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Are you looking for RV loans or want to finance an RV, then you should read this article.
Once you have decided to buy an RV remember it can be the second most expensive purchase after your home.
So, think and research, as you have to find a creditor, know the interest rates, some tricks which will help you to save money and others.
Don’t panic as we have compiled everything you must know about RV loans|RV finance.
RV Loan Calculator
Use the calculator to know the monthly payment or EMI on the loan.
Fill the fields and click calculate button at the end.
Where to Finance Your RV Or How to Finance an RV
RVs are expensive and for that many people opt for financing an RV. However, people can confuse a little bit because RV is not a house and not a vehicle but don’t worry there are ways to finance your RV.
So, let’s know them one by one.
1. Dealership Loan
Yes, like a car dealership offers loans in the same way you can get financing options from RV dealerships.
Most of the loans that dealership provides are actually bank loans which are linked through the dealer. Dealers take and forward your information to these banks and the rest work is done by the banks itself.
One thing to remember is that these dealers can add to the interest rates to get a profit from both selling an RV as well as from the financing of the deal.
Like for example, the dealer may get a 5% interest rate from the bank but may charge you a 6% interest rate.
So, if someone finances the RV straight from the bank then they might have to pay less.
But there are dealers that claim that they can provide you better interest rate because of the relationship with the bank. You can go for this option as financing through a dealer might make the process faster and it also reduces the number of people you might have to deal directly.
2. Bank loan
You can finance an RV directly from the bank if you are not interested in dealership loans. For this, you have to research which bank is offering a lucrative interest rate and directly contact them.
There are also pre-approval for a loan so you can straight go to the dealership for the RV.
Seeking loans from the banks have their own benefits such as there are no middlemen in the deal and you can also negotiate your own interest rate with the bank.
This also means that you know how much money you have before selecting an RV.
3. Personal Loan
Banks can also offer personal loans, so, if you don’t want to secure an RV loan with the actual RV then you can try this option.
Banks will offer these unsecured loans to you if you have great credit or if you are willing to pay higher interest rates.
It all depends upon the situation you are in. like for example if you want to purchase a used RV then you might not get normal traditional bank loans, for this, you can go for a personal loan.
4. Home Equity Loans
If you have a house then also you can finance a loan for your RV. In-home equity loans, you can use the value of your house as collateral on your loan.
This loan has its own downside as for example if you fail to make the payment you can lose your house.
5. Credit Cards
You can use your credit card for RV purchase. But you have to see the limit of it. Most of the time, you can purchase a small RV from your credit card.
The only thing you have to do is to use the credit card at the dealership.
This type of deal has it benefit such as for your first year, the credit card company may offer you 0% financing. And, the downside is that it is expensive if they do not offer any discount. The number can go from 10% or even 20% after the first year.
Ask your credit card company before making a purchase.
6. Online Lenders
Yes, you can grab a loan from online lenders too, companies such as LightStream offer unsecured personal loans. These types of loans are generally unsecured and also quick to fund (usually in one day).
Another company is Marcus that provides personal loans, including RVs.
7. Credit Unions
Credit unions are non-profit organizations serving members who are working or associated with a particular group. They can offer lower rates with good or bad credit.
How to Save Money On Financing An RV
It does not matter from where you took the loan and up to what amount for the RV. Here are a few things to remember to save money while financing your RV
1. Bigger Down Payment
One of the first and excellent ways to save money while financing an RV is to reduce the amount of money you borrow. So, to reduce it put a large downpayment when you buy it.
Saving money before buying an RV and negotiating for a better deal from the dealership can make it easy.
An example will clear it out-
If you purchase an RV for $20,000 for 15 years at a 5% interest rate, you have to pay $8,468.57 interest on the loan.
If you put $1,000 extra downpayment you will be saving a lot of money.
Now you purchase an RV for $19,000 for 15 years at a 5% interest rate, this time you have to pay $8,045.14 interest on a loan.
You will save $423.43 just by putting $1,000 as a downpayment.
2. Go For a Lower Interest Rate
Getting a loan for a lower interest rate will matter a lot in saving additional money.
How much you save by even 1% less interest rate.
If you purchase an RV for $200,000 loan for 15 years at a 6% interest rate then you have to pay $103,788.46 in interest on a loan.
Now you negotiated with the bank for a 5% interest rate.
This time you purchased the same RV for the same $200,000 loan for 15 years at a 5% interest rate. Then you have to pay $84,685.71 interest on a loan.
You will save $19,102.75 just by negotiating for a lower interest rate.
3. Writing the Interest Off on The Taxes
For this, you have to show that you live full time in your RV or you use your RV as a secondary residence.
So, if you want this you need an RV that includes cooking, sleeping and toilet facilities. For more information on this, see IRS publication 936 (US citizens only).
You can also write off the RV interest if you use the RV for business purposes only. Then you won’t be able to use the RV for your personal use.
Yes, you can refinance the same RV if you want. This is usually done when the interest rates are down or you have paid a substantial amount of principal of the loan.
You may have to pay for the new originating fee for that. But, still, you will save a lot of money. This time the interest rates will be lower and you will be paying a lesser amount on a monthly bases.
5. Large Monthly Payment
Making a large number of monthly payments can even save a lot of money in the long run. But, make sure to get a loan without pre-payment penalties.
There are two benefits-
- it will reduce the amount of principal that has the interest attached to it.
- It will also reduce the length of time to pay off the loan.
If you finance an RV for $100,000 for 15 years at a 5% interest rate, then you have to pay an additional $41,926 in interest after your first payment.
So, if you pay just $50 a month after the first payment you will end up paying only $38,008 in interest.
That’s a saving of $3,919 and you will pay the loan 1.3 years sooner.
6. Shorter Loan
The last way of saving on an RV loan is the shorter loan.
If you take a loan of $200,000 at 5% interest over 10 years, you have to pay total interest of 54,557.
Now, if you take a $200,000 loan at 5% interest over 15 years, you have to pay total interest of $84,685.
The difference is about $30,128, for this, you have to either start saving for an RV or to borrow from your family and friends.
But this is a good way to really save a good amount of money.
Best RV Finance Company
Here are the best RV financing providers.
Lightstream is one of the best providers of loans for RV, they offer higher borrowing amounts and lowest rates.
You can apply for the loan from their website. Select the loan purpose, view the range of potential rates and you are set with a few other steps.
In order to qualify for a Lightstream loan, you must have a good to excellent credit history and many years of credit history and even a strong record of on-time payments.
2. Good Sam RV Loans
Good Sam Finance Center offers a competitive RV loan rate for new and used RV purchases. They even provide loans for private party RV purchases and RV refinancing for existing RV loans.
Join the Good Sam Club Today! Discounts, Tips, Tools & Much More!
To apply for a loan you can mail, fax or call them. You can go to their website to apply for a loan.
Tips For Financing Your RV
There are many things to consider before financing an RV, things like monthly installments, maintenance costs, and other expenses.
Here are the things which you should know before financing your RV.
1. Do not take the price at face value
Like many other things in the market, RVs are also inflated in price as much as 25% to 30%. Dealers will expect that you should buy the RV in the highest possible rates, but you should negotiate to bring the price down.
You could save thousands of dollars by just asking “what the lowest you can offer” and that’s it.
Sites like RVs.com, TVT.com, and RVTrader.com can give you a better idea of the price. So, it better you research and then visit your nearest RV dealership.
2. Do not overestimate
Many people think that they have to spend only upon loans, taxes and registration fees for an RV, whereas there are other costs to consider, That includes:
- Utility costs such as water, cable, and electricity
- Campsite fee
- Storage fee
- Maintenance cost
- Mileage rates
It is better to check the monthly interest rates before you finance an RV. it will give a better estimate before you step forward. You can use online calculators for that. RV Loan Calculator
3. Do not grab the first available loan
Have you ever accepted the first loan you got, NO, never because you always look for other options? This thing is also true for RV loans.
They are high chances that other offers can be better than the present one. RV loans are not always the same as auto loans in size and duration.
See offers, be sure and then make a decision. Research is one of the best ways to know about financing RV. Ask your friends/Relatives, search online, call financing companies/banks and visit dealerships.
4. RV price depreciates
When you drive your RV from the dealerships it depreciates 20 to 30% instantly. That means one-fourth of the money is already lost even if you sell it the next day.
That’s why there is a risk associated with RV loan higher than the vehicle price. To avoid this try to make a large downpayment as it will make sure you owe less when trying to sell it.
Another way is to buy a small RVs and then climb the ladder. Buying a small RV means you can pay a loan easily and can sell it to buy a better one. It’s a long process but believes us you will live in peace.
5. Do check your credit score
The price of your RV is not only the price you pay, but it also contains the loan terms and interest rates. Your credit rating plays an important role in saving your money.
A credit score of 660 or higher is considered a good credit rating and lower than means you could expect an interest rate of up to 24%. Yes, it will depend upon the country/state you live but eventually, you have to pay a higher price for the RV.
RV financing is not like an auto loan because there are many options that you won’t get in a normal auto loan. Like, if RV is your primary or secondary residence then it will decrease your federal taxes (only US citizens).
Frequently Asked Questions
1. How long Can RVs Be Financed For?
Most of the dealership loans and bank loans on RV generally range from 10 to 15 years. Generally, think twice the length of time of most of the vehicle loans and half the length of time for most home loans.
The length of a home equity loan and personal loans may vary. They can be in the range of few years to as long as 10 to 15 years, depending upon the bank and company granting it.
Usually, credit cards do not have any terms and can be paid off right away or later. But, remember the longer you keep the loan the higher interest you have to pay.
2. What is a Credit Score?
A credit score is a numerical expression that is based on a level analysis of a person’s credit files or it is done to find out of the person’s creditworthiness. It is based on the credit report, credit information that is sourced from the credit bureaus.
3. What kind of credit score did you need for financing an RV?
The credit score that is needed for financing an RV varies greatly. The RV financing standard ranges from about 660-700 FICO score, but you can also find finance for the credit score in the 500 to 600 range.
In The End
It can take some time to find out the best deal, its important that if you are new then you should try to know more. Gather information, talk to people who have gone through this and you will make fewer or no mistakes.
RV buying is a life-changing experience and many people buy it once in a lifetime so, do not make any mistake.
Happy & Safe Buying!
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