Camper Loans: What Are Your Financing Options?

Recreational vehicles (RVs) can be expensive, so it's important to understand your financing options before you buy. Here are some of the loans you may be able to get for an RV:

- Secured RV loan: This type of loan uses the RV itself as collateral, which means the lender can repossess the vehicle if you can't make your payments. Secured loans typically have lower interest rates than unsecured loans, and they may be easier to get approved for if you have a low credit score. However, they often require a down payment, and the approval process may be longer since the RV must meet the lender's requirements.

- Unsecured RV loan: This is essentially a personal loan that you take out to fund the purchase of an RV. No collateral is required, so you won't risk losing your RV if you can't make the payments. Approval is based solely on your credit profile and financial health. However, interest rates for unsecured loans may be higher than those for secured loans, and they typically have shorter repayment terms.

- Home equity loan: If you've built up equity in your home, you may be able to use it to secure a loan to buy an RV. These loans can have longer repayment terms than RV loans, but there is a risk of foreclosure if you can't make the payments. The approval process for a home equity loan can also be quite lengthy.

Secured vs. unsecured loans

When it comes to financing a camper, you can either opt for a secured or unsecured loan. Here's a detailed comparison between the two:

Secured Loans:

Secured loans are specifically designed to help you purchase a recreational vehicle (RV), such as a camper, travel trailer, or motorhome. In this type of loan, the RV itself acts as collateral for the loan. This means that the lender can repossess your RV if you default on the payments. Secured loans are often offered by dealerships, credit unions, and online lenders. They usually come with lower interest rates and longer repayment terms, sometimes extending up to 20 years. However, the approval process may be longer, and a down payment may be required. The lender could repossess your RV if you fail to repay the loan. Additionally, there might be stricter eligibility criteria and RV eligibility requirements.

Unsecured Loans:

Unsecured loans, on the other hand, do not require collateral. Instead, approval for this type of loan is based on your credit score, income, and existing debt. Unsecured loans are typically easier to qualify for if you have good credit. They usually have a faster approval and funding process, and there are no restrictions on the type of RV you can purchase. However, interest rates may be higher, and repayment terms are usually shorter, typically up to 7 years. With unsecured loans, you won't risk losing your RV if you fail to repay, but the lender can take legal action against you.

Factors to Consider:

When deciding between a secured or unsecured loan for a camper, consider the following:

• Interest rates: Secured loans typically have lower interest rates than unsecured loans.
• Loan amount: Secured loans may allow you to borrow a higher amount.
• Repayment term: Secured loans often offer longer repayment terms, while unsecured loans usually have shorter terms.
• Eligibility: Secured loans may have stricter eligibility criteria and require a down payment. Unsecured loans are generally easier to qualify for with good credit.
• Risk of losing collateral: With secured loans, you risk losing your RV if you fail to repay, while unsecured loans do not carry this risk.
• Approval process: Unsecured loans often have a faster approval and funding process.

Loan amounts

RV loan amounts can range from $1,000 to over $1 million. The amount you can borrow will depend on the lender, your credit score and history, income, and the type of RV you're looking to buy.

On the other hand, RVs can cost upwards of $1 million, so loan amounts can be quite high. For instance, Bankrate mentions that LightStream offers loan amounts of up to $100,000. Similarly, SoFi gives borrowers access to loans of up to $100,000.

If you're buying a used RV, you may be able to get a loan of up to $300,000. Loan amounts for new RVs can be even higher. For example, Truist Bank offers unsecured loans for RV purchases of up to $100,000.

It's worth noting that some lenders have a minimum loan amount requirement. For instance, Upgrade offers loans starting from $5,000, while Upstart's minimum loan amount is $1,000.

Interest rates

RV loan interest rates can vary significantly, from as low as around 4% to upwards of 30%. Borrowers with excellent credit scores will typically qualify for the lowest interest rates, while those with poor credit may be offered rates at the higher end of the spectrum.

It's worth noting that RV loans can be secured or unsecured. Secured RV loans use the RV itself as collateral, while unsecured RV loans are based solely on the borrower's creditworthiness. Secured RV loans typically have lower interest rates than unsecured loans, but they come with the risk of repossession if you default on the loan.

When comparing RV loan interest rates, it's important to consider the loan term, as longer repayment terms will result in lower monthly payments but higher overall interest costs. Additionally, some lenders may offer discounts or incentives, such as autopay discounts, that can lower your interest rate.

To get the best interest rate on an RV loan, it's recommended to shop around and compare quotes from multiple lenders. Prequalification can be a helpful tool to get an idea of the rates and terms you may qualify for without impacting your credit score.

Loan terms

RV loans are typically installment loans, meaning you receive the loan in a lump sum and pay it back in fixed monthly instalments that include interest. The repayment terms for RV loans can range from one to 20 years, with secured loans offering terms of up to 20 years and unsecured loans offering terms of up to seven years.

RV loans can be secured or unsecured. Secured loans use the RV itself as collateral, which means that if you default on the loan, the lender can repossess the vehicle. Unsecured loans, on the other hand, do not require collateral, and approval is based on your credit score, income, and existing debt.

The interest rates for RV loans can vary depending on the lender, loan amount, and creditworthiness of the borrower. Rates typically range from around 4% to 36%, with secured loans often offering lower rates than unsecured loans.

When applying for an RV loan, you will need to provide personal information such as your name, address, contact details, and Social Security number. You may also need to provide supporting documents to verify your identity, employment, and income. If you are applying for a secured RV loan, you will also need to provide vehicle information such as the year, make, model, and model number.

The approval process for RV loans can vary depending on the lender and the type of loan. Secured loans may take longer to approve since the lender will need to approve the RV in addition to the borrower. Unsecured loans are often funded faster since they do not require the lender to approve the vehicle.

Lender options

There are several options for lenders to choose from when looking for a loan to finance a camper. These include:

• Banks: Banks are a common source of financing for campers, offering both secured and unsecured loans. Secured loans use the camper as collateral, while unsecured loans are based on creditworthiness. Banks typically have strict requirements for income and credit history, and may offer lower interest rates for secured loans.
• Credit unions: Credit unions are another option for financing a camper. They may offer more flexible terms and lower interest rates than banks, especially for members. Credit unions often require a membership, but joining is usually straightforward.
• Online lenders: Online lenders provide a convenient option for those seeking financing. They often offer quick approval and funding, and may be more willing to work with borrowers who have lower credit scores. However, interest rates can be higher compared to traditional lenders.
• Dealerships: Some dealerships have in-house financing options or partnerships with lenders, which can make the loan process more convenient. Dealerships may also be more flexible in terms of credit requirements and down payments. However, interest rates and fees can be higher compared to other lenders.
• Personal loans: For smaller campers or older used models, a personal loan may be an option. Personal loans are typically unsecured, so there is no risk of losing the camper if you default on the loan. However, interest rates can be higher, and the loan amount may be lower compared to RV-specific loans.

Frequently asked questions