Road trips with your family squeezed into the back seat of a car, and a trunk full of luggage can make driving cramped and uncomfortable. Flying can be pricey and stressful, with long lines and canceled flights. But with an RV, you can relax and see the country with all the amenities of home and enough room to spread out.
But RVs can be expensive, ranging from $35,000 to $300,000, depending on the RV class and features. You’ll likely need an RV loan. Because it’s a big purchase, you’ll want to understand your RV loan options, how these loans work, and where to get the best RV loan rates to help you buy an RV without straining your budget.
An RV loan is a type of long-term financing available through banks, credit unions, online lenders, and RV dealerships to purchase a wide variety of travel trailers, fifth wheels, motorhomes, pop-up or truck campers.
It may also be possible to use a personal loan to buy an RV, provided you can qualify for a large enough loan amount. Depending on your credit score, interest rates for a personal loan may be comparable to, or higher than, the rate for an RV loan.
Recreational vehicle loans are similar to car loans, where you borrow money from a lender and agree to repay the loan, plus interest, over a set period of time. Most RV loans are secured and backed by collateral (usually the RV) and generally come with longer terms and more stringent qualifications than some other types of loans.
RV loan terms typically range from 10 to 15 years, but some banks offer financing up to 20 years.
RV loans vs. auto loans
While auto loans and RV loans are a similar type of financing, they do have some differences:
- Loan term — The average loan term for a new car was about six years in March 2020, with seven-year loans not far behind, according to Edmunds. Most auto loans in 2020 were longer than five years. RV loan terms can be as long as 20 years.
- Loan type — Like car loans, most RV loans are secured loans. But some smaller RV loans are unsecured, much like personal loans.
- Credit score requirements — Some lenders view RV loans as similar to getting a boat (or other pleasure craft) loan. So you may need a higher credit score to qualify than you would for an auto loan.
- Interest rates — Currently, interest rates for auto loans and RV loans are about the same. But RV loan interest rates vary widely depending on the type of RV, model year, features, and upgrades.
You can get an RV loan from banks and credit unions, as well as online lenders and RV dealers. Keep in mind that because RVs are recreational vehicles, qualifying may be challenging without a good credit score. Most lenders offer loans for both new and used RVs.
What credit score do you need for an RV loan?
To get an RV loan, you’ll typically need a credit score of 650 to 700, though individual requirements vary by lender. In contrast, you can typically get a car loan with a credit score of 579 or below, but your interest rate will be much higher than if you have good credit.
If you want to get an RV but your credit score is less than stellar, you can do several things to improve your score before you buy:
- Pay all your bills on time.
- Don’t take on more debt than you can easily pay off.
- Catch up on any past due accounts.
- Pay down your credit card balances.
- Limit how many new credit accounts you open.
The process to get an RV loan is much like any other loan. You’ll submit an application that your lender reviews based on several factors like your credit score, loan amount, down payment, and debt-to-income ratio. It’s a good idea to get prequalified with multiple lenders before completing a formal loan application so you can get an estimate of how much you can afford for an RV.
These are the steps you’ll typically follow to get an RV loan:
- Set your budget. Before you shop for an RV or apply for an RV loan, understand how much you can comfortably afford to pay back. New RVs can be expensive. Used RVs can also be costly but may be more affordable in the long run.
- Save for a down payment. Many RV companies require a down payment of 10% to 20%. Typically the larger the down payment, the lower your monthly payments will be. You may also get better terms and a lower interest rate.
- Check your credit. Lenders typically offer better rates and terms to people with good to excellent credit. Improving or repairing your credit score could make it easier to secure RV financing.
- Shop around. Lenders offer varying rates and terms, so it’s best to shop around for a loan to find the best deal for your financial situation.
- Negotiate. Research prices ahead of time so you know what dealerships are charging for the RV of your dreams. Think about a reasonable down payment amount and raising your credit score so you can negotiate better terms when applying for financing. Also, consider fees and penalties, like prepayment penalties or processing fees, when negotiating loan terms.
- Apply for the loan. When qualifying you for an RV loan, lenders look at your credit score and down payment. They may also consider your debt-to-income ratio, income, and employment history and take a look at your taxes to determine what rate and terms to offer you.