Camper Costs: Payment Plans And Purchase Prices

The cost of a camper can vary from less than $10,000 to six figures, depending on the type of camper, its condition, and quality. RV loans are available from online lenders, banks, and credit unions, with terms ranging from two to seven years for unsecured loans and up to 20 years for secured loans. The interest rate on an RV loan is determined by factors such as the loan amount, the borrower's credit score and history, income, existing debts, and the age and mileage of the RV. When considering an RV loan, it is important to take into account additional costs such as insurance, parking or storage fees, maintenance, repairs, fuel, and license.

How much you need to put down

The amount of down payment you need to put down for a camper depends on several factors, including the lender, your credit score, and the type of camper you're purchasing.

Lender Requirements

Most lenders who offer RV loans require a minimum down payment of 10% of the purchase price. Some lenders might require a 20% down payment. A larger down payment will reduce your monthly payments over the life of your loan and might even earn you a lower interest rate.

Some lenders don't require a down payment at all, but financing 100% of the camper's price may result in you owing more than what the camper is worth as it depreciates.

Your Credit Score

Your credit score will also play a role in determining the down payment amount. A higher credit score generally means you're in a better position to secure a low-interest rate on your loan. A score in the mid-700s or higher increases your chances of being approved and receiving a better rate.

If your credit score is below 680, you may need to pay cash for the camper, work out an owner financing arrangement, or put down a large down payment.

Camper Type

The type of camper you're purchasing will also influence the down payment amount. Depending on the type of camper you get and its condition and quality, prices can range from less than $10,000 to six figures.

For example, Class A RVs, which are the largest and roomiest self-contained motorhomes, typically have a starting price of $200,000 and can go up to $300,000 or more. On the other hand, Class B motorhomes, also known as camper vans, are the smallest vehicles in the RV family and are substantially less expensive, with a retail price of about $80,000.

How to get an RV loan

The process of getting an RV loan is similar to applying for an auto loan, but the approval requirements are often more stringent. Lenders tend to have stricter requirements for RV loans due to the large loan amounts involved.

Set your budget:

Consider your budget in terms of what you can afford to pay each month, as well as the total amount you're comfortable spending. Don't forget to factor in other upfront and ongoing costs, such as sales tax, fees, accessories, insurance, and maintenance.

Prepare your down payment:

Some RV lenders require a minimum down payment of 10%, while others recommend 20% or more. A larger down payment can help you secure a lower interest rate and save money in the long run. However, it's important to balance this with maintaining sufficient cash reserves for emergencies and other financial goals.

Check your credit scores:

A higher credit score improves your chances of getting approved for an RV loan and securing a lower interest rate. Take time to review your credit reports and address any potential issues, such as paying off credit card balances or disputing inaccurate information.

Compare lenders:

Shop around and compare offers from different lenders, including banks, credit unions, online lenders, and dealership partners. Each lender may have unique approaches to underwriting and determining interest rates, so it's essential to explore multiple options to find the best deal.

Determine your loan term:

RV loan terms can range from several years to 20 years or more. A shorter loan term will typically result in a higher monthly payment but lower overall interest costs. On the other hand, a longer loan term will reduce your monthly payments but increase the total interest paid over the life of the loan.

Prequalify with multiple lenders:

Get quotes from multiple lenders by providing basic information, such as your estimated credit score and the RV price range you're considering. This process, known as loan prequalification, will not hurt your credit score and will help you understand your purchasing power and potential monthly payments.

Complete a full application:

Once you've chosen a lender, submit a full application by providing the required information, including your full name, date of birth, Social Security number, employment details, proof of identity and address, and proof of income.

Sign the loan agreement:

Review the loan agreement carefully, paying attention to the fine print. If you're comfortable with the terms, including the payment amount and due date, sign the agreement. The funding process can vary depending on the lender, with funds typically available as soon as the next day or even the same day if financing through a dealership.

Pros and cons of secured and unsecured RV loans

The price of a camper ranges from $10,000 to $1 million, depending on the type of RV you want. If you can’t pay for one in cash, taking out an RV loan is a possible solution.

There are two types of RV loans: secured and unsecured. Both loan types offer different benefits and drawbacks. The amount you need, your credit profile, and how you’ll use the RV will all affect which is best.

Pros and Cons of Secured RV Loans

A secured RV loan requires you to use the RV as collateral, which means the lender can repossess your RV if you don’t repay the loan. Since the lender is taking on less risk in this scenario, you generally receive a lower interest rate than an unsecured RV loan.

Pros

• Possible lower interest rate
• Higher loan amounts than unsecured RV loans
• You don't need a good credit score since you're offering something as collateral

Cons

• Lender can take your RV if you fail to repay the loan
• Some lenders may require a down payment

Pros and Cons of Unsecured RV Loans

Unsecured RV loans, on the other hand, don’t require you to use the RV as collateral. Because of this, you may need a stronger credit profile to qualify.

Pros

• Lender can’t immediately repossess your RV if you default
• The application process is usually quicker than applying for a secured loan

Cons

• Typically higher rates than secured RV loans
• May be difficult to qualify with bad credit
• More risk for the lender, which can result in lower borrowing limits, higher interest rates, and higher credit scores needed to apply

How much RV you can afford

The cost of an RV varies depending on the type, features, and amenities included. When considering how much RV you can afford, it's important to look at both the upfront cost and the ongoing expenses associated with ownership. Here are some factors to consider:

Types of RVs and Their Costs:

• Class A Motorhomes: These are the largest and most luxurious RVs, offering features similar to those found in a permanent home. They typically range in price from $200,000 to over $1 million.
• Class B Motorhomes (Camper Vans): These are smaller and more compact RVs that are easier to handle and more fuel-efficient. They usually cost between $80,000 and $175,000.
• Class C Motorhomes: These are a hybrid between Class A and Class B, offering more space and amenities than Class B but not as large as Class A. They generally cost between $50,000 and $115,000, depending on size and features.
• Fifth-Wheel Trailers: These offer the most square footage and are popular for full-time living or larger groups. They typically cost between $40,000 and $125,000.
• Travel Trailers: These are compact and lightweight, making them easy to tow. They are versatile and offer similar features to larger RVs at a fraction of the cost, usually ranging from $15,000 to $30,000.
• Pop-up Campers: These are the most compact and affordable option, perfect for weekend trips or short camping holidays. They typically cost between $5,000 and $15,000.
• Truck Campers: Designed to fit into truck beds, these are ideal for one or two travelers and typically cost between $8,000 and $50,000, depending on features.

Upfront Costs:

When considering how much RV you can afford, remember that the purchase price is not the only upfront cost. Other costs to consider include:

• Down Payment: Lenders typically require a down payment of 10% to 20% of the RV's cost.
• Sales Tax: This varies by state but can add a significant amount to the overall cost (e.g., a 6% sales tax on a $100,000 RV would be an extra $6,000).
• Closing Costs and Insurance: There may be additional fees and costs associated with the loan itself, and you'll need to insure your RV.

Ongoing Expenses:

In addition to the upfront costs, there are ongoing expenses to consider when determining how much RV you can afford:

• Maintenance and Repairs: Larger RVs with more features tend to require more maintenance and repairs, which can add up over time.
• Fuel Costs: RVs are not known for their fuel efficiency, and the cost of fuel can be a significant expense, especially for larger models.
• Towing: If you need to tow your RV, you may need to upgrade your current vehicle to ensure it has the necessary towing capacity.
• Insurance: RV insurance is mandatory and can be quite costly, depending on the make and model of your RV.
• Parking and Storage: When you're not on the road, you'll need to consider parking and storage fees, which can vary depending on your location and the size of your RV.
• Camping Fees: Overnight camping usually comes with a fee, especially if you want access to electricity, water, and other amenities.
• Additional Amenities: If you want to outfit your RV with modern conveniences like a satellite TV, Wi-Fi booster, or GPS, these will add to the overall cost of ownership.

Loan Considerations:

When thinking about how much RV you can afford, don't forget to factor in the cost of financing. Here are some key considerations:

• Loan Amount: This is the amount you need to borrow and will depend on the purchase price of the RV minus any down payment and closing costs.
• Repayment Term: RV loan terms can range from 2 to 20 years, with longer terms resulting in lower monthly payments but higher overall interest costs.
• Interest Rate: The interest rate will depend on various factors, including your credit score and history. A higher credit score can help you secure a lower interest rate, reducing the overall cost of the loan.
• Monthly Payments: Use an RV loan calculator to estimate your monthly payments based on the loan amount, term, and interest rate. Ensure that these fit comfortably within your budget.

Budgeting and Saving:

Before purchasing an RV, it's essential to create a budget and ensure you have room for all the associated costs. Here are some tips:

• Set a Realistic Budget: Consider not just the upfront cost of the RV but also the ongoing expenses. Be honest about what you can afford, and don't overextend yourself.
• Shop Around: Compare prices and loan options from different dealers and lenders to find the best deal. Don't accept the first offer; negotiate and look for opportunities to save.
• Consider a Used RV: Buying a used RV can be a more affordable option, but be sure to have it inspected by a reputable mechanic to ensure you're getting a good deal.
• Save for a Down Payment: A larger down payment can help reduce the amount you need to borrow and may even lower your interest rate. Start saving early to have a substantial down payment ready when you're ready to buy.
• Improve Your Credit Score: A higher credit score can help you qualify for better loan terms and interest rates, saving you money in the long run. Take steps to improve your credit score before applying for an RV loan.

In conclusion, determining how much RV you can afford involves considering both the upfront cost and the ongoing expenses of ownership. By researching the different types of RVs, understanding the associated costs, and creating a realistic budget, you can make an informed decision about how much RV you can comfortably afford. Remember to shop around for the best deals and always read the fine print when it comes to loan agreements. Happy camping!

Typical mistakes when obtaining an RV loan

There are several common mistakes people make when obtaining an RV loan. Here are some key ones to watch out for:

Not budgeting properly

Budgeting is essential when considering an RV purchase. It's easy to get excited about luxury models, but it's crucial to be realistic about what you can afford. Remember to factor in additional costs such as fuel, taxes, insurance, and maintenance, on top of the RV's price. Create a detailed budget that includes all potential expenses and compare it to your income and other financial commitments to ensure you can comfortably afford an RV loan.

Forgetting about your credit score

Your credit score is critical when applying for any loan, including an RV loan. Ensure you check your credit score with the major credit reporting agencies and take steps to improve it if necessary. A low credit score can slow down the loan process and affect the interest rates and loan terms offered to you. Work on paying your bills on time and reducing any outstanding credit card debt to boost your credit score.

Not saving for a down payment

Start saving for a down payment as early as possible. The larger the down payment, the more favourable loan terms you may receive, such as a lower interest rate. It can take a significant amount of time to save, so plan well in advance.

Avoiding talking to a lender

Don't hesitate to reach out to lenders to discuss your options. Consult with banks, credit unions, RV dealerships, and online lenders to find the best loan rates and options for your needs. Shopping around can help you secure the most suitable loan for your financial situation. Remember that lenders are there to guide you through the process, so don't be afraid to ask for their expertise.

Paying the sticker price

Just like with any vehicle purchase, you should never pay the asking price for an RV. RV prices are often inflated, and there is usually room for negotiation. Don't fall for sales tactics, and don't be afraid to walk away if you can't get the price you want. Be cautious about sharing your budget with salespeople, as they can manipulate loan terms to fit your monthly budget, resulting in an overpriced rig.

Not researching loans before the sale

It's crucial to research and compare loan options from different lenders before finalising your RV purchase. Monitor your credit score regularly, as excessive credit checks can negatively impact it. Joining a local credit union can offer favourable loan terms, and you'll know your approved loan amount upfront. Dealerships often have in-house financing, but they may not always have your best interests at heart, especially if they work on commission.

Frequently asked questions