
Southeast Financial
When looking for RV financing with low credit, Southeast Financial is your best option. Customers with credit as low as 550 can get RV loans through their Credit Challenge Program.
To qualify, a stable annual income of $20,000 or more is required. All bankruptcies are acceptable, and rvs up to 15 years old can be used as collateral (but you can finance an rv of any age). They have reasonable interest rates for old vehicles and don’t care about the year or mileage. Rates for used recreational vehicles start at 5.49%.
Your maximum loan amount is $75,000, and your repayment term is anywhere from 60 to 180 months. Borrowing is not available for park model or full-time RV use.
Lightstream
LightStream is the most efficient site to apply for and receive an RV loan of $5,000 to $100,000 (think same day loan). But the 24-84 month repayment period is significantly shorter than what competing lenders offer. Interest rates begin at 5.99%
We believe LightStream stands out from the rest of our recommended lenders since they offer unsecured loans (meaning no collateral necessary). This will equally save you on extra paperwork because you won’t be asked to produce any RV-related paperwork.
Did you know unsecured loans also allow for instant approval and deposits?
There is no required minimum credit score, although having good to exceptional credit will boost your chances of being approved.
Bank of the West
If you have excellent credit, Bank of the West is your best bet. They offer loans between $10,000 and $2,000,000 with interest rates as low as 4.74% APR.
Anyone planning to live in or just vacation in their rv could be eligible for this program and you can choose from repayment terms ranging from 48 months to 240 months.
Since Bank of the West is upfront about its minimum credit score requirements (680 minimum preferred), we recommend them to only those with decent credit.
6 Strategies on How to Get a Cheaper RV Loan
There are ways to cut costs on an RV purchase regardless of the type of loan you use to pay for it. You can try some of these tried-and-true methods:
- Give a Larger Down Payment
- Increase Your Monthly Payments
- Focus on Lowering The Interest Rate
- Deduct The Interest Off Your Taxes
- Keep An Eye Open For Refinancing Options
- Shorten Your Loan Terms
Give a Larger Down Payment
Cutting down on how much you owe is the most effective strategy for saving cash while financing a recreational vehicle. And it’s possible to accomplish this by making a sizable down payment on your loan.
The two most obvious ways to do this are (1) to save up more money beforehand and/or (2) to negotiate a higher trade-in value for the RV you intend to sell to the dealership.
By giving a larger down payment up front, you will pay less in interest over the life of the loan.
Increase Your Monthly Payments
A loan without prepayment penalties will allow you to pay more of principal each month. So you if you get a loan like this, then you can make those larger monthly payments.
This will shorten the time it takes to repay your loan and the amount of interest you accrue each month. This can save you thousands of dollars in the long run (and help you pay off the loan sooner) if you continually pay more than your “agreed-upon” monthly payment.
Focus on Lowering The Interest Rate
You can save a lot of money on the financing of your RV if you negotiate a lower interest rate. This is especially important to remember while shopping for any luxury RVs.
Phil and I spent a lot of time on YouTube watching negotiation videos, and we definitely recommend it if you are not a natural negotiator or in sales. We just typed in “best rv negotiation videos youtube” into Google, and was given so many options to sift through.
Deduct The Interest Off Your Taxes
Did you know you can deduct the interest from your taxes if you reside in your RV full-time?It’s true!
Many states have tax breaks for recreational vehicles, both new and old. If you live in your RV full-time, vacation in your RV or if you run a business out of your RV, you may be eligible for additional tax breaks.
Possible tax breaks could include:
- Homeowner tax deductions if you use the recreational vehicle as your primary residence.
- In most states, the amount of the RV’s sales tax that you paid up can be claimed as a deduction for the year you bought your RV.
- Any money you put toward paying interest on your RV loan during the tax year can be deducted.
- If you run a business out of your RV, or if you rent it out to others, you may be eligible for additional tax breaks. The only drawback with this is that you won’t be allowed to use your RV for personal trips. If you do, the IRS will certainly give you some problems…
To start the homeowner tax deductions, all you need is a RV outfitted with a bed, a kitchen, and a bathroom. You can verify this by checking the “Qualified Home” section of Publication 936 by the Internal Revenue Service for details.
As I’m writing this article, this is the most recent version written:
“For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
Keep An Eye Out For Refinancing Options
Although you may have previously financed your RV, that doesn’t mean you can’t find a better deal else where. You may be able to refinance your loan at a reduced rate of interest or if you have made significant principal payments.
There is a major drawback though. If you take this course of action there is the possibility of paying another loan origination fee.
Nonetheless, refinancing could be a good idea if you still owe a significant amount on the loan. We would definitely keep a look out, if you don’t think you got the best rates.
Shorten Your Loan Terms
Interest is a not so fun game we have to play when getting a loan. And the longer we hold our loans, the more interest we have to pay. Thus, the shorter the duration of the loan, the less we end up paying in interest.
We’ve ran the math on a few different rvs and sometimes the difference between paying the loan off in 10 years versus 15 years is over $15,000.
Clearly, the interest savings are considerable and will increase in proportion to the loan amount. So do your research before you commit to a time frame!
RV Loans on Older RV Models
A credit union is your best bet for finding a loan for your older RV that has a reasonable rate and terms. A loan is often granted for RVs no older than 15 years, however vehicles of up to 20 years of age have been approved in the past.
Keep in mind, there typically will be added requirements when financing an older rig though. For instance, a downpayment equal to 20% of the RV’s total price may be required to secure the loan. Also, maintaining a high credit score will be critical in getting a decent interest rate, however, that may be difficult to do when the RV is older than 10 years.
Thankfully, credit union rv loans are not your only option.
You could look into applying for a personal loan or a home equity loan.
If you have decent credit and are looking for a loan that doesn’t put as much strain on your finances, a personal loan may be the right option. By doing this, you can avoid paying exorbitant rates on an RV loan and get a better repayment period.
Another option is to get a home equity loan. If you were to take out a loan against the value of your property, you could put that money toward whatever you wanted (including the rv).
With these loans, you wouldn’t have to worry about paying interest on the money until you actually use it, and the rates would be much more competitive.
The bank, credit union, or financial institution that you choose to work with will handle the specifics, so the terms will vary.
Final Thoughts
So there you have it. Everything you need to know when looking into RV Financing options.
There are a number of options for paying for your rv, each with its own set of pros and cons. Your individual financial situation will dictate the type of financing you pursue and should be a personal decision. This isn’t a one size fits all kinda deal.
The most important piece of guidance we can give is to take your time and carefully consider each of your financing alternatives to ensure you obtain the best deal.
Remember to work on improving your credit score, saving up for a sizable down payment, and try paying off the loan as soon as possible to save even more.
You may get the greatest bang for your buck and the quickest path to complete RV ownership by following these simple guidelines.
Happy RVing!
