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Make your motorhome dreams come true with a loan from one of the leading providers on the market. Compare rates and terms, and apply now.
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If you've ever felt the need to get out and go, an RV might be the best thing for you. It will give you the ability to pick up and travel anywhere the road can take you, a freedom that many adventurous souls crave. Financing your new purchase is something that you'll need to understand if you want to make that dream a reality, though.
If this is your first rodeo, you probably don't know much about what it takes to get approved for motorhome financing or where to even get started. Well, the first thing you'll need to know is where to go for an RV auto loan. Banks and credit unions will sometimes provide RV loans, but the rates may be high, and the paperwork can be tedious. Alternatively, since most people don't want to waste hours at a lender's office signing papers, online lenders are a convenient solution. Doing everything online saves you time, energy, and money. Plus, you can do some comparison shopping and save significantly on your loan.
Here are a few more things to know when looking for an RV auto loan:
Most lenders will ask for a down payment of at least 10% of the wholesale value of the vehicle you are purchasing. In truth though, if you can afford it, put down a larger down payment. The larger your down payment is, the lower your monthly payments will be and the less interest you’ll pay over time. Additionally, a larger down payment helps protect you against getting upside down on your loan (i.e., owing more money on the loan than the vehicle is actually worth), since an RV loses as much as 30% in value the minute you take it home.
There are many laws surrounding the buying and repayments of a motor home, but some of them work in your favor. If your RV is listed as a second home, the interest you pay each month towards your loan might be tax deductible. Consult a legal expert for guidance to save considerably.
Don’t forget the extras when applying for an RV auto loan. Frequently, lenders will want to see an appraisal of the vehicle before approving an RV loan. You’ll also want to deck out your new RV with supplies and accessories, so calculate these pricey items into your overall budget.
RV dealerships mark up their vehicles considerably because they expect people to negotiate with them. So, don’t take a price tag at face value; see how low the dealer is willing to go.
There aren't different types of RV loans, but there are different types of RVs, and the one you buy will factor into your loan eligibility, rates, and terms. The most popular are:
The most commonly asked about variant is new versus used RVs. New RVs are more exciting, have better features, and will have fewer mechanical problems. On the other hand, they’re more expensive, insurance premiums are higher, and you may need to put in more work to find the compatible accessories. A used RV is significantly cheaper (at least 30%), can be customized with your own taste, and might be easier to find. It’ll also have more mechanical issues and won’t have the manufacturer’s warranty to back it up. Which is better? That’s up to you, but the loan amount will vary significantly based on this decision.
As mentioned, the online application process is the smoothest and easiest way to apply for an RV loan. Click a few buttons, and your application is sent in moments. Most lenders have the same requirements for approval. They’ll want to see:
The only other thing that will really weigh heavily on your application process is a permanent address. If you are planning to use your RV as a full-time residence, you may have a difficult time finding a lender that will give you a loan. Since full-time RV owners are a higher risk as they can just drive away with their collateral if they can't make the payments, government regulations are tighter, and paperwork is more tedious, so many lenders will refuse a full-time residency RV loans.
That being said, there are still some reliable lenders that are willing to take a chance on permanent RV livers. Some lenders might charge higher interest rates or ask for a 12-month deposit as collateral for full-timers. If so, the collateral is returned after a year of successful payments.
Rates are based on the loan amount, creditworthiness, and the like, regardless of whether you are buying privately or from a dealership, however, older RVs can come with higher interest rates. Generally speaking, you'll get a higher APR for a longer loan, but either way, you'll end up paying more interest the longer the loan terms are. You can anticipate APRs ranging from 4.99%-7.49%.
RV loans range in their terms based on several factors including:
How much you can get, how long you’ll have to repay the loan, and what interest rates you’re offered will vary significantly. Most lenders offer RV loans from $5,000-$2,000,000 with repayment terms ranging from 60 months to 20 years. This is not a hard and fast rule though, so you can shop around to find the best terms for you (especially if you have good credit).
Of course, the loan terms and requirements will be different for a new and used vehicle, as well. Used RVs must have less than 60,000 miles usually to get approved (100,000 for diesel).
How much to borrow will depend on your finances and the wholesale value of the RV you're trying to purchase. To figure out how much you should ask for, make a monthly budget to see how much you can afford. Taking out a loan larger than you can afford is one of, if not the worst thing you could do, for your credit and finances. Estimate how much you can really afford to pay each month and use that as a gauge for your RV loan offers.
Also, remember the other expenses involved in purchasing an RV. There are often appraisal fees, legal fees, closing fees, accessories, and insurance. If you are buying a towable, factor in the cost of the towing vehicle or apparatus as well.
With the right amount of preparation and some good comparison tools, you can find a great RV loan that will work with your finances. Spruce up your credit, do a little homework on the best RV loan providers, and apply now so you can be driving around in your own RV soon!