How to Get an RV Loan

With costs that range from tens of thousands of dollars to deep into the hundreds of thousands, most buyers of recreational vehicles need financing assistance to afford this massive purchase.

An RV can cost as much as a house, and sometimes more. But even though this oversized vehicle is essentially a home on wheels, you can’t use a mortgage or an auto loan to finance this purchase.

Specialized RV financing is offered by a number of lenders, and it comes with different interest rates and qualification standards than other types of financing you might have applied for in the past. If you’re in the market for a new RV, here’s what to expect as you approach the financing process.

Determine Your Financing Budget

Your purchase budget for an RV will depend on the type of vehicle you’re considering, as well as your repayment term length. Compared to an auto loan, RV loans can offer longer repayment periods of up to 20 years—which can make monthly payments more affordable, especially given the significant cost of the purchase.

Given these repayment term lengths, you will need to calculate how much you can afford in a monthly payment to determine your maximum spending budget, as well as the repayment period required to facilitate that budget.

Be mindful of the length of the repayment period when looking at the projected monthly payment for an RV: Although the monthly bill itself may be low, you could be paying that amount for decades if you max out your repayment term length.

Brace for a More Stringent Loan Approval Process

RVs are widely considered a luxury, and the vehicle itself also poses more potential risk due to its higher cost and faster depreciation. For that reason, the RV lending process will likely be much tougher on borrowers looking to prove they can afford the cost of the loan—especially when compared to the auto loan approval process. In general, many lenders are leery of issuing an RV loan to consumers with a credit score below 660, although there are always possible exceptions.

As part of this additional scrutiny, some lenders may require higher credit scores for approval than what they will accept for an auto loan. In some cases, lenders may also ask to inspect the RV prior to the purchase to make sure the asset is in good condition.

Along these same lines, the approval process for an RV will likely take longer than an auto loan approval. Whereas car buyers can often get same-day approvals for their vehicle purchases, it typically takes at least 24-48 hours for an RV loan to be approved—and depending on any required RV inspection, this timeline could stretch even longer.

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Research Your Lender Options

Interest rates and other terms are often not as buyer-friendly for RVs as they are for auto loans and mortgages. Some lenders may also charge for the RV inspection even if it’s required for loan approval—and this inspection could range from as little as $150 to more than $1,000.

You will also need to decide whether you want a secured or unsecured RV loan. Although unsecured RV loans are beneficial in that they don’t use the RV as collateral, and won’t create a risk of the RV being repossessed if you fail to pay, they also charge a higher interest rate than secured RV loans—and even if you prefer an unsecured loan, certain lenders may be willing to consider only a secured loan that uses your RV as collateral.

This makes it all the more important that you shop around to compare rates and fees, as well as the overall lending process, including loan approvals. Considering the relative size of the loan being sought, even fractions of a percentage point in interest savings can lead to hundreds or even thousands of dollars saved over the life of the loan.

Buying an RV can be the fulfillment of a lifelong dream, and the start of an exciting new chapter in life. Visit your local community bank to learn more about its RV loan options.

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