Henry Horton
Recreational vehicles (RVs) can be expensive, and their prices vary depending on make and model. While an RV with all the comforts of home could cost anywhere from $60,000 to well over $1 million, smaller travel trailers can be bought for less. On top of the sticker price, you’ll have expenses like gas, maintenance and insurance. With such a big investment, it’s important to understand how RV loans work, as well as the potential challenges that come with RV financing.
The length of an RV loan depends on many factors, such as the cost, your credit score, the loan payment, the lender, and how long you want your loan term to be. On average, RV loans are available for terms of 10 to 15 years, though some institutions will offer loan timeframes of up to 20 years.
The type of loan you take out will also affect the length of your loan. Secured loans, where the RV acts as collateral, tend to have lower interest rates and longer terms. Unsecured loans, where the RV is not used as collateral, usually have higher interest rates and shorter terms.
| Characteristics | Values |
|---|---|
| Typical loan term | 10-15 years |
| Maximum loan term | Up to 20 years |
| Minimum loan term | 5 years |
| Loan amount | $10,000 - $300,000 |
| Interest rate | 4.5% - 18% |
| Down payment | 10% - 20% |
What You'll Learn
Loan terms for used campers
The loan term for a used camper depends on several factors, including the cost of the camper, your credit score, and your financial situation.
Typical Loan Terms
The standard loan term for RVs, including campers, ranges from 10 to 15 years. However, it's not uncommon to find loans with terms of up to 20 years, especially for newer and more expensive vehicles.
Factors Affecting Loan Terms
Cost of the Camper
The purchase price of the camper is a significant factor in determining the loan term. Generally, a more expensive camper can be financed over a longer period. For example, at My Financing USA, a loan of at least $75,000 can be financed for up to 20 years, while a loan between $20,000 and $24,0000 may have a term of up to 12 years.
Your Credit Score
Your credit score plays a crucial role in determining your eligibility for a loan and the interest rate you'll be offered. A higher credit score typically leads to better loan terms and lower interest rates. For RV loans, a minimum credit score of 600 is usually required, and a score of 700 or above will provide more favourable terms.
Financial Situation
Lenders will also consider your financial situation, including your income, debt-to-income ratio, and ability to make payments. A stable income and a low debt-to-income ratio can lead to longer loan terms. Additionally, a larger down payment can help you secure a longer loan term by reducing the lender's risk.
Unsecured Loans
It's important to note that the loan terms mentioned above typically apply to secured loans, where the camper acts as collateral. Unsecured loans, which don't require collateral, usually have shorter terms of up to 7 years and are associated with higher interest rates.
Tips for Financing a Used Camper
When financing a used camper, it's essential to shop around for the best interest rates and loan terms. Used campers may attract higher interest rates than new ones, so comparing offers from multiple lenders is crucial. Additionally, consider the loan terms, as secured loans for used campers may have shorter terms than those for new campers. A significant down payment can also help lower your monthly payments and interest rate.
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Interest rates for used campers
According to My Financing USA, current interest rates for RV loans range from 6.24% to 19.95%. The average RV loan rate is 9.5% to 13.5%, with loans of 120 to 180 months being the most common. However, it's important to note that these rates may be higher for used campers compared to new ones.
Good Sam Finance Center provides an example of how loan amounts can impact interest rates. They state that a loan of $10,000 could have an Annual Percentage Rate (APR) of between 6.19% and 7.69%, while a loan of $75,000 could have an APR of between 4.59% and 5.35%.
Additionally, a higher credit score can lead to more favourable interest rates. A credit score of 640 may be the minimum required by some financiers, but a score of 700 or above is more likely to result in lower interest rates.
The length of the loan term can also affect interest rates. Shorter loan terms often result in lower interest rates, as lenders perceive longer terms as having a greater chance of the borrower defaulting.
It's worth noting that interest rates for RV loans are generally higher than those for car loans, reflecting the specialised nature of RV financing.
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Down payments for used campers
When it comes to buying a used camper, the down payment you'll need to make will depend on a variety of factors. Most lenders who offer RV loans require at least 10% of the purchase price as a down payment, while others may require 20%. The higher the down payment, the lower your monthly payments and interest rate are likely to be.
It's worth noting that it is possible to find loans that do not require a down payment, but these can be difficult to find and usually come with certain drawbacks, such as higher interest rates and a need for an excellent credit score.
If you're considering buying a used camper, it's important to do your research and compare offers from different lenders to ensure you're getting the best deal. You should also be aware of your credit score, as this will impact your eligibility for loans and the interest rate you'll be offered.
Additionally, when buying a used camper, it's crucial to carefully inspect the vehicle before purchasing it. While a used camper may be more affordable upfront, it might also come with higher interest rates due to the cost of ownership over the loan's life.
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Loan eligibility for used campers
The eligibility criteria for a loan on a used camper vary depending on the lender. However, there are some general factors that lenders consider when evaluating loan applications for used campers. Here are the key aspects you should be aware of:
Credit Score
Your credit score plays a crucial role in determining your eligibility for a used camper loan. A higher credit score, typically in the range of 700 or above, improves your chances of securing a loan with favourable terms. Lenders consider a good credit score as an indicator of your ability to manage debt and make timely payments.
Income and Debt
Lenders will assess your financial situation by evaluating your income, employment status, and debt-to-income ratio. They want to ensure that you have a stable income and can afford the loan repayments. The debt-to-income ratio compares your total monthly debt payments to your monthly income, giving them an idea of your ability to take on additional debt.
Down Payment
Some lenders may require a down payment for a used camper loan. The down payment amount can range from 10% to 20% of the total cost of the camper. A larger down payment can work in your favour, as it reduces the loan amount and may result in more favourable loan terms.
Age and Condition of the Camper
The age and condition of the camper are significant factors in loan eligibility. Lenders often have restrictions on the age of the camper they are willing to finance. Many lenders prefer campers that are 10 years old or newer, but some may finance older campers up to 12 or 15 years. Additionally, the lender may require an inspection of the camper to assess its condition and identify any defects that could impact its value or functionality.
Loan Amount
The loan amount you are seeking can also affect your eligibility. Lenders typically have minimum and maximum loan amount requirements. Some lenders specialise in larger loan amounts for luxury campers, while others cater to smaller loan amounts for more affordable options. Ensure that the loan amount you are seeking aligns with the lender's offerings.
Loan Term
The loan term, or the duration of the loan, is another factor in eligibility. Lenders usually offer standard loan terms ranging from 10 to 15 years, but some may provide shorter or longer terms depending on the cost of the camper and your financial situation. Keep in mind that longer loan terms result in smaller monthly payments but higher overall interest costs.
Lender Policies
Each lender has its own policies, guidelines, and eligibility criteria for used camper loans. Local banks may offer shorter loan terms, typically 5 to 7 years, while specialised RV and boat loan companies may provide extended terms of up to 20 years. It's important to shop around and compare the terms offered by different lenders to find the best fit for your needs.
Additional Considerations
When evaluating your loan eligibility, lenders may also consider other factors, such as your ability to provide collateral or a co-signer. Additionally, your existing relationship with the lender, such as having a bank account or other loans with them, could positively impact your eligibility.
In summary, securing a loan for a used camper depends on various factors, including your credit score, financial situation, the age and condition of the camper, and the lender's policies. It's essential to do your research, compare different lenders, and carefully review their eligibility requirements before submitting your loan application.
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Loan amounts for used campers
The loan amount for a used camper depends on several factors, including the lender, the camper's age and condition, and your credit score.
Some lenders have specific loan amount thresholds, such as Southeast Financial, which offers loans up to $4,000,000 for luxury RVs. On the other hand, Upgrade offers loans capped at $50,000, while Upstart offers loans ranging from $1,000 to $50,000.
The age of the camper is also a crucial factor. While some lenders finance campers up to 15 years old, others, like Southeast Financial, only finance campers up to 12 years old.
Your credit score plays a significant role in determining the loan amount. A higher credit score generally increases your chances of securing a higher loan amount. For example, a credit score above 680 may be required to borrow more than $50,000 from Good Sam Finance Center.
Additionally, the condition of the camper is important. Lenders may require an inspection for used campers, which could limit your lending options and result in shorter loan terms.
It's worth noting that some lenders have minimum loan amounts, such as iNet, which offers loans starting at $5,000, while others have maximum amounts, like LightStream, which offers loans up to $100,000.
When considering a loan for a used camper, it's essential to shop around and compare various lenders' offerings to find the best option for your specific needs and financial situation.
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Frequently asked questions
The standard range for an RV loan is 10 to 15 years, but it can be as short as 6 years or as long as 20 years depending on factors such as the loan amount, RV model year, and mileage.
The minimum credit score required for an RV loan is typically 600, but some lenders may accept a score in the high 500s with a higher interest rate. A score of 700 or above will result in more loan products being available and more competitive rates.
Affordability is based on factors such as income, credit score, debt-to-income ratio, purchase price of the RV, loan term, and interest rate. It's important to remember that the estimated monthly payment for an RV loan usually does not include insurance, parking or storage fees, maintenance, repairs, fuel, or license costs.
It is possible to purchase an RV with bad credit, but it may be challenging to qualify for RV loans. If your credit score is below 680, you may need to consider alternative options such as paying cash for the RV, arranging owner financing, or making a large down payment.
