Searching For a Pre-Owned Motorhome? Here’s How to Finance Your Wheels.
The short answer is yes, you can find used motorhome financing. But certain restrictions will apply. Examples include the age, mileage, and condition of your RV. Your credit worthiness is also a factor. Additionally, you may need to provide documentation of the RV’s current condition by having it professionally inspected.
A 3rd party independent inspection may be required by the lender depending on the loan value, the age of the motorhome, or if the RV is being sold by a private party. After all, the lender will use the vehicle as collateral for the loan and they need to confirm that their interests are protected.
You may even be able to refinance an existing loan to obtain a longer term or better rates, and in that situation, you might not need to supply an inspection report if you are going to refinance with the same lender. However, an entirely new loan with a different lender may require an inspection for refinancing.
Financing an RV for full-timing
If you are (or intend to be) a full-time RVer and live in your motorhome, financing a new or used motorhome will become a bit more challenging. There are a few lenders that will finance full-time RVers, but you’ll need a nearly perfect credit score and you may pay a higher interest rate because the risk for the lender is higher for full-time RVers.
Limitations and restrictions on used motorhome financing
The interest rate on used motorhome financing will depend on three factors:
- The total value of the loan
- The term (length) of the loan
- Borrower credit worthiness
Every lender sets their own criteria for their lending policies. Some lenders restrict the age of the used motorhome or RV to no more than 10 years. They may also restrict the mileage on a used motorhome. For example, Good Sam has a use threshold of 60,000 miles for a gas motorhome and 100,000 miles for a diesel rig. Other lenders use a universal mileage limit of 90,000.
Many lenders restrict the age of a used motorhome to 10 years or newer. Good Sam, on the other hand, will finance a used RV as old as 2010, but for 2010 and 2011 models they add .25% to the applicable loan rate.
Additionally, if you are seeking financing for RVs other than a motorhome, you may discover higher interest rates apply to specific types of RVs. Good Sam charges an additional 1% for truck campers, pop-ups, or folding RVs.
This galley is in a late-model used motorhome. Photo by P. Dent
Range of interest rates
There’s a wide range of interest rates for RVs. Using Good Sam again as an example, you’ll find that the interest rates for a used motorhome loan go from a low of 4.84% to a high of 9.64%. Interest rates are partly determined by the lender’s risk, so the two main variables that impact that risk and determine the published rates are the loan amount and duration.
Higher loan values result in lower interest rates, while longer terms raise the rate. An interesting side note, however, is that the published interest rates at Good Sam for new or used motorhomes are the same rates, so it makes you wonder how much risk is factored into their formula. Other RV lenders are a little less transparent about their rates.
What determines the interest rate
The lenders may publish rate tables, but the actual rate you’ll pay will be defined in the small print. That’s where the lenders describe the risk factors they use to calculate the interest rate for any specific loan.
In addition to the loan value and duration of the loan, there are other factors in the formula which include the make, model, and year of the vehicle, and the financial strength of the borrower, their creditworthiness, payment history, and their current ability to repay the loan.
Down payment requirements for used motorhomes
Essex (Bank of the West) is another RV lender, and like Good Sam, their used motorhome loan values range from $10,000-$2,000,000. Both firms’ requisite down payment for an RV loan depends on the loan amount as shown in the chart below.
Although these companies have similar loan amounts and down payments, they are independent firms and have their own unique benefits and limitations, and both are worth further investigation.
10% for $10,000 – $200,000
15% for $200,001 – $400,000
20% for $400,001 – $750,000
25% for $750,001 – $1,250,000
30% for $1,250,000+
Other RV lender loan criteria
SE Financial will underwrite RV loans from $15,000-$4 million for up to 240 months (20 years). Their published lowest interest rate is 3.74%, but they don’t specify what criteria is needed to qualify for that low rate.
SE Financial is also more flexible regarding the borrower’s credit worthiness and may finance used motorhome purchases even if the borrower’s credit score is as low as 550.
However, a low credit score may result in a loan package with higher interest rates, a larger down payment, or a shorter loan term to offset the risk inherent in the borrower’s low credit score. I have seen published interest rates at high as 17.95%.
Downsides to financing a used motorhome
We have friends who searched for months to locate the perfect used motorhome for their unique needs. They were well prepared for this venture. They’d gone through the process of getting pre-qualified for a loan, so they knew exactly what they could afford, and being experienced RVers, they knew what they really needed and wanted in the next RV.
As I said, they searched for months, and finally located the vehicle that checked all their boxes. Unfortunately, it was one year older than their lender’s maximum allowable RV age.
It had very low miles. It had been maintained in excellent condition and it was being sold by the original owner at a very competitive price. In every way this vehicle was perfect for their needs and if they had located it at the beginning of their search, their lender would have funded the purchase, but the calendar had rolled over while they were searching, making this vehicle 11 years old, and the lender would not budge on their RV age criteria.
Our friends probably could have found other financing, but they had already gone through the whole encumbering process of getting pre-qualified, so they passed on the perfect vehicle and continued their search.
Besides the age, mileage, and condition of the RV being financed, there are other considerations that could hamper your financing options or result in less favorable loan terms. These other considerations are associated with the borrower’s history and current financial status.
These factors include:
- A high debt-to-income ratio
- A low credit score
- Previous bankruptcy
- A poor personal payment history
- Unverifiable income
- Insufficient collateral
Financing used motorhomes
There are dozens of companies that offer used motorhome financing, and as stated above, each of these firms set their own policies, guidelines, and restrictions. Therefore, it would serve you well to research these various options to find the most favorable interest rates and terms before committing to any one of them.
Below are links to some of the best-known lenders, but this is not an exhaustive list. You might do just as well with your credit union or bank. Some traditional lenders limit the maximum term of a vehicle loan to 6 or 7 years. However, motorhomes are more like a real estate loan than a vehicle loan. You might learn that your regular bank or credit union underwrites a motorhome loan for a longer term or perhaps you only need a short-term loan.
- National Vehicle is a company that helps people buy and sell used RVs and part of their service is helping buyers secure financing and to safely complete the transaction.
- RVTrader gives RV buyers access to a huge database of RVs for sale. They also provide useful information about financing and provide a link to a well-known vendor.
- The Balance – This article gives detailed information about eight RV lenders, and if you’re shopping for a loan for a used motorhome, it would be a great place to start your search.
- Lending Tree – This financial resource claims to fund 99% of all applicants.
RVers looking for valuable how-to information have learned to go to the experts. Forums such as iRV2.com and blog sites like RV LIFE, Do It Yourself RV, and Camper Report provide all the information you need to enjoy your RV. You’ll also find brand-specific information on additional forums like Air Forums, Forest River Forums, and Jayco Owners Forum.
- Can You Refinance An RV Loan?
- How To Get The Best RV Loan Rates
- Can You Find RV Financing With Bad Credit?
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