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Updated on Friday, January 18, 2019
Whether you want a million-dollar mansion on wheels or a pop-up camper trailer that’s barely seven feet long, recreational vehicles come in all sizes. So do RV loans. RV financing varies almost as widely as the RVs themselves so finding the best RV loan rates requires some shopping around. We’ll tell you what to look for in an RV loan, where to find one and how to get the best rates.
Which lenders offer RV loans
Dealership lending partners
Many RV shoppers get a loan through the RV dealership. There are two ways to do this: through the dealership itself (which we’ll talk about later) or through a lending partner. In the second case, the dealership itself is not the lender, rather banks and credit unions that partner with the dealer are the ones that respond with potential loan offers.
Pros. It is terribly convenient to get an RV and an RV loan in one sweep, at one location.
Cons. The dealer may be able to raise your APR and take the difference as profit. They could also only tell you about the loan offer that makes them the most money – not the one that saves you the most money.
Dealership in-house financing
Dealerships themselves may have a financing company that lends to customers “in-house.” Also known as “buy here, pay here” financing, in-house lending is usually only offered to people who can’t get financing elsewhere.
Pros. For people who can’t find financing anywhere else, it can be a relief to have an option and get a loan offer.
Cons. “In-house” financing is known to be predatory and can have APRs above 20%.
Banks, online lenders and credit unions
Large and small banks and credit unions may be willing to finance an RV, but you might not know that if you only receive loan offers from the dealer. A dealer may not partner with the particular bank or credit union you want to apply to, which means you’re unknowingly limiting your loan options. You may also be able to get a customer rate discount if you apply directly with the bank, credit union or online bank where you already have an account.
Pros. The main benefits of financing with a large bank or online lender are the 24/7 customer service and the advanced apps they may offer. The main benefits of financing with a credit union include potentially lower rates, though you would have to meet its membership requirements.
Cons. You may need to do a separate application for each bank and / or credit union you want to apply to.
How to apply for an RV loan
On almost any loan application, you’ll need to write out how much you want to borrow, what you want to buy, in addition to who you are, where you live, where you work, how much you make and how much rent or mortgage you pay.
What the lender looks at about you
Your credit score. It’s a grade of how well you’ve handled credit — how well you repaid loans, paid bills, etc. It’s a number between 300 and 850. The higher the number, the better. You may not have a credit score if you’ve never taken out a loan before. For more information, you can check out this guide to understanding your credit score.
Your credit history. This is a record of how much you’ve borrowed for what and how well you’ve paid loans back. Potential lenders see it as a good thing it you have paid other loans on time.
Your debt-to-income ratio. This measures the amount of your income that goes toward debt each month. A high debt-to-income ratio may be a sign that you don’t have enough money to make payments on an RV loan.
Your down payment. How much money are you putting down? Zero or $10,000? A down payment could show the lender how well you manage and save your money, and how much you are willing to invest of your own money, upfront, in the RV.
Your collateral. You may be able to get a better deal on an RV loan by putting your house or other substantial asset you own as collateral.
What the lender looks at about the RV
What is the RV’s age and mileage? A new RV may be a less risky investment as it is probably less likely to break down and its depreciation rate is more predictable. The older and more mileage an RV has, the more risky it may be.
The price of the RV. How much is that RV, $3,000 or $300,000? A used RV may be riskier but will typically cost less.
The value of the RV. How much is the RV actually worth? That is, are you overpaying or are you getting a good deal? To find out how much an RV is actually worth, you can use a free, online industry guide: NADAguides.
Trade-in information. If you have an RV to trade in that is worth more than what you owe on it, it can act as a down payment.
What the lender looks at about the loan you want
How much you want to borrow. Overall, how much do you want to borrow for the RV? Is this amount more than or less than what it is worth?
How long you want to borrow. How long you want to borrow the money is an important factor. Usually, the more money you borrow, the longer the loan term and the lower the APR. Despite the lower APR, the amount and the term mean you’re paying more in interest to the lender. Note that a loan advertised with a very low APR may be a variable-rate loan, meaning the rate could go up and down over time. If it is a variable-rate loan, consider the pros and cons before you sign.
How to negotiate
Don’t focus on the monthly payment. A small increase in a monthly payment can mean a big change to the bottom line. If you get a good deal on the overall price, you’ll get a good monthly payment.
Shop around. Do not solely rely on the dealer and trust them to give you the best loan offer. Get at least one RV loan offer from a lender directly so you know what you qualify for and then tell the dealer to beat that offer.
Ask for a tier bump. When you are talking to the lender representative or the dealership salesperson, ask them for what’s known as a tier bump. Potential lenders use your application to determine your credit tier. The higher the tier, the more likely you are to get a loan and to get a good loan rate. Reasons you might deserve a tier bump include a good credit history, low debt and a steady job.
Think carefully about add-ons. Don’t simply say “yes” to add-ons such as an extended warranty, GAP coverage, interior protection and tire warranty. These things are usually an afterthought to the RV itself, but they can cost thousands of dollars. Potential buyers should also factor in the other costs of RV ownership: insurance, fuel and maintenance, not to mention overnight or RV park fees.
RV loan rates and terms
RV loan offers you may receive will depend on your financial situation, the lender and the RV. To give you an idea of what’s out there, here are the highest and lowest advertised rates we saw as of this writing.
- One of the lowest advertised rates we saw was 4.29% for a new RV loan ranging from $5,000 to $100,000 for 24 to 84 months.
- One of the highest advertised rates we saw was 15.04% for 84 to 120 months for any amount greater than $100,000.
Depending on your financial situation, however, the APR may go up to your state’s highest legal limit, which is 25% in some states.
Terms for RV loans can be nearly as long as home loans, up to 20 years. Of course, unlike a home which you hope will appreciate in value, RVs generally depreciate. The good news? Not all RVs are super pricey — nearly a quarter of RV owners have a conventional travel trailer, which range in price from $8,000 to $95,000, according to the RV Industry Association.
Who RV loans are best for
Large RV loans are best for people who have a high credit score (750 or greater), an established credit history, low debt-to-income and a significant amount of assets that could be used as collateral. These assets could either be real estate property, stocks and bonds, a pension or other such property.
Alternatives to RV loans
There are many alternatives to RV loans. If you could get money to buy the RV in a cheaper way other than taking out an RV loan, Eric McClain, CFP at McClain Lovejoy in Birmingham, Ala., says you should consider it. “Consider your assets and credit sources and utilize the cheapest money available when possible,” McClain said.
- Full-timer loan. If you will be using the RV as your primary residence and live in it full time, you may be able to get a “full-timer RV loan.” Talk with a tax professional about potential tax benefits for buying and using an RV as a residence — you may be able to take advantage of the same tax deductions as a traditional homeowner.
- Vehicle loan. If the RV has a similar price to that of a regular vehicle, you may be able to get a vehicle loan for the RV. Be aware that vehicle loans usually have shorter terms than RV loans, so you may have to make larger payments.
- Personal loans. If the RV you want is inexpensive, a few hundred dollars, you may not be able to get an RV loan for it. An alternative may be a personal loan. You could use our personal loan tool to compare lender requirements and offerings.
- Home equity loans. If you own a house, or have almost paid off your house, you may be able to get a home equity loan or a home equity line of credit (HELOC) at a lower rate than an RV loan. Keep in mind that if you were to default on these loans, you could jeopardize your primary residence.
- Cash. “Cash is king” as the saying goes. If you have enough cash to afford what you want, why pay interest on a loan?
If you’re caught trying to choose whether to finance or pay cash, Bernard Kiely, CFP, of Kiely Capital in Morristown, New Jersey, advised paying half in cash and financing the other half. He explained that if you withdraw cash for a large purchase, from a stock market investment, for example, and the stock market goes up 5%, you’re going to kick yourself. But, he says, “If you go half way, you’re right no matter what happens.”
RV loan refinance
If your financial circumstances, particularly your credit score, have significantly improved since you originally signed for your current RV loan, consider looking into refinancing. You may be able to save more money by refinancing than you otherwise would by making early payments. Many places that offer RV loan financing also offer refinancing and you could even ask your current lender for a refinancing offer. Not all lenders will refinance their own loans, but some will in order to keep your business.