Camper Financing: How Long Can You Realistically Finance?

Financing a camper or RV is a lot like financing a car, and the length of your loan will depend on a variety of factors. Generally, RV loans range from 5 to 20 years, though shorter and longer loans are possible. The size of the loan, the age and type of the RV, your credit score, and your desired monthly payment will all play a role in determining the length of your loan.

The higher the loan amount, the longer the loan term is likely to be. Lenders often set minimum loan amounts to qualify for longer terms. For example, My Financing USA offers 20-year loan terms for RV loans of at least $75,000, 15-year terms for loans between $25,000 and $74,000, 12-year terms for loans between $20,000 and $24,000, and 10-year terms for loans between $10,000 and $19,000.

The age and type of the RV will also affect the length of the loan. Lenders may restrict loan terms for older models as RVs depreciate over time. Lenders may also offer different financing terms depending on whether the RV is new or used, or the length or features of the vehicle.

Your credit score will also impact the length of your loan. A higher credit score will give you more options for term length, while a lower score may result in a lender seeing you as a higher risk and offering a shorter term.

Finally, the desired monthly payment will be a factor. Longer repayment terms result in lower monthly payments, but you will pay more in interest over time. Shorter repayment terms can help you save money on interest but will result in higher monthly payments.

Loan terms for RVs can range from 5 to 20 years

Loan Terms for RVs: 5 to 20 Years

The length of your RV loan term will depend on several factors, including the cost of the RV, your credit score, and the lender. While the typical RV loan term is between 10 and 15 years, they can range from 5 to 20 years.

Factors Affecting Your RV Loan Term

Loan Amount

The loan amount you require will directly impact the length of your loan term. Larger loan amounts tend to have longer loan terms. Lenders often set minimum loan amounts to qualify for specific terms. For instance, at My Financing USA, you can get a 20-year loan for amounts of $75,000 or more, while a loan amount between $25,000 and $74,000 may qualify for a 15-year term.

RV Condition and Age

Just like cars, RVs depreciate over time, and their value can drop significantly in the first few years. Lenders often restrict loan terms for older RV models due to this depreciation. My Financing USA, for example, finances RVs from 2011 or newer models, while others may limit loans to RVs that are 10 to 15 years old.

Your Credit Score

Your credit score plays a crucial role in determining the loan term options available to you. A higher credit score generally means more favourable loan terms and interest rates. Lenders typically categorise credit scores into tiers, such as deep subprime (300-549), subprime (550-674), prime (675-749), and super prime (750-850). A higher score indicates lower risk to the lender and may result in longer term options.

Type of Lender

Dealerships often offer longer repayment terms compared to traditional lenders like banks, credit unions, and online lenders. Dealerships may offer terms up to 20 years, while banks and credit unions usually offer terms between two and seven years.

Desired Monthly Payment

A longer repayment term results in lower monthly payments. However, you will end up paying more in interest over the life of the loan. For example, a $50,000 loan with a 7.99% interest rate will cost over $16,000 more in interest over a 10-year term compared to a three-year term.

Choosing the Length of Your RV Loan

When deciding on the length of your RV loan, consider the trade-off between monthly payments and total interest paid. Longer terms result in lower monthly payments but higher total interest costs. Additionally, RVs depreciate over time, so choosing a longer term may put you at risk of having negative equity, making it difficult to refinance or sell the RV. Therefore, it's generally advisable to choose the shortest repayment term that comfortably fits your budget.

The length of your loan will depend on factors such as the cost, your credit score, and the lender

The length of an RV loan can vary depending on the lender and the borrower's financial situation. Some lenders offer RV loans with terms as short as five years, while others may offer terms up to 20 years. The average RV loan term is typically between 10 and 15 years.

The cost of the RV is a significant factor in determining the length of the loan. Larger loan amounts tend to have longer repayment terms. For example, a loan of $75,000 or more may qualify for a 20-year term, while a loan between $25,000 and $74,000 may have a term of up to 15 years.

The age and condition of the RV also play a role in determining the loan term. Lenders may restrict the term length for older models due to depreciation. A newer RV may qualify for a longer loan term, while a used RV may be limited to a shorter term.

The borrower's credit score is another important factor. A higher credit score generally leads to more favourable loan terms and interest rates. Lenders may offer shorter loan terms to borrowers with lower credit scores as they are seen as higher-risk.

When choosing the length of an RV loan, it is essential to consider the interest rates and monthly payments. Longer loan terms result in lower monthly payments but higher overall interest costs. Shorter loan terms can help save money on interest but will result in higher monthly payments.

A longer loan term will result in smaller monthly payments but more money paid overall

When it comes to financing a camper, the length of your loan will depend on various factors, and it's essential to understand the implications of a longer loan term. While opting for a more extended period will result in smaller monthly payments, it's important to recognise that you will end up paying more money overall due to the accumulation of interest over time. This trade-off between monthly payments and total cost is a critical consideration when deciding on the duration of your camper loan.

Here's a more detailed look at why a longer loan term results in smaller monthly payments but a higher overall cost:

• Smaller Monthly Payments: Stretching out your loan over a longer period means that you will be dividing the total cost of the camper over more months. As a result, each monthly payment will be smaller. This can be advantageous if you're looking to manage your monthly cash flow and want to keep your regular expenses as low as possible.
• Higher Overall Cost: While the smaller monthly payments may seem attractive, it's important to understand the trade-off. When you extend the loan term, you're essentially taking on more months of interest charges. Over time, these interest charges add up, and you end up paying more for the camper than if you had chosen a shorter loan term. The longer the loan, the more interest you'll pay.
• Interest Rate Risk: It's also worth noting that longer-term loans often come with variable interest rates, which can be risky. If interest rates rise during your loan period, your monthly payments and total interest costs will increase. This can further contribute to the higher overall cost associated with longer loan terms.
• Loan Term Flexibility: The flexibility of loan terms is an important consideration. Generally, lenders offer RV loan terms ranging from 5 to 20 years. However, the specific term you qualify for will depend on factors such as the cost of the camper, your credit score, and the lender's policies. It's essential to shop around and compare offers from different lenders to find the best terms for your situation.
• Credit Score Impact: Your credit score plays a significant role in determining the loan terms available to you. A higher credit score generally gives you more favourable options, including longer loan terms and lower interest rates. Conversely, a lower credit score may limit your choices and result in shorter loan terms or higher interest rates.
• Affordability and Budgeting: When deciding on the length of your camper loan, it's crucial to consider your financial situation and budget carefully. While a longer loan term can provide smaller monthly payments, it's important to ensure that you can comfortably make those payments over the entire duration of the loan. Assess your income, expenses, and other financial commitments to determine what you can realistically afford.
• Total Interest Paid: To make an informed decision, calculate the total interest you will pay over the life of the loan for different loan terms. This calculation will help you quantify the difference in interest costs between a shorter and longer loan term. Remember that a longer term will result in more interest paid overall.
• Prepayment Options: Some lenders may offer the option to prepay your loan, which means paying off the loan early. If you choose a longer loan term but find yourself in a position to pay off the loan sooner, take advantage of prepayment options to save on interest costs. This can be a strategic way to benefit from smaller monthly payments while minimising the total interest paid.
• Alternative Options: If you're concerned about the higher overall cost of a longer loan term, consider alternative financing options. For example, you could explore a shorter loan term with a higher monthly payment that you can afford. Alternatively, you could look for ways to increase your down payment, which would reduce the total amount you need to borrow, giving you more flexibility with the loan term.

RVs depreciate over time, so a longer loan term may result in negative equity

RVs are a significant investment, and like all vehicles, they depreciate over time. This means that the longer you finance your camper, the more likely you are to end up with negative equity.

When you finance an RV, you are essentially taking out a loan to pay for it. The length of this loan, or finance term, can vary depending on several factors, including the cost of the RV, your credit score, and the loan payment terms. On average, RV loans are available for terms of 10 to 15 years, with some institutions offering loan terms of up to 20 years.

While a longer loan term means smaller monthly payments, it also means you will ultimately pay more money in interest over time. This is where depreciation comes in.

Depreciation refers to the loss in value that an asset experiences over time. In the case of RVs, depreciation can be influenced by various factors, including the age of the RV, its mileage, wear and tear, and the type of RV.

Class A and Class B RVs tend to depreciate at similar rates, while Class C RVs depreciate more slowly and hold their value slightly better. Travel trailers and fifth wheels also depreciate, with their depreciation rates hitting a plateau after the first five years.

When it comes to managing RV depreciation, proper maintenance is key. Keeping your RV clean, well-maintained, and storing it properly can help slow down the depreciation process.

However, despite your best efforts, depreciation is inevitable. This means that if you finance your RV for a longer term, you may end up owing more on the loan than the RV is worth. This is known as negative equity.

For example, let's say you take out a 15-year loan to finance a $100,000 RV. By the time you've made five years of payments, you still owe $70,000 on the loan. However, due to depreciation, the RV is now only worth $60,000. This means you have negative equity of $10,000.

To avoid negative equity, it's essential to consider the depreciation rate of the RV you're interested in and try to keep your finance term as short as possible. While this will result in higher monthly payments, it will help you build equity in your RV faster and reduce the risk of owing more than it's worth.

Your credit score will determine your eligibility for a loan and the interest rate

Your credit score will play a significant role in determining your eligibility for a loan and the interest rate you will be offered. A higher credit score will generally make you more eligible for a loan and also help you secure a lower interest rate.

Lenders will use your credit score to assess your creditworthiness, which will determine whether or not they will approve your loan application. A higher credit score indicates that you are more likely to make your loan payments on time and in full, and therefore makes you a more attractive borrower.

The minimum credit score required to obtain an RV loan can vary depending on the lender. Some lenders may require a minimum score of 600, while others may accept a score as low as 550. However, it is important to note that a lower credit score may result in a higher interest rate and a larger down payment requirement.

Additionally, your credit score can also impact the length of your loan term. Lenders may offer shorter loan terms to borrowers with lower credit scores to mitigate their risk.

It is also worth noting that your credit score is not the only factor that lenders consider when evaluating your loan application. They may also look at your income, debt-to-income ratio, employment status, and other financial factors to determine your eligibility and interest rate.

To improve your chances of obtaining a loan with favourable terms and interest rates, it is recommended to have a credit score of at least 670. This will increase your chances of approval and help you secure a lower interest rate, making your loan more affordable in the long run.

Frequently asked questions