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Financing An RV: Vital Tips You Should Know

By Lauren Cordell  Updated March 15, 2021

Financing an RV is similar to funding a car or a house. You can take out a loan from a bank, credit union, online lender, or any lender connected to an RV dealership. Moreover, just like any other loan, terms and rates vary from one lender to another. Here’s everything you need to know about an RV loan and how to get one.

What Is An RV Loan And How Does It Work?

Taking out an RV loan is a great way to help you buy a new or used RV. Since RVs come in various sizes, loan amounts tend to vary. Moreover, unlike auto loans, RV loans are much larger and complicated.

For example, you can get an RV loan worth 30,000 that you can repay over a few years. Or you can also find an RV loan worth $350,000 that can be repaid over 20 years. However, these will all depend on many factors, including the lender.

If you plan to purchase a cheaper RV, you can opt to get a personal loan instead. Experts recommend getting a personal loan if the RV you desire is only worth $10,000 or even less.

What is the Application Process for an RV Loan?

 Like any other loan, to apply for an RV loan, you will need to fill out a form. This application form will be reviewed and checked by lenders to see if you can qualify for an RV loan. Moreover, your credit plays an essential role in your loan application. Most of the time, the higher your credit score, the greater your chances of landing the best rates on your RV loan.

Besides checking your credit during the application process, lenders usually dig deeper into your other financial aspects like employment, income, and housing. Furthermore, for larger loans, requirements tend to be more stringent. 

Should you get Pre-Approved for an RV Loan?

Suppose you plan to get an RV loan from a lender, My Financing USA, for example, instead of through a dealership. It would be best to get pre-approved before you shop around for the RV you want to purchase. By doing so, you will know what to expect in taking out an RV loan.

During the pre-approval process, the lender might offer you a variety of term options. They might also allow you to select your repayment time frame. Furthermore, the said time frame will influence your monthly payments and interest rates.

Smaller RV loans tend to last about two to three years. On the other hand, larger RV loans usually run from ten to twenty years. Moreover, RV loans most likely have fixed interest rates. This means your payments will remain consistent until the end of your loan.

How do Unsecured and Secured Vehicle Loans Differ?

All auto loans are considered secured loans. This means you will need to pledge your car as collateral. Besides that, this also means that when you fail to repay the loan, the lender might repossess your car.

On the other hand, personal loans most likely are unsecured. This means no collateral is required for you to qualify. Also, your approval is largely based on your creditworthiness.

In RV loans, you can choose between secured and unsecured loans. In some cases, RV loans that are smaller tend to be unsecured and work like personal loans. However, expensive loans, usually for luxury RVs, are secured and function like a mortgage or auto loan.

When you take out a secured RV loan, it will help if you remember that it has a risk involved. If you fail to make repayments, the lender might repossess your RV. However, secured loans tend to be less risky for lenders, which also means interest rates tend to be lower.

6 Steps To Financing an RV

Now that you know the basics for financing an RV, let’s talk about six steps you need to follow. 

Step 1: Set A Budget

To help you set your budget, it is best to take a look at your current financial situation. You need to know how much cash you want to spend on your desired RV. Most RVs cost around $10,000 to $300,000. So do some research first to know what RV you can afford.

As you create a budget, consider the following:

  • How much do you want to pay for your RV?
  • What would you like your monthly loan payments to be?
  • How much of a down payment can make?

Besides these direct costs, consider the other expenses needed in owning an RV. This includes utilities, gas, maintenance, insurance, camping spots, and other expenses. Once you know your budget, you can proceed to look at different RVs that fit your lifestyle and budget.

Step 2: Prepare a Down Payment

Lenders will expect you to give them a minimum of 10% (of the RV price) as a down payment. Hence, it would be best to prepare the amount before deciding on taking out an RV loan. Furthermore, the bigger the down payment, the lesser your total loan amount will be. 

Step 3: Review Your Credit Score

Your credit score has a great influence on your RV loan. The higher your score, the better your loan interest rate. That is why you should review it before you apply for an RV loan. Moreover, checking your credit score before applying will give you the chance to improve it or fix any errors it might have.

Step 4: Choose The Type of Loan You Want

As mentioned above, RV loans can either be secured or unsecured. The difference between the two types of loans is that the former will need collateral while the latter does not. Moreover, secure loans tend to have lower interest rates than unsecured loans. However, these interest rates can vary depending on the lender and your credit score.

Step 5: Compare Lenders

Interest rates often vary depending on lenders. It would be best to compare what interest rates lenders are offering. To do this, you can check out the annual percentage rate (APR) they offer. The lower the APR means, the more affordable the total loan amount is.

Step 6: Negotiate Rates

After knowing your RV loan options, you are ready to pick the best lender to meet your needs. You can now negotiate your rate and purchase price with the RV dealer. You might need to know how to haggle because RV dealers will expect it. Moreover, negotiating can help you save a lot of money on your RV purchase. Don’t get fooled into a loan with low monthly rates, but high-interest rates and/or extended payback periods. Those loans will end up with a very large total loan amount.

In Summary

Financing an RV is a significant purchase. Hence, you would want to make sure you are doing it right. By knowing the essential information and following the vital tips above, you will certainly get your desired RV without any regrets in the future.

If you are looking for RV Buying advice, check out this post: New or Used RV? RV Buying Advice from the Experts.

If you want to learn more about Full-Time RV Finance check out this book!

About Lauren Cordell

Lauren Cordell is a freelancer who writes for various financing and business websites. Aside from finance and business, she also writes book and movie reviews. If she’s not writing, you will see her sitting at the corner of a coffee shop reading books.

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