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Owning a recreational vehicle is a highly rewarding thing for those who love camping and life on the road. RVs can be a large purchase, requiring buyers to obtain financing. Loans can be acquired through standard banks and financial institutions, dealership loans, and personal loans. Each of these loans has its own set of qualifications, with credit rating and history being the main deciding factor in approval. Buyers can finance both used and new RVs, making it easier for those with varying budgets to purchase a camper, motor home, fifth wheel or other RV, depending on their personal preferences.
Typical Terms and Rates of RV loans
As with just about any loan, terms will vary from lender to lender. One of the biggest components in determining the terms of RV loans is the amount of money that is being borrowed. Smaller loans will typically have a shorter loan period of 4 years. Those purchasing a higher priced vehicle could qualify for a loan with a life of 12 to 20 years or longer.
Interest rates are determined by a combination of factors. Lenders will take into consideration the amount of the loan, the term of the loan, and the creditworthiness of the buyer, among other factors that are unique to the lender. Rates typically begin at just a few percent and can be as high as 20% or more for those with sub-prime credit. Those who are in the market for an RV loan should spend a little time cleaning up their credit to try to obtain a higher score before applying to finance their recreational vehicle.
Typical Mistakes When Obtaining an RV Loan
There are a few mistakes that first-time RV buyers make quite frequently. By keeping these mistakes at the front of mind as you go through the purchasing process, you can ensure that you will get the best loan possible for your own needs and budget.
Taking the first offer you receive – It can be exciting to get approved for RV loans, but instantly accepting the first offer from lender can be a big mistake. Shop around to a number of different lenders to get the best terms that you can for your loan. Not considering the depreciation of the recreational vehicle, many buyers are so excited for the lower payments of a long-term loan that they don’t consider the depreciation of the RV they are purchasing. You may not be able to get the trade-in value that you had hoped if you do not keep in mind the depreciation of the vehicle.
Failing to negotiate with the seller – In most cases, sellers include a considerable markup in the price of a recreational vehicle. This leaves room for negotiation when it comes to determining the price of the RV you are purchasing. Work with the seller to reduce the sticker price of the vehicle before obtaining a loan to ensure that you get the lowest price and payments possible.
Not considering your overall budget – There is more to RV ownership than just the amount of your loan payment. Consider the maintenance, fuel, and other costs that you may incur as you use your RV and factor that into your budget. It would be a travesty to find yourself making payments on an RV and not have enough funds in your budget to enjoy using it.
Features of the Best RV Loans
Though the best RV loan might not look exactly the same to every buyer, there are some specific features that you should look for when shopping for RV loans. Be sure to read documentation carefully and ask questions so that you are certain of what you can expect and what is expected of you from your lender.
Gap Protection – Loans that include Guaranteed Asset Protection will ensure that you are covered, even if your RV is deemed totaled and your insurance company’s settlement will not cover the remaining balance on your loan.
No Penalty for Pre-Payment – Be sure that you can make additional payments on your loan and pay off the principle early without being charged a penalty. Some lenders will charge a fee when you pay off the balance prior to the final payment date to ensure that they can collect the interest they are expecting from your loan.
No Hidden Fees – Carefully look over loan documents and terms to ensure that you will not have unexpected fees, such as application fees, yearly fees, or other charges that will affect your budget that you might not have expected. Though some fees may be standard, unscrupulous lenders will tack on charges to boost their profits, which can be a challenge for some buyers to pay.
This calculator is intended solely for general informational purposes and to provide a rough estimate based on the information you have provided. You should not base your decision on this estimate alone. Please note that title, registration, tax and other fees, and personal circumstances such as employment status and personal credit history, were not considered in the calculations. Personal circumstances may have a significant effect on interest rates for which an individual might qualify. Accordingly, we cannot and do not guarantee the accuracy or applicability of the estimates produced by this calculation, and the results from its use should be viewed as hypothetical, for illustrative purposes. At the appropriate time, we recommend that you rely upon actual interest rate and payment information provided to you by your dealer or lender.