According to the Recreational Vehicle Industry Association, 25 million consumers go RVing each year. Whether you want the convenience of traveling in an RV for your next family vacation or the freedom to hit the road on a solo retreat, an RV can get you where you want to go.
Purchasing an RV, however, is a major financial decision. If you don’t have cash saved upfront, you may need to finance a loan for an RV. Here’s what you should know about RV loans, the types of loans that are available, and where you can find a reputable lender.
The basics of RV loans
Depending on the type of RV you buy, you can expect to potentially spend many thousands of dollars on your recreational vehicle. The RVIA’s 2017 Survey of Lenders’ Experiences found that the average amount financed for a new RV was $45,368 and borrowers supplied a down payment of 13.4%.
Depending on how you finance your RV, you may get either a secured or unsecured loan. An unsecured loan relies on your positive credit history to vouch for your ability to repay your debt. A secured loan requires extra assurance or “collateral” to minimize the lender’s risk in case you can’t make your payments. Some lenders use the RV itself as collateral. This means if you don’t make your payments, the lender could seize your RV so they can recoup their money.
Like with other consumer loans, such as an auto loan or a mortgage, your credit score will determine the interest rate you’re eligible for when it comes to qualifying for an RV loan. But generally loans for RV purchases already have a higher interest rate than other vehicle financing since it’s considered a “luxury” item. Other factors that will affect your RV loan application include your debt-to-income ratio, as well as the age and value of the RV.
What all this means is that prospective borrowers looking for a loan for an RV have a few different lending options to choose from. Let’s look at each in a bit more detail so you can decide which lending option will be the best fit for you.
The best options for an RV loan
A traditional bank, such as Wells Fargo or U.S. Bank, will typically offer specialty vehicle financing for new or used RVs. Bank lenders may showcase competitive interest rates when advertising these loans, but these rates are usually reserved for borrowers with a good credit score. For example, some lenders prefer applicants with a credit score of 690 or higher. Financing terms for an RV loan will vary between banks, with some offering a 48-month term or less, or as long as 20 years.
Be aware that it might be more challenging to finance an older or low-value RV through a bank, compared to a new RV appraised at a higher value. This is because in the event you default on your RV loan, banks want to ensure the collateral on the loan (i.e. the RV) is worth enough money for them to recover their costs.
If you’ve demonstrated creditworthiness in the past and have a high credit score to show for it, a bank loan for your RV purchase may offer competitive rates and terms. If you think this type of loan is for you, you’ll need to gather some information ahead of time. This may include your Social Security number, the details of the potential collateral, proof of income, and your existing debt.
Who a bank loan is good for: Borrowers who have varied RV loan needs, particularly if funding is needed toward a premium RV, and those who have a strong credit score.
Credit unions are not-for-profit, member-owned financial institutions that offer competitive financing options to their members. To finance a loan for an RV through a credit union, you’ll need to first be a member (or shareholder). The criteria for membership will differ between credit unions, with some being regional and requiring you to live in a certain area while others may require that you work for a specific company or industry. Many are not hard at all to join, though.
If you meet membership eligibility requirements, you can typically join a credit union by making a minimum deposit into a checking or savings account. For example, some credit unions require just a $5 deposit into a share savings account to become a shareholder of the institution.
Once you’re a member, you may have access to competitive interest rates compared to a traditional bank. Like a bank lender, some credit unions offer financing up to 20 years, which is particularly useful if you’re looking for the lowest monthly payment possible.
Whether or not you’re already a member of a local credit union, it’s a good idea to see whether you’re eligible for membership at other credit unions in your area and then find out what their RV loan options look like. Just as with traditional banks, comparing rates and terms among credit unions can be useful when it comes to finding the best RV loan for you.
Who a credit union loan is good for: Individuals who meet eligibility requirements for membership into a local or national credit union, and who are looking for more competitive interest rates.
Getting a loan for an RV is also possible through an online lender. Online lenders can provide borrowers with personal loans that can be used to fund a large purchase — including a recreational vehicle.
Comparing many different online personal loan options is easy to do on your own, thanks to websites like Personal Loan Pro and LendingTree. These loan marketplaces show you detailed information from an array of partner lenders so you can find the perfect personal loan for your financial situation. To do this, you’ll need to fill out a preliminary form with your basic information, employment status, and income. With this information, the site will perform a soft credit check and show you a list of personal loan offers you’ve qualified for.
Although some online lenders offer secured personal loans, many strictly offer unsecured loans. The benefit of an unsecured loan is that your RV can’t be repossessed in the event that you default. The caveat, however, is that personal loans tend to have higher interest rates.
Who an online lender is good for: Borrowers who are tech-savvy and enjoy the convenience of shopping various offers in one sitting may find an online lender marketplace ideal. Just remember, the lowest advertised interest rates are reserved for those with strong credit.
An alternative for full-time RVers: Good Sam
If you’re planning to be a regular RVer or even a full-time RVer and you’re also planning to join the RV club Good Sam, then their financing options offered through Bank of the West might be a good fit for you.
Good Sam offers financing options for those who want to borrow funds toward either a new or used recreational vehicle. Loan amounts start at $10,000 and rates vary depending on your chosen length of loan and the amount you’re financing. The age requirement for the RV being financed is that it can’t be older than a 2008 model. This is because Good Sam uses your RV as collateral for the loan.
An advantage of financing through Good Sam is its special rates, depending on how you plan on using your recreational vehicle. For example, borrowers who intend on living in their RV full-time may receive special rates through Good Sam.
Who Good Sam is good for: Individuals who are looking to finance an RV that meets minimum requirements for a loan or borrowers who plan on living in their RV full-time.
The bottom line on loans for RVs
If your priority when it comes to shopping for an RV loan is convenience, an RV dealer can help you find financing through a credit union or bank. Of course, you can reach out to any bank or credit union independently to see what they can offer you. Doing this ahead of time can help you know the price range of the RV you should be shopping for.
Similarly, if you know you’ll be taking out a personal loan to finance your RV, it’s helpful to compare offers before shopping for your RV so you know your budget. Finding out if you’re pre-approved for an RV loan through an online lender and for how much can typically be done in just a few minutes.
Before locking in your loan for an RV, make sure you’re accounting for the entire cost of RV ownership. This includes tax, registration, and insurance on your RV. You’ll need to account for these expenses in your monthly budget or in the RV loan amount itself if you plan on financing these costs.
Getting an RV loan is a major financial responsibility, but with the right knowledge it can be a helpful financial tool to get one step closer to a fun and adventurous experience on the road!