Buying a recreational vehicle is exciting. Read on to learn more about the differences between financing a used vs new RV.
The biggest factor that affects loan terms for used vs new RVs is the cost of the RV itself. If the RV you choose is new and costs a lot, you’ll likely have higher monthly payments and longer loan terms. To many, this extra cost pays for itself. New RVs offer peace of mind with manufacturer warranties, modern amenities, and pristine mechanics. On the other hand, used RVs are typically more affordable, depending on the model’s age and mileage. The lower cost allows you to qualify for shorter loan terms and lower monthly payments.
Beyond price, a few other factors affect financing for used vs new RVs, like your credit score. Lenders often tab you as a liability if you have a low credit score. Unless you can demonstrate you can repay a loan, you’ll need to improve your credit score to qualify for better financing options.
Choosing the right lender also gives you more options for your loan terms. You can go through a dealership, bank, or a professional financing service specializing in motor vehicle loans. Financing through dealerships often has the highest interest rates. Dealers know a majority of their buyers won’t look elsewhere and take advantage of that. Your bank can also provide loans, but the process can be lengthy and drawn out.
More often than not, your best bet is to finance through a professional service specializing in RVs because they have a lot of experience coordinating RV loans. These financing experts are well versed in expediting the process and can leverage preexisting relationships to give you improved loan terms compared to banks or dealerships.
There are pros and cons to buying both a used vs new RV.
There are plenty of benefits to buying a new recreational vehicle. It will be clean, have the latest amenities, and all mechanical components will be in top condition. Buying a new RV usually comes with a warranty, giving you peace of mind knowing any issues are guaranteed to be properly resolved for the next few years.
The biggest disadvantage is the moment you drive your RV off the lot, its value immediately depreciates. Its value decreases by about 20% when it leaves the dealership, because it’s now classified as a pre-owned vehicle.
The main advantage of buying a used recreational vehicle is the purchase price. The used RV market is highly transparent, meaning you won’t have to deal with the hassle of dealership markups. Additionally, you have more wiggle room when negotiating the price on used vs new RVs.
While you save more money buying used, it’s still very feasible that you could pay too much for your RV. Used recreational vehicles come with existing wear and tear, and if the seller doesn’t disclose water or structural damages, you might be stuck with unexpected and expensive repairs.
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The details of your financing contract varies on a few factors. Loan terms are fairly similar for both used and new RVs, but minor details can still affect your agreement.
Generally speaking, new RV loan terms are longer because new RVs cost more, meaning it will take longer to pay off.
On average, RV financing terms typically fall around 10–15 years. For loans upwards of $50,000, many dealerships and credit unions extend the duration up to 20 years.
Your loan term when buying a used RV is heavily reliant on the price you pay. The term length is still around 10-15 years, but you can shorten your financing term with a higher monthly payment.
Finance Solution helps you navigate the various loan options available for both new and used recreational vehicles. Our approach focuses on finding you the best loan available, while leveraging our connections to ensure your loan process is quick and efficient. Reach out to our experts to get the best refinancing options on your next RV loan.