How to get an RV loan

RV loans work similarly to other types of installment loans. If you qualify, the lender gives you a lump sum to pay for your RV and you make monthly payments of principal and interest until it’s paid off.

With RV prices ranging between $10,000 and $1 million, most people finance them by taking out an RV loan. The RV financing process can be as simple as getting a personal loan or as complicated as qualifying for a mortgage to buy a home, depending on how modest or luxurious your RV is. Gaining a better understanding of how these loans work can help you decide whether they’re a good fit for you.

What is an RV loan?

An RV loan is a secured loan used to finance the purchase of an RV, camper or travel trailer. Lenders generally qualify you for an RV loan based on your credit, income, total debt and the specifications of the RV you’re financing. Your RV becomes collateral for this type of RV loan and the lender can repossess your RV if you default.

You can also use an unsecured personal loan to buy an RV. Since your RV isn’t collateral for the loan, you qualify based on your credit, income and debt-to-income (DTI) ratio. Both secured and unsecured RV loans are usually installment loans, which means you receive all of your funds at once and make monthly payments based on the terms you’re approved for.

Secured loans

You’re likely to be offered a secured RV loan if you buy your vehicle from a dealership. There may be special discounts or perks for using a dealership’s in-house lender.

Alternatively, your credit union or local bank may offer secured RV financing with better rates and terms based on your banking relationship. Online RV lenders may also offer secured loan options.

Pros

• May be able to buy and finance your RV in one place.
• Possible lower rates and fees than unsecured personal loans.
• Higher loan amounts available than unsecured loans.
• Terms of up to 20 years may be available.

Cons

• Lender could repossess your RV if you can’t repay the loan.
• RV may not be eligible for financing.
• The approval process may be longer and more difficult with a down payment required.
• Special dealer or lender perks may only be available through a preferred lender.

Unsecured RV loans

You don’t need to have an RV picked out to get a personal loan to buy one. This may give you an edge if you’re buying a used RV and need funds quickly to outbid someone else.

Personal loan amounts typically start around $1,000, making them a good option to finance smaller or older used RVs for occasional use. Your interest rate will be solely based on your credit profile though, which means the lowest rates go to borrowers with the highest credit scores. Be aware that unsecured bad credit loan rates can reach up to 36 percent, and may result in exceptionally high monthly payments.

Pros

• Quick funding turnaround.
• No risk of losing your RV to repossession.
• Less documentation required for approval.
• No RV eligibility requirements.

Cons

• Typically higher rates and fees than secured RV loans.
• Terms are usually capped at seven years.
• May not be eligible for higher loan amounts.
• May be difficult to qualify with bad credit.

Steps for financing an RV

The RV loan application process is similar to applying for an auto loan, but getting approved is often harder. That’s because lenders tend to have stricter requirements for these types of loans, given their large amounts.

1. Prequalify with multiple lenders

Before submitting a full application, get quotes from the lenders you’ve researched. This process, known as loan prequalification, will not hurt your credit. It helps you determine your purchasing power and possible monthly payment before you shop.

If you are purchasing from a dealer, look for one that works with multiple lenders. This may increase your chances of being matched with a competitive offer.

2. Complete an application

Once you’ve settled on a lender, complete and submit your full application. Although this may vary from one lender to the next, you’ll likely be asked to provide some basic information.

• Your full name and date of birth.
• Your Social Security number.
• Your employer’s contact information.
• Proof of identity and address.
• Proof of income, such as copies of recent tax returns, pay stubs or W-2s.

3. Sign the loan agreement

The loan agreement outlines the loan terms, including your payment amount and due date. Review the fine print and sign if you’re comfortable with the offer.

Depending on the lender, the funds may be deposited into your account as soon as the next day. If you finance through a dealership, you may be able to get financed and purchase your RV on the same day.

Getting approved for an RV loan: Factors to consider

RVs are expensive and often labeled as luxury items. This means financing may come with more stringent qualifications than a car loan, and may even resemble the criteria to qualify for a mortgage.

Credit score

As with applying for any type of loan, a solid credit score is important. Lenders use credit scores to gauge your level of credit risk or likelihood of repaying the loan.

Most lenders require a FICO score of at least 670 to qualify for an RV loan. However, some will allow FICO scores below that threshold. To secure the lowest rates, you’ll need a credit score in the mid-700s or higher. Otherwise, you could end up with a hefty interest rate and incur steep borrowing costs.

Before starting your application, check your credit reports with all three credit bureaus — Experian, Equifax and TransUnion — so you know about any negative marks. That way, you can dispute any errors promptly and take other steps needed to improve your score. A free copy of your credit report from all three bureaus is available weekly from AnnualCreditReport.com.

Credit history

While credit history requirements vary by lender, every lender cares about your track record of borrowing. This includes making on-time payments on credit cards and any installment loans, such as student loans, personal loans or a mortgage.

Lenders balk at late or missed payments and defaults, as it increases the likelihood of you failing to repay them on time. The fewer you have, the better.

Income

When applying for an RV loan, the lender will ask you to provide proof of income. Lenders may also ask you to produce statements of debts to calculate your debt-to-income ratio (DTI).

Your DTI shows how much of your monthly income goes to paying your debts. Lenders typically want to see that your DTI will stay under 36 percent even after you take on an RV loan. A low DTI indicates you can likely afford additional debt.

Use Bankrate’s personal loan calculator to help determine how much you can reasonably afford to borrow.

Loan amount

On the low end, you can find a towable pop-up camper for as low as $5,000. High-end new RVs can cost more than $1 million. Before you start shopping, figure out what you want in an RV and what you can reasonably afford.

The age of the RV will also impact its price. A new RV will naturally cost more than a used model. But while it may come with sleek features, you will likely face steep depreciation, just like with a new car.

On the other hand, a used RV will have similar features but cost significantly less. You can also find RVs that are decades old. They won’t have as cushy of features as a recent model, but they will cost significantly less.

Interest rates

Rates start around 7 percent as of October 2024 — if you have stellar credit and high income. The best RV loan rates typically go to borrowers with scores in or above the mid-700s. You may also get an extra incentive on your rate with a down payment of 10 to 20 percent.

Secured RV loan rates are often lower for newer vehicles compared to older used ones. For unsecured loans, your rate will be heavily dependent on your credit score and could go up to 36 percent if it isn’t in the best shape.

Lender-specific requirements

Approval requirements typically vary by lender. The most common variations include minimum credit score and income requirements.

Some lenders may also ask questions about how you plan to use the RV — including whether you plan to use it as a primary residence or as a vacation home. They may also want to know about the vehicle’s condition. To avoid unnecessary loan denials, check this on each lender’s website or by contacting customer support before applying.

The bottom line

A secured RV loan can be a good way to finance your coach, camper or trailer if the monthly payment is affordable, and you have the room in your budget to handle a long-term debt. It’s even more important to pick the right RV loan if you plan to live in your RV — a default could be like losing a home in a foreclosure.

Many lenders can help with financing an RV, whether new or used. To increase your approval odds, assess your credit score and income before proceeding with a formal application. Also, shop around and get prequalified with multiple lenders to find the best deal available to you.