How to Finance Your First RV Purchase

December 2, 2020 Tom Clark

Now more than ever is a great time to get a different perspective on life. What better way to do it than behind the wheel of a recreational vehicle.

It’s time to look into buying an RV.

Owning an RV gives you freedom on the road. If you’re an empty-nester or retiree, you have the liberty to come and go as you want. When you feel like spending time in the outdoors, you have your own accommodations.

Drive to the site where you’d like to hike or camp, park, and enjoy nature.

It also encourages self-care. Most modern RVs have advanced technology and contemporary comforts. Those alone motivate you to take time out for yourself.

The holidays are here and it’s the perfect time to travel and see family. Look into buying an RV with this guide on how to finance an RV purchase.

Buying an RV: What’s an RV Loan?

It sounds strange, considering it’s not a car or an SUV, but you can get an RV Loan. Banks actually finance the purchase of recreational vehicles.

An RV loan is a long-term loan used to purchase RVs, campers, trailers, and motor homes. The loan size depends on the size and luxury of the recreational vehicle. A small RV may cost around $10,000 while a larger, more luxurious one costs over $1 million.

How Does an RV Loan Work?

As with usual vehicle loans, you can purchase or refinance an RV. A financial institution—banks, credit unions, and other lenders—provide the purchasing power.

They approve the borrower for the purchase and supply the funds. The borrower pays back the loan, which includes interest, over a period of years. These loans also include extended warranties, which get built into the price of the RV.

The RV itself works as collateral, seeing that RV loans are part of secured loan financing. As a borrower, you’ll need to research your lender, apply for the loan, and get approved.

Terms and Interest Rates

Most times, the payback timeframe on an RV loan is 10-15 years. Based on your credit profile, some lenders extend loan repayments out to 20 years. This helps keep the monthly payment low and affordable for buyers.

The interest rates for most RV loans start as low as 4 percent. Some go lower depending on the credit profile of the borrower and the length of the loan. A lower credit score means a higher interest rate.

A small RV loan may qualify for financing for 5 years with an interest of 3.5 percent. That’s still FICO score based though.