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How to Finance an RV

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RVs are a fun way to travel the country without flying and still have all of the luxuries of home. Since RVs are a unique mixture of an automobile and home combined, financing doesn’t fall within your typical categories. RVs have a higher price tag, therefore, an RV loan can help you finance your purchase.

What is an RV loan?

RV loans help finance a purchase of a new or used RV that you cannot purchase outright. Since there are a wide range of RV sizes, types and prices, RV loans have different options for term length. RV loans are always separate from auto loans because they are a much larger purchase. Different lenders have different term lengths with some lasting a few years and other loans are repaid over a 20 year period. For a small RV loan, you have the option of a personal loan which some banks require for RVs under $10,000.

How Loans for RVs work

Borrowers must submit a loan application that the lender reviews and evaluates. The borrower’s credit plays a large role in acceptance and interest rate, as well as the size of the loan and down payment. Lenders may also look at your income, debt to income ratio, employment and housing. Larger loans have more strict requirements and may require additional documentation.

If you prefer getting an RV loan through a lender versus a dealership, you can get pre-approval before shopping for your RV. Smaller loans may be 2-3 years in length where a larger loan can be 10 to 20 years. Interest rates are fixed so your payments stay consistent. Down payments are usually required, and fluctuate between 10% to 20%. Some lenders may require an inspection which costs around $150-$200.

There are two types of loans: unsecured loans and secured loans.

  • Smaller RV loans are typically unsecured and function like personal loans
  • Larger loans for luxury RVs are secured like an auto loan or mortgage, using the RVs title as collateral. If you fail to make payments on a secured loan, your lender can repossess your RV. Interest rates are often lower on secure loans because of the collateral.

Where do you get an RV loan?

There are two options for financing your RV: through a traditional lender or through the RV dealership

Traditional Lender or Online Lender

You can get a loan through a traditional bank or credit union. It’s suggested to get pre-approved by the lender before you go shopping for RVs. This is helpful to know how much you can afford based on your credit history.

RV Dealership

The dealership can give you options for financing and this is often an easier route to go. RV Dealerships have partnered with various lenders which give the buyer more bargaining power.

If you plan to buy an RV that is less expensive, it is often suggested that you finance through a personal loan. You can do this prior to shopping to have the money on hand and can make your RV purchase outright.

What is the length of an RV loan term?

RV loans are typically larger than an auto loan so they are often for longer terms. The most common timeframe is between 5 to 10 years. Depending on the price of your RV and the size of your down payment, higher priced RVs can be financed for up to 20 years. The age of the RV is a big factor. If an RV is older than 10 years, you cannot do a long term loan. Typically, lenders only allow a loan for 5 years or less with a downpayment of 20% if the RV is older than 10 years in age.

The size of the loan determines the term length of the loan:

  • If the loan is under $25,000, most lenders finance from 5 to 7 years
  • Loans of $50,000 are usually financed for 10 years or less
  • RVs over $50,000 have a loan length of 10 to 15 years
  • Any loan over $100,000 can have payments for a 20 year loan term/
  • Steps to apply for an RV loan Determine your budget Before you start shopping, determine what you’re going to use the RV for. Make a list of your must-have features. Research the RVs that carry your requirements. Since RVs vary in size, type and costs, evaluate if the cost of the RV that meets your needs and fits within your budget. Another way to determine your budget for purchasing an RV is to calculate your monthly finances to see how much room you have within your budget each month. Keep in mind maintenance, fuel and insurance costs as well. Check your credit score Your RV loan interest is largely determined by your credit score. Some lenders are more strict than others. Generally speaking, a credit score of 700 or higher is preferred for an RV loan. Other lenders specialize in loans for bad credit such as My Financing USA. It’s important to check your credit score and improve it if needed.   Save for your down payment It’s very important to save for your down payment on your RV. Most lenders prefer a 10% down payment of the purchase price while other lenders can require up to 20% down. Start saving for your down payment as soon as possible. The larger of a down payment you apply to your loan, the less your monthly payment will be. This can also decrease your interest rate. If you have bad credit, a bigger down payment will help your chances of getting approved for an RV loan. Shop for lenders Shopping around for your lender is smart. Dealerships can assist you through their in house financing. This is a more convenient option since they take care of all of the details. If you choose a private lender, complete the application form and get pre-approved before shopping for your RV. If you purchase an RV under $20,000, a personal loan may be the best option for you. Negotiate terms of RV purchase Do your research and shop around for the best RV to fit your needs. Keep in mind, some dealerships mark up the price as they expect you to negotiate. You may be able to get up to 20 to 30% off your RV if you negotiate the price. There are often holiday sales or sales allowances the dealership can apply. Some dealerships can throw in discount maintenance service, longer warranties or extra upgrades.   Now that you’re ready to start the process of financing your RV, you’re ready to start shopping! If you need assistance with your financing options, Lakeshore RV in Muskegon Michigan is here to help! We offer stress free financing to get you on the road to explore. Lakeshore is proud to carry the top RV brands at the lowest prices available. Our credit application only takes a few minutes, and is safe and confidential. We also have a helpful online calculator to determine your loan amount. Call us today 231-788-2040 or find more information online here.
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