How do RV loans work?

RV loans are a great way to purchase a trailer, motorhome, or other recreational vehicle. Traditional RVs can cost anywhere from $60,000 to over $1 million. However, small travel trailers are cheaper than standard RVs and can be purchased with an RV loan.

Like car loans, RVs are used as collateral for the loan. Therefore, if you miss payments on the loan, the lender can repossess your RV. This type of loan is known as a secured loan. Some lenders offer unsecured RV loans, but that will depend on your financial situation.

The loan amount will depend on the cost of the RV, the down payment, the APR, and your credit history.

How to use the RV loan calculator?

The RV loan calculator above will tell you your monthly payments and the expected interest amount. All you have to do is input the size of the loan, the loan terms, and the interest rate associated with your RV loan.

How long are RV loan terms?

Like other vehicle loans, the loan terms can vary based on the vehicle and the borrower. Because RVs are more expensive than your average car, RV loan terms are usually longer. For a standard RV or travel trailer, borrowers can expect a 10-year loan. For more expensive RVs and motorhomes, borrowers may be offered a 20-year loan.

In general, you should try to apply for the shortest loan term that is financially feasible. By looking at the life of the loan, we can see that longer loan terms cause higher interest payments over time.

For instance, the interest on a $100,000, 120-month loan at 6% is $33,225. But the same loan ($100,000 at 6%) paid over 240 months would have an interest cost of $71,943.

If you need a longer loan term, you can use it to your advantage. Sometimes, lenders are more willing to offer lower interest rates on long term loans. Try to remember this for your loan negotiation!

How long does it take to get an RV loan?

Applying for an RV loan should take no longer than 48 hours. During this time, lenders will obtain and review your financial history to create a loan offer.

You have plenty options when looking for a RV loan lender. You can ask any large banks, online lenders, credit unions, and RV dealerships. In some cases, the dealership can cost you more since dealers will add fees to the lender’s quote. This can also make comparing quotes more difficult.

What is the minimum credit score for an RV loan?

One benefit of RVs is that lenders consider them a necessity that can be used as a living space. This means that lenders are more lenient toward borrowers with lower credit scores.

In general, you want to have a credit score of 650 or higher to get the best interest rates. If your credit score is above a 650, you can expect the interest rate to be between 4% – 18%.

But you can have a credit score as low as 550 and still be accepted for an RV loan. However, with a credit score of 550, you will likely have an interest rate of 20% or higher.

What are the requirements for an RV loan?

There are many factors a lender will look at when creating a loan offer. Aside from your credit score, lenders will look at your full financial history, such as:

  • Credit score
  • Debt-to-income ratio
  • Liquidity 

Additionally, most lenders will require a down payment. A typical down payment for an RV loan is 20% but can be as low as 10%.

You should always provide the largest down payment that works in your budget. The larger your down payment, the less interest you will pay in the future.  

What is the oldest RV you can finance?

RVs have a long life and can be used as a domicile for years. However, RVs depreciate like cars, so lenders don’t treat them like homes.

In general, lenders won’t offer loans for RVs older than 15 years. This is because it is difficult for lenders to estimate the value of the RV.

If you’re looking to buy an RV that’s older than 15 years, you can still finance it with a personal loan. However, the personal loan may have higher interest rates and unfavorable loan terms.