When you decide to invest in an RV, you’ll need a way to finance it when you make the purchase. Let’s go over what you should understand about how to finance an RV. Once you understand the different factors involved, you can make a smart financial decision.
As you look at the financing options for RV investments, you need to consider the following factors:
- Loan Length: How long does the loan last? Short-term vs. long-term loans is something you’ll have to consider. With a short-term loan, you’ll pay higher monthly payments over a shorter amount of time than you would with a long-term loan. Short-term loans often range from 10 to 15 years, but long-term loans can last as long as 20 years. A long-term loan may sound like a good idea because you can take longer to pay off their investment, but it can have downsides, depending on the situation and the loan’s interest rate. In some cases, buyers may choose long-term loans, but you could end up paying more than the RV is worth if the interest rate is high enough and your RV depreciates quickly.
- Personal Financial History: Your financial and credit history can determine your ability to secure an RV loan. If a buyer has a lot of debt and a checkered credit history, lenders are less likely to offer them loans because they consider that type of buyer a higher financial risk than someone with little debt and a solid credit history. Look at your credit and financial histories before investing in a major purchase like an RV.
- Lender Options: Traditional financial institutions like banks do offer RV loans, but you can also get them through other avenues. Many dealerships have relationships with lenders, and you can go through your RV dealer to secure a loan. However, you can also secure a loan through a credit union or an online lender. Review RV financing options from multiple lenders before you choose one. Comparing bank loans against dealer-related, online, and credit union loans helps you select the right one for your financial situation.
- Down Payment Options: The size of your down payment affects the loan amount that you need to pay for the rest of your RV purchase. Many lenders suggest making a 20% down payment on your purchase. That means you pay 20% of the RV’s full cost and use a loan to cover the rest of the cost. So, if you buy a $60,000 RV and you choose to make a 20% down payment, you’ll pay $12,000 up front and cover the other $48,000 with a loan. But not all lenders require 20% down payments. Some lenders allow 10% down payments and others require no down payment at all. These seem like great options on the surface, but not making a down payment means you’ll have to pay off the RV’s entire costs. As with loan length, this option can cause you to pay more in interest than the RV is worth. Weigh your financing options carefully before you decide on your down payment amount. Make sure it doesn’t saddle you with more interest and monthly payments than you need to cover the RV’s cost.
Take all these factors into account when you consider investing in an RV. Research your financing options before you visit a dealership to better understand what type of loan meets your needs and how you can best afford your new purchase.
Learn more about RV financing and insurance from our other blogs.
RV dealerships outsource their financing and insurance (F&I) services to Finance Solution. We take over their financing services and solutions, and we use our relationships with lenders to help buyers access the best financing options for their needs. If you want solid options for financing your recreational vehicle, find a dealer near you who works with Finance Solution. We provide resources that help dealers pair their customers with the right loans and financial options. We’re ready to do the same for you and your dealer so you can get your financing approved and begin enjoying your RV as quickly as possible.