Camper Financing: Exploring Loan Options For Your Dream Purchase

Financing a camper, motorhome, or trailer can be a large expense that many people can't afford outright. RV loans are personal loans from online lenders, or secured vehicle loans from banks and credit unions. The type of lender you choose will probably depend on whether you want a secured or unsecured loan. Secured loans are guaranteed by collateral, which means they typically have lower rates than unsecured loans. Lenders may also be more willing to approve your application if you secure the loan with the RV. Unsecured loans do not require collateral, and approval is based on your credit score, income, and existing debt. The length of an RV loan will depend on the lender, loan amount, and type of loan, with terms ranging from one to 20 years.

RV loan options: secured vs unsecured

There are two types of RV loans: secured and unsecured. The one that is right for you will depend on your financial situation and your credit profile.

Secured RV Loans

Secured loans are generally easier to get approved for and have less stringent financial requirements. The lender can repossess your RV if you default. They may also take longer to approve since the RV must meet the lender’s requirements.

Unsecured RV Loans

This type of RV loan is simply a personal loan that you take out to fund the purchase of an RV. No collateral is required. Approval is based solely on your credit profile and financial health. Rates may be higher than secured loans, and they are often funded faster since they don’t require the lender to approve the RV.

Pros and Cons of Secured and Unsecured RV Loans

Secured RV Loans:

• May carry lower interest rates and longer terms.
• If you have a low credit score, you may have an easier time qualifying.
• You may need to have cash on hand for a down payment.
• If you fail to repay the loan, the lender can seize your RV.

Unsecured RV Loans:

• Can usually pre-qualify to preview potential rate and term.
• No collateral is required, so you won’t risk losing your RV.
• Interest rates may be higher and terms shorter.
• You’ll need a strong credit score and solid finances to get the best offer.
• If you fail to repay the loan, the lender can take you to court.

Qualifying for an RV loan

Lenders will look at a variety of factors when considering your application, including your credit score, debt-to-income ratio, employment history, and income. A high credit score, low debt-to-income ratio, stable income, and clean credit history are generally favourable for approval.

If your credit score is less than ideal, you may still be able to qualify for an RV loan by taking the following steps:

• Save for a larger down payment: Borrowing a smaller amount reduces the lender's risk and may increase your chances of approval. A larger down payment can also lower your interest rate and overall cost of the loan.
• Improve your credit score: A higher credit score will make you more likely to qualify for an RV loan with acceptable lending terms. You can improve your credit score by always paying your bills on time and reducing your debt.
• Consider a co-signer: Some lenders allow co-signers on RV loans, which can help you qualify if you have a lower credit score. Keep in mind that the co-signer will be liable for the debt if you default on the loan.
• Compare lenders: Different lenders have different approval requirements, so it's worth shopping around to find one that suits your financial situation. Online lenders, banks, credit unions, and dealerships all offer RV loans, and some specialize in lending to borrowers with poor credit.

Interest rates and repayment terms

Interest Rates

RV loan interest rates can range from around 7% to almost 36%. Secured loans typically have lower interest rates than unsecured loans. For unsecured loans, the interest rate will depend on your credit score, with rates as low as 6% for those with good or excellent credit and higher rates for those with fair or poor credit. For secured loans, lenders will also consider information about the vehicle, such as its age, when determining the interest rate.

Repayment Terms

Repayment terms for RV loans can range from one to 20 years, with terms typically being longer for secured loans than for unsecured loans. The length of the repayment term will impact the size of your monthly payments and the total amount of interest you pay over the life of the loan. For example, a longer-term loan will result in lower monthly payments but higher total interest costs.

When comparing RV loan offers, it's important to consider not only the interest rate but also the repayment term and any associated fees to understand the total cost of the loan.

How to get an RV loan

RV loans are typically secured by the vehicle, like car loans, with a fixed APR and set repayment terms. Some lenders offer RV loans for up to 240 months or 20 years. If you're buying an inexpensive used camper under the minimum RV loan amount, you may want to take out an unsecured personal loan instead.

Check Your Credit Score

Your credit score is one of the biggest factors in getting a good interest rate. Start by checking your credit score with the three credit bureaus (Equifax, Experian and TransUnion) or your bank before applying for an RV loan. You can take steps to improve your score to increase your chances of approval and to secure a better rate.

Determine Your Budget

Shop around to determine the price range of the vehicle you’d like to own. It’s easy to fall in love with the newest RV with all the gadgets, but you could end up spending more than you planned. Use an RV loan calculator to estimate your monthly loan payments, taking into account factors like down payment and APR. Don’t forget to include other costs of RV ownership, such as taxes, title and registration, insurance, storage fees, maintenance, fuel and campground fees.

Save for a Down Payment

Your lender may require a down payment of 10% to 20% of the purchase price. A sizable down payment will reduce the amount of interest you pay and could help you qualify for a better APR. Taking the time to save for a down payment could save a lot of money in the long run, leaving more to spend on your travels.

Apply for a Loan

Apply online and receive offers from multiple lenders. It won’t hurt your credit score to apply to multiple lenders for an RV loan any more than it does to apply to one, if you submit all applications within a 14-day period. When comparing APRs and terms, use an RV loan calculator to understand the impact of longer versus shorter terms on the total cost of borrowing. It’s easy to be tempted by longer terms that result in lower monthly payments, but remember that you’ll pay more in interest over the life of the loan with a long term.

Shop for an RV

Your lender will want to know which RV you plan to finance. Even towable RVs have vehicle identification numbers (VIN), which will tell the lender the year, make and model of the RV. Other important factors include mileage, condition, title status and vehicle history, such as whether it was in an accident.

Submit a Loan Application

Submit a loan application online or at the RV dealership. You will need the usual information, including Social Security number, residence and employment history, proof of income and the amount you want to borrow.

Alternative financing options

There are a few alternative financing options available if you're looking to buy a camper or recreational vehicle (RV). Here are some options to consider:

• RV loans: These are secured loans specifically designed for purchasing RVs, with the vehicle itself serving as collateral. RV loans typically offer longer repayment terms, ranging from two to 20 years. The interest rates and borrowing requirements may vary depending on the lender and the loan amount.
• Unsecured personal loans: Unlike RV loans, personal loans are not backed by collateral, so you don't risk losing your camper if you can't make the payments. Personal loans tend to have higher interest rates, especially for borrowers with poor credit. However, they offer more flexibility as they can be used for any purpose.
• Home equity loans: If you own a home, you can borrow against the equity in your property. Home equity loans often come with lower interest rates and longer repayment terms of up to 30 years.
• Renting: If you're not ready to commit to buying a camper, renting can be a more affordable and flexible option. This is especially suitable if you only plan to use it occasionally.
• Paying in cash: If you have the financial means, paying in cash can save you from accruing interest and fees associated with loans. Consider buying a used camper to further reduce the cost.

Frequently asked questions