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It should come as no surprise that so many Americans are buying RVs. After all, camping is an extremely popular pastime, and many people make it their mission to tour the country, visit national parks, and see the sights in an RV.
If you’re considering purchasing a recreational vehicle of your own, you have multiple options, including caravans, motorhomes, and camper vans. However, any of these options will come at a significant cost, so you may need to borrow to buy.
If you do, this guide to RV loans will help you to make certain you’ve secured the most affordable financing for your recreational vehicle.
In this guide:
- Best RV Loans & Rates
- What to Consider When Comparing RV Loans
- RV Types and Costs
- Alternatives to RV Financing
Best RV Loans & Rates
You have many options for RV loans, but here are six lenders to consider to help you get started in shopping around. Typically, the lender that offers you the lowest rates with fees included (APR) is your best option, but you should also consider repayment flexibility and other benefits.
LightStream is one of our highest-rated personal and auto loan lenders with low rates, no fees, and a Rate Beat program in which they will beat any rate a competitor offers by 0.10 percentage points.
If you have a good credit score, LightStream is a great option for financing your RV purchase.
Key features of LightStream loans include the following:
- Loans are available only to individual borrowers, not businesses.
- You must have good credit and sufficient income or assets. You will need to provide details on your current debt when applying.
- Borrow up to $100,000
- Buy or refinance used or new RVs or trailers
- Vehicle financing starts at 4.29% APR, with autopay and a repayment term of 36 months or less
- No fees whatsoever
- You can receive credit approval and funding as soon as the day you apply
Key features of loans from US Bank include the following:
- Loans are available to legal residents of the U.S. who are over 18. You’ll need to provide your Social Security number, identification, the year and make of the RV you want to buy, and the estimated RV value.
- Loan amounts available up to $150,000 for your RV
- Finance or refinance a new or used RV
- RV loan rates start at 6.24%, with autopay and a repayment term of 48 months or less
- Apply online or via phone at 800-473-6372
Bank of the West
Key features of an RV loan from Bank of the West include the following:
- Loans are available to borrowers only in Arizona, California, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Nevada, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, Wisconsin, and Wyoming.
- Loans are available from $5,000 and up
- Buy or refinance new or used RVs or trailers
- APRs vary with loan term. For example, you could get a 10-year fixed rate loan for $26,050 at an APR of 6.995%.
- Apply online or via phone at 1-866-269-2327. However, you need to come to a branch to complete the final paperwork. If you are not near a branch, Bank of the West will contact you to facilitate the closing of your loan.
Mountain American Credit Union
Key features of an RV loan from Mountain America Credit Union include the following:
- Loans are available to credit union members. You will need to provide your personal contact information, Social Security number, driver’s license, and the VIN number, mileage, and details on accessories the RV is equipped with.
- Buy or refinance new or used RVs
- Interest rates start as low as 6.24% for a fixed rate loan. You can get an interest rate discount with MyStyle Checking.
- Apply online, at your nearest branch, or via phone at 1-800-748-4302.
Key features of an RV loan from Southeast Financial include the following:
- Loans are available to U.S. citizens who are at least 18 and who will not be using the RV for commercial purposes. The vehicle cannot have a salvaged, lemon law, flood, or frame-damaged title. Southeast Financial also does not offer financing for full-timers.
- Loans are available from $7,500 and up
- Buy or refinance new or used RVs, including units as old as 20 years
- Interest rates start at 4.75% for a fixed rate loan
- Apply online
Key features of a USAA RV loan include the following:
- Loans are available to USAA members
- Loan Amounts: Up to 100% of retail price
- Interest rates start at 5.25% with financing terms up to 180 months
- Buy or refinance new or used RVs
- Apply online or via phone at 800-531-USAA (8722)
What to Consider When Comparing RV Loans
When you decide to borrow for an RV, it’s important you borrow responsibly and find the best loan to meet your needs.
You don’t want to borrow more than you need to, as borrowing requires you to pay interest — which costs money and increases your total RV expenditures. And you want to make sure you get a loan with affordable monthly payments, a low interest rate, and the best possible terms and conditions.
It’s a good idea to compare at least three different lenders that provide RV financing when you’re trying to decide which loan is best for your needs. Some of the key things to compare include:
- Interest rate: You’ll want to pay the lowest possible rate. However, be sure to understand the difference between fixed and variable rate financing. Variable rate loans typically have a lower starting interest rate. However, your rate is tied to a financial index, so it can move up or down. And when the interest rate changes, your payments could increase. If you’d prefer more certainty, paying a bit more for a fixed rate loan is advisable.
- Loan repayment timeline: RV loans typically have fixed repayment terms, so you’ll know up front how long you have to pay back the debt. The repayment timeline varies among lenders. A longer repayment period would mean your monthly payments are lower, but you will pay more total interest over time due to stretching out the period when you pay interest.
- Loan fees: Some lenders charge application, administrative, or origination fees. These add to your costs. Others don’t charge these fees. Some lenders charge prepayment penalties, which make it costlier to get out of debt sooner.
- Qualifying requirements: Lenders with the best terms typically have stricter requirements for who can qualify. If you can’t qualify on your own, you may be able to have a cosigner with good credit help you.
By comparing all these things when applying for a loan, you can get the financing that makes sense for your situation.
RV Types and Costs
There are several primary types of recreational vehicles, each of which has its own cost ranges. Some of these common types of RVs, along with their typical costs, include the following:
- Class A Motorhomes: These are the biggest RVs, with boxy, bus-like bodies (up to 45 feet long) and large panoramic windows. The favorite of touring country-western bands, Class A vehicles start at about $50,000, while the price of the most luxurious units can easily climb into the millions. Amenities may include a full bathroom, master suite, washer/dryer units, multiple slide-outs, fully equipped kitchens, and extensive entertainment systems. Owners frequently hitch an automobile to the rear for additional mobility.
- Class B RVs: Smaller than Class As and Cs, these cargo vans don’t provide camper space above the cab area. They range in price from $40,000 to over $100,000 and are often tight on space. You might be able to accommodate up to four people, but these are really built for one or two occupants. These units often fit into standard garage spaces, have better fuel economy than the bigger units, and are easier to park at malls.
- Class C Motorhomes: These are midsize units built from cargo vans such as the Chevrolet Express and Ford Econoline. The camper portion extends over the cab area in front and supports a bed or entertainment center in that space. Class C motorhomes begin at $50,000 but can cost well over $100,000. They range in length from 20 to 33 feet and have fewer amenities and less floor space than their big Class A brothers. On the other hand, Class C vehicles are more maneuverable, affordable and better suited to secluded campgrounds.
- Other Types: Less expensive alternatives include travel trailers, fifth-wheel trailers, popup trailers, slide-in campers for pickup trucks, and toy haulers. Typically, these are priced well below $50,000, and small units are available for less than $5,000.
Ready to apply? Check out our top-rated lender LightStream
Alternatives to RV Financing
While you have options for RV loans, this doesn’t always mean that taking out a loan is the best choice — so it’s important to consider all your financing options.
If possible, your best option is to pay cash for smaller units. This would allow you to avoid interest charges, credit checks, and loan paperwork. But for the more expensive items, most folks turn to other options such as credit cards or personal loans. Here are the most appropriate alternatives:
Use an Existing Credit Card
If you have enough available credit, you could potentially charge the purchase of an inexpensive RV on your card. This option has some advantages and some disadvantages, including the following:
- Advantage: If you already have an existing credit card with enough available credit, you can buy your RV right away without having to worry about securing financing from another source.
- Disadvantage: Credit cards often have high interest rates. If your card has a rate above around 10% — and many do — then you may pay much more if you charge your RV on an existing card rather than obtaining an RV loan.
- Disadvantage: Your credit rating may take a hit because your credit utilization ratio will rise once you’ve charged the RV.
- Disadvantage: Not all RV dealers allow you to charge your purchase, as RV dealers would usually need to pay a fee to process your card payment.
Use a New Credit Card
You could also apply for a new credit card specifically to cover the cost of your RV purchase. Advantages and disadvantages of this option include the following:
- Advantage: If you have good to excellent credit, you might easily be able to get a new card with a sufficiently high credit limit to pay for the purchase. You may also be able to qualify for a card with a 0% promotional interest rate, which would mean you pay no interest for the first several months of paying on your RV loan.
- Advantage: Credit cards give you the most flexibility in the amount you pay back each month. Minimum payments are usually pretty low, and you also have the option to pay more.
- Disadvantage: If your credit score isn’t very good or if you have a limited credit history, securing a credit card will be difficult and expensive, and you may not be approved for a line of credit that’s large enough to fund your RV purchase.
- Disadvantage: Your credit score could take a hit because the card issuer will pull your credit report. Inquiries stay on your report for two years, and a lower number of inquiries is better for your credit score.
- Disadvantage: Using the card will affect your credit utilization ratio, just as it could if you applied for a new card.
- Disadvantage: Interest costs could run as high as 29.99% APR or more. This could make repayment very expensive.
Take a Consumer Vehicle Loan
Vehicle loans are secured debt, which means they’re collateralized by the vehicle; the lender can take the RV if you don’t pay.
Class B and Class C motorhomes are classified as converted cargo vans, so you can usually get a vehicle loan from the manufacturer, through the dealer, or from a bank or credit union. These could be fixed or variable rate loans and usually have repayment terms of up to eight years maximum.
Class A motorhomes, on the other hand, are often financed with long-term financing — similar to a mortgage — provided by banks, credit unions, and finance companies. These loans may require 20% down, and the repayment term may last decades.
Advantages and disadvantages include the following:
- Advantage: Consumer vehicle loans are usually easier to get since they are collateralized.
- Advantage: Loan interest is cheaper typically than credit card interest.
- Advantage: If the RV has sleeping, toilet, and cooking accommodations, you may be able to deduct the interest on your loan as second home mortgage interest.
- Disadvantage: Your RV can be repossessed if you miss payments.
- Disadvantage: Payments are based on a repayment term that’s fixed upfront and are less flexible than credit card payments.
Commercial Vehicle Loan
If you use your RV for your business, a commercial loan might be preferable to these other financing alternatives. Some of the advantages and disadvantages of this approach include the following:
- Advantage: If you have a business that qualifies for the commercial vehicle loan without you cosigning, your personal credit will be unaffected.
- Advantage: You could become entitled to tax breaks when you prove your RV is used for business.
- Disadvantage: Most commercial vehicle loans are collateralized, so you could lose the vehicle if you can’t pay.
- Disadvantage: APRs can be higher than other alternatives, depending upon your business credit.
Bottom Line: Which RV Loans Are Right for You?
Ultimately, you will need to research all of your options to decide which RV financing option is right for you. Compare lenders to see which will offer you the lowest rate.
Remember not to borrow more than necessary and to look for the most affordable loan possible so you can enjoy trips in your recreational vehicle without worry about how you’re going to pay back all you owe.
Ready to apply? Check out our top-rated lender LightStream
Author: Christy Rakoczy