Understand the nuances of financing your new or used campervan, motorhome or travel trailer
Financing. The word may seem intimidating or leave you with a feeling of apprehension when it comes time to find out whether you can afford that new or used camper van, motorhome or travel trailer. But with the right dealer, there’s really nothing to fear.
Buying your dream camper van or travel vehicle to begin your vanlife journey is a big step, and some rigs can be expensive. They say the biggest purchase a person makes in their lives is their home, followed by their car. As a home on wheels, motorhomes, RVs and campervans fall somewhere in between. In fact, some new RVs can cost as much as a small house!
Before you take the plunge on that rig, we recommend calling your local bank and speaking with a financial expert about your options and budget. Of course, your bank isn’t the only option available for securing an RV loan. RV dealerships, online lenders and credit unions also frequently offer loans.
There are also a number of lenders in North America that specialize in RV financing, such as Camping World, Good Sam, LightStream and GreatRVLoan. Since these lenders primarily deal with camper, motorhome loans and RV, you may be able to secure a longer financing term and better rates.
What is an RV loan?
An RV loan is similar to a traditional auto loan, but the loan payment duration tends to be longer like a home loan (mortgage)—up to 15 years, whereas most car loans are between 5-7 years. It’s also possible—depending on the institution and how expensive the rig you’re looking to purchase is—that you may be able to secure financing for a term of 20 years.
While an RV loan is similar to an auto loan in its basic structure, an RV loan can have a little more complexity to it, not unlike getting a house mortgage. RV loans are typically available on new and used models, and the financing can be for as little as $5,000 or all the way up to more than $1 million.
Keep in mind that many institutions will not allow you to finance an RV that’s more than 10 or 12 years old. If the rig you want is older than that, then you may have to put down a bigger down payment to secure a loan.
When you are ready to get financing, you’ll most likely be faced with a choice between an unsecured personal loan or a secured vehicle loan. An unsecured loan means your RV won’t be repossessed if you struggle to make payments, whereas a secured loan usually means that your RV would be repossessed if you can’t make payments. Secured loans may be necessary for folks with a lower credit score.
What information you’ll need to apply for an RV loan
If you decide to pursue an RV loan, you will need to get certain documents and paperwork ready for the lender to review. For instance, your financial statements, pay stubs, tax returns and detailed credit history will all likely be factored into your loan eligibility. You’ll also probably be asked for information about the specific RV you’re interested in buying, such as the year, make and model, as well as the vehicle identification number (VIN).
The loan company will probably run your credit score. A “good” score to secure a regular auto loan is typically around 670 or higher, but for a bigger ticket item like an RV you’ll want a credit score of at least 700.
Don’t be surprised if the lending institution requires an inspection of the RV, which could set you back anywhere from $100 to over $1,000. It’s also important to note that not all lenders will finance every kind of recreational vehicle. Some lenders won’t lend for travel trailers, while others won’t lend for vintage Volkswagen camper vans. You’ll want to check on that before settling on a lender.
Currently, RV interest rates are between 4 and 12 percent, though this varies depending on where you live and how good your credit is. The better your credit score, the better—or lower—the interest rate a lending institution is likely to offer you. If you have a poor credit score (such as below 570), you may be looking at an interest rate on the higher end of the range listed above.
Tips and challenges of financing an RV, motorhome or campervan
Now that you know what an RV loan is and how to apply, let’s address the common challenges and offer some tips to securing financing for a new or used RV.
The first thing you’ll want to do is settle on a budget. Calculate a monthly amount you can comfortably afford and that you can commit to paying. (You don’t want to be “RV poor.”) Also, take into account the cost of RV insurance. If you’re seeking a loan to help with financing, you’ll probably be required to have insurance, too, so be sure to factor that monthly cost into your budget.
While you’re looking for your dream rig, start saving a substantial down payment. Some lenders will ask for a minimum of 10 percent down, but most will want at least 20 percent down.
If your credit score needs to be improved, talk with your bank or financial planner about entering a program to enhance your credit score.
Another touchy subject many people shy away from is negotiating the price of the RV, and even negotiating with a lender for slightly better rates. Consider trying to find wiggle room in both the RV price and loan terms. It can’t hurt to ask and, in many cases, it’s expected.
For instance, if you’re purchasing a brand new rig, the dealership may reduce the price by up to 20 or 30 percent off the manufacturer’s suggested retail price (MSRP). Your best chances for a good price are during the camping offseason, from October to February.
You may find you get a better deal on the rig if you decide to finance directly through the RV dealer, but just make certain you’re comfortable with the loan rate being offered. If you’re planning to live in your RV, motorhome or campervan full-time, then you may want to talk with a tax expert because it may be feasible to write off deductible loan interest.
Apply for RV financing today
At Classic Vans, we offer financing options on all of our new and used class B RVs, motorhomes and campervans. If you’re in the market for a camper van or motorhome, take a look at our current inventory and schedule a personalized tour of our lot.
We also buy used motorhomes and camper vans. So if you’re looking to tell, trade-in or trade-up, send us info about your rig.
We’ve been in the van buying-and-selling business for over 30 years and have always been a family-owned and operated business.