Used Camper: Financing Options And Opportunities

Recreational vehicles (RVs) can be expensive, so it's important to understand your financing options before you shop. RV loans exist to help consumers finance these large, unique purchases. You can finance a new or used RV, motorhome or camping trailer that you can't afford to purchase outright. Because RVs vary in size and price, so do RV loans. You can find RV loans for around $25,000 that are repaid over a few years, but you can also find loans as large as $300,000 that are repaid over 20 years.

RV loans are available for pre-owned vehicles, but age, mileage, and condition restrictions apply

While it is possible to get a loan for a used RV, there are several factors that will impact your ability to secure financing. Firstly, the age of the RV plays a crucial role. Many lenders restrict the age of a used RV to 10 years or newer, with some lenders extending financing to RVs up to 15 years old. If you're considering an older RV, be prepared for higher interest rates or additional requirements.

Mileage is another important consideration. Lenders typically impose mileage restrictions on used RVs, with limits ranging from 60,000 miles for gas motorhomes to 100,000 miles for diesel motorhomes. Exceeding these mileage limits may result in higher interest rates or disqualification from financing.

The condition of the RV is also a factor in securing a loan. Lenders may require a professional inspection to assess the current condition of the RV, especially if it is being sold by a private party. They want to ensure that the vehicle is in good condition and can be used as collateral for the loan.

In addition to these factors, your creditworthiness will play a significant role in obtaining a loan for a used RV. Lenders will evaluate your credit score, debt-to-income ratio, and financial history to determine your eligibility and the terms of the loan. A higher credit score can lead to more favourable interest rates and loan amounts.

It's important to shop around and compare offers from multiple lenders, as each lender has its own unique criteria and restrictions. By exploring various options, you can find the best financing solution that meets your specific needs and budget.

Lenders will consider your credit score and financial history

The typical minimum credit score for an RV loan is 700 to 750, but some lenders will underwrite loans with a minimum score of 550. Loans written for borrowers with bad credit tend to have other restrictions, including higher interest rates (up to 19.95%), shorter loan terms, and smaller loan amounts.

However, creditworthiness should be based on more than just the borrower's credit score. To be fair, underwriting decisions should reflect the borrower's current financial performance, ability to repay the loan, debt-to-income ratio, work history, and documented and verifiable income.

If you have a low credit score due to past events like a job loss, injury, sickness, or divorce, look for lenders that factor in a wide variety of current financial data into their underwriting decision. Be prepared to provide a clear statement of why there may be negative financial information in your history which is no longer a challenge.

It's also important to note that some lenders have minimum loan amounts for RVs, so a personal loan might be the only way to finance a small RV purchase. Personal loans typically have higher interest rates than vehicle loans since they aren't backed by collateral.

You may need to provide documentation of the RV's current condition through a professional inspection

When financing a used camper, you may need to provide documentation of the RV's current condition through a professional inspection. This is because the lender will use the vehicle as collateral for the loan and will want to confirm that their interests are protected. A professional inspection can highlight potential issues in advance, saving you money when negotiating a purchase price, or helping you avoid buying a lemon. It will also give you peace of mind, knowing exactly what you are buying and what to expect, reducing the chance of surprises down the road.

A professional RV inspector will be able to detect possible repairs ahead of time and identify any potential issues, allowing you to plan and budget for future repairs. They will also be able to provide an unbiased and skilled assessment of the RV, testing all systems and conducting a road test if it is a motorhome. A pre-purchase inspection typically includes an exterior, interior, and mechanical inspection, as well as a review of documentation and history. During the exterior inspection, the inspector will check for any signs of rust, corrosion, or damage to the body and frame, as well as inspect the roof, tires, and wheels for any issues. The interior inspection involves checking the condition of the living area, testing all appliances, and inspecting the plumbing and electrical systems. Mechanical inspections cover the engine, transmission, suspension, and exhaust system. Documentation and history include service records, vehicle history reports, and ownership and registration information.

It is important to hire a qualified and certified RV inspector who can provide a comprehensive evaluation of the RV. You can search for inspectors in your area through organisations such as the National RV Inspectors Association (NRVIA). When hiring an inspector, be sure to get a contract, know what the report will cover, ask for a sample report, and review the standards of practice.

RV loans are typically secured by the vehicle itself, but unsecured loans are also available

RV loans are typically secured by the vehicle itself, with the RV acting as collateral to guarantee the loan. This means that if you can't make your monthly payments, the lender could repossess the vehicle. However, unsecured loans are also available, though they tend to have higher interest rates to compensate for the higher risk to the lender.

Secured loans are often preferred by lenders as the RV acts as a guarantee, and they may be more willing to approve your application if you secure the loan with the vehicle. This can be especially helpful if you have a lower credit score. Secured loans also usually have lower interest rates than unsecured loans. However, a downside is that you may need to have cash on hand for a down payment.

Unsecured loans, on the other hand, do not require collateral. Instead, approval is based on your credit score, income, and existing debt. Unsecured loans may be preferable if you want to avoid the risk of losing your RV if you fail to repay the loan. They can also be a good option if you want to finance an older RV or one with more miles on it, which may not be possible with a secured loan. Online lenders that offer unsecured loans usually allow you to pre-qualify, so you can compare rates and terms without impacting your credit score.

Both secured and unsecured loans are typically available from banks, credit unions, and online lenders, as well as RV dealerships that have financing arrangements with certain lenders. It's important to shop around and compare options from multiple lenders to get the most affordable loan for your needs.

You can apply for an RV loan through a dealership, bank, credit union, or online lender

Yes, you can finance a used camper. You can apply for an RV loan through a dealership, bank, credit union, or online lender. Here are some things to keep in mind when exploring these options:

Dealership

Dealerships may offer the most convenient lending experience, as they can help you secure an RV loan by collecting your loan application and submitting it to multiple financing companies. However, this option can also be the most expensive, as dealerships often charge fees that other lenders don't. Dealerships may not always offer the lowest Annual Percentage Rates (APRs), and they may not prioritize getting you into a loan that fits your budget. It's worth noting that you may be able to take advantage of special discounts or perks if you use a dealership's in-house lender.

Bank

Applying for an RV loan through your bank, especially one where you already have an account, may offer some benefits. Your bank may provide you with a relationship discount, and you can avoid high dealer financing fees. Not all banks offer RV loans, and some only offer them through their dealer networks. It's a good idea to check with your bank to understand their specific offerings and requirements.

Credit Union

Credit unions can be a great option for RV loans, often providing some of the best rates available. They may even offer RV loans to those with bad credit. Credit unions often have unique perks for their members, such as rate reductions after making several on-time loan payments. However, you may need to become a member of the credit union and meet specific requirements, such as military affiliation or geographic location. Additionally, credit unions may have shorter loan terms compared to other lenders.

Online Lender

Online lending can be an affordable and convenient option for RV financing, as these lenders don't have large overhead costs. Online brokers can help you review offers from multiple lenders to find the best one for your needs. Some online lenders specialize in RV loans, offering repayment terms of up to 20 years and loan amounts of up to $1 million. However, it's important to carefully review the terms and conditions, as online lenders may have higher APRs for RV loans.

When applying for an RV loan through any of these options, it's essential to consider factors such as your credit score, income, and debt-to-income ratio. Lenders will assess these factors to determine your eligibility and the specific terms of the loan. It's recommended to get pre-approved with multiple lenders and compare their offers to find the best fit for your financial situation and goals.

Frequently asked questions