Don’t Start RV Shopping Until You Read This
If you qualify, RV loan rates will depend on the lender, your credit worthiness, the age and type of vehicle you are trying to purchase, how you intend to use the RV, whether the loan is secured or unsecured, and a host of other variables.
Currently, interest rates range between 4% to 10% but the actual annual percentage rate (APR) is determined by all these variables calculated together.
Who Has the Best RV Loan Rates? What RVers Get Them?
Every lender has their own standards of what they will and will not finance and how they calculate their risk. The greater their risk, the higher the interest rate will be. You have some control over this calculation, by donig the following?
- find the lowest priced RV that meets your needs,
- negotiate the lowest possible price,
- pay a larger down payment,
- let the bank secure their investment with the RV,
- improve your credit score.
If you’re not in the market right now for an RV loan and your credit score is in the good category then work hard on that score to move it to the excellent category before you go shopping for an RV loan. Some lenders require a minimum credit score of 750 or above and Credit Karma’s online scores are not an accurate representation of your FICO credit score.
Take the time to learn about your actual credit worthiness. You can do that by requesting a credit report from each of the three primary credit bureaus. Annually request a free credit report. You might also obtain your FICO score through your bank or credit union.
If you can’t get it there, Discover offers free FICO scores and you don’t need to have a Discover Card. It’s a good idea to be as informed as possible. It’s demoralizing to think your credit score meets the lender’s requirements then have your application rejected because your score was too low.
RV loan lenders
Some lenders finance RVs for part-time or full-time use. But other lenders will not finance a park model or full-time RV user. Some lenders will not finance older RVs or ones with mileage over a specific threshold.
Many lenders specialize in loans for borrowers with low credit scores or blemishes on their credit history, and some lenders focus only on high-dollar, high-end recreational vehicles and the people who want to buy them.
An unsecured loan will typically have a higher interest rate than a secured loan, but some online lenders can qualify you for an unsecured loan in one day. Shop for an RV knowing that your loan is pre-approved.
You know how much of a loan you will qualify for, how much of a down payment will be needed, and how much your payments will be. This puts you in the driver’s seat when you are negotiating with the sales team at a dealership. If they know you are preapproved for a specific loan value and the RV you’re interested in purchasing is a little over that price they may be willing to discount the RV to facilitate an immediate sale.
Some lenders will allow you to roll your extended warranty and taxes into your loan, while other lenders will not allow the inclusion of these secondary costs to be rolled into the primary loan. Many new RV owners just want to get it all taken care of at one time and in one loan, and they see advantages in amalgamating the extra costs into the primary loan.
RV loans vs mortgage loans
RV loans are more like car loans than mortgage loans. In some cases the interest on the loan is tax deductible. This is just like the interest on a mortgage. But the rates are more like car loans. The terms of an RV loan are generally in-between car loan terms and mortgages.
Most lenders do not have a prepayment penalty. Sometimes you can start off with a high interest rate because of poor credit. Over time you establish a satisfactory payment history. Then you may be able to refinance your loan at a reduced interest rate. Ask about prepayment penalties and refinancing when your credit worthiness improves.
What to look for
Deciding which lender is the right one for you requires some research. A determining factor can be the age and mileage of the vehicle to finance. Some lenders won’t finance RVs older than 2008, 2010, or 2012. Perhaps you want to live full-time in your RV. This too dictates which lender you can use. It also determins the annual percentage rate (APR) of the loan.
Your credit score is a major factor that dictates the right lender for you:
- Some lenders specialize in loans to people with low credit scores
- Others only lend to people with high scores.
The links at the bottom of this article help your research. They contain extensive descriptions of many different lenders and their unique criteria is for RV loans.
The RV Loan Application Process
Every lender wants to know about your employment and your annual income. They also ask about your debt-to-income ratio, and your spouse’s income if you have one. Other factors also help calculate their risk. Be prepared to provide personal information in the application process.
They will pull your credit score which may result in a hard hit on your credit. If you are trying to finance your RV purchase with a secured loan (to get the better interest rate) then you’ll also need information on the actual vehicle you wish to finance, so they can factor that security into their calculation.
- But what if the vehicle you really want to purchase doesn’t qualify for a loan?
- Or you don’t qualify because you haven’t been on the job long enough?
- What if your credit score is too low?
- Maybe your debt-to-income ratio is too high.
Are you stuck? The short answer is no.
Lease to own
There is another option. It’s called Lease (Rent) to own. The general idea is much more popular than you might think. You can find dealerships or private parties who are willing to rent their RV to you long term. When the term is complete, you own the RV.
In these cases, part of the rental payment goes toward the purchase price of the RV. The rest goes to the rent. The advantage of this type of purchase is that it can be used for RVs or buyers that don’t qualify for traditional financing. This is often due to the age or mileage of the vehicle. The borrower’s credit worthiness is also a factor.
Additional RV Financing Resources
- RV LIFE: Can You Find RV Financing With Bad Credit?
- The Wandering RV
- The Balance
- Bank Rate
- Credit Karma: Qualifying For An RV Loan
One of the best parts about RVing is engaging with the community of traveling enthusiasts. iRV2 forums allow folks to chat with other RVers online, and get other perspectives on everything RVing, including products, destinations, RV mods, and much more.
Peggy Dent is an author, writer, and full-time RVer, traveling around the US and Canada. She’s traveled more than 130,000 miles in a motorhome, over the past 20 years, and is currently writing for the RV industry. You can contact her through her website at www.APenInYourHand.com