How Long Can You Finance An RV?
There is a saying that there is a recreational vehicle for everyone. When financing an RV, one of the most common questions that potential buyers have is, “How long can you finance an RV?” Generally, RV loans can be financed for 10 to 20 years, depending on the lender and the borrower’s creditworthiness.
- Standard lengths: 10, 12, 15, 20 years.
- Some lenders may extend up to 25 or 30 years.
- Longer terms make monthly payments more affordable.
- Lower-priced RVs may have shorter financing, 10-15 years.
- High-end RVs like luxury motorhomes may go beyond 20.
- Loan length depends on the lender, credit, and RV cost.
If you are on a budget, there are models for you. Similarly, if you have deep pockets, there are also RV models for you. In this post, I will share all the essential details you need to know about financing an RV purchase.
How RV Loans Work?
RV loans are very similar to car loans. Before banks give an RV loan, they will check your credit score, aka your financial trustworthiness.
Based on your score and other factors, such as your assets and verifiable income, they will decide whether or not to give you a loan, the loan interest rate, and the loan term.
So, your credit score determines your loan term. The loan term can be a couple of months or several years. For most people, it is usually between five years and twenty years.
How Long Can You Finance Your RV Loan?
As mentioned above, loans generally have a repayment period of between five years and twenty years. Credit unions, banks, and RV dealers are the primary financiers of RV loans.
These and other lending organizations generally consider recreational vehicles as secondary homes. This is why they can stretch lending terms to five or even twenty years. So, how long you can finance your RV loan can be a few years or up to 20 years.
The amount of time you can get to pay for your RV loan is one of the most important things to consider when seeking an RV loan. Other equally important things to consider include the down payment and the interest.
The down payment is usually about 20% of the price of the RV you want the lender to finance. Meanwhile, the interest rate you will be offered will vary from lender to lender and largely depend on your credit score.
If your credit score is high, you will most likely be offered a low-interest rate loan by most of the lenders you will approach. This is something desirable. Moreover, the loan term you will get will also be something you like.
What Determines Your RV Loan Term?
As mentioned, your RV loan term can be between five and twenty years. Most RV owners typically finance RV loans between ten and fifteen years.
Nevertheless, some have much longer loan terms, especially for those with loans in the region of $60,000 or more.
Many lending institutions have flexible payment terms. So even if your loan has a term of 10 years or more, you can pay off the loan at a go or make extra payments to settle the loan quickly.
Different lending institutions consider other factors to determine your RV loan term. Some key factors lending institutions think include how much time you want to repay your loan, your credit score, and how much you plan to pay monthly.
One important thing to note about loan terms is that you are better off having a short loan than a long one. Because a short loan term means you will make more significant monthly payments to settle the loan.
In contrast, a long-term loan will mean you will be paying smaller amounts monthly, and hence, you will have to pay a lot more money in the end because of interest rates.
Therefore, if you can settle your RV loan faster in more significant monthly payments, do it. This will help you pay off the vehicle with much less money.
Why You Should Not Get a Long-Term RV Loan
RV loans are generally expensive. They are loans to buy recreational vehicles – well-equipped to function as mini homes. So, it is not a surprise that the loans are expensive.
Getting a long-term RV loan may sound like a good idea. This is because many people figure that since they only have to pay smaller amounts over a long period, such loans are much better. However, this is not the case.
While an RV loan with a long-term repayment period will naturally be more manageable, it will also be more expensive. Now, as I already mentioned, RV loans are generally costly.
So, getting a long-term RV LOAN is double the trouble; it is doubly expensive.
Most people who take long-term RV loans do so when buying new and expensive RVs. In the next section, I will show you exactly what to do to get a relatively cheap loan to finance your RV purchase. You can buy a used RV if you like.
It will be cheaper, for sure. You might even be lucky to get one in perfect shape. However, you do not need to buy a secondhand RV. Check out the section below to learn how to finance your RV loan better.
How to Go About Financing an RV Loan
1. Set A Budget
This is perhaps the most essential step when getting an RV loan. The reason is that so many fantastic RV vehicles are on the market.
So, if you do not set a budget beforehand based on your actual needs and finances, you may get excited and tempted to buy something more expensive when you go RV shopping.
So, set a budget beforehand to avoid choosing an expensive RV model, which will require more time to settle.
2. Find Out Your Credit Score
I mentioned earlier that lenders check credit scores to determine your creditworthiness and decide the loan terms they will give you. You can estimate how much interest you will be charged by specifying your credit score.
A higher credit score (more than 750) will earn you a lower interest rate. With this information, you can guesstimate if an extended or long-term loan is better for you.
3. Compare Lenders
Once you have your budget and your credit score, it is time to talk to and compare lenders. Organizations that could finance your RV purchase include banks, online lenders, credit unions, and even some RV dealers.
With your budget and credit score, you can get feedback from lenders about the terms they are willing to offer you. You can then use this information to choose the best among them.
4. Negotiate With RV Dealers and Then With the Lender
Once you know which lender offers the best loan terms, it is time to approach dealers. RV dealers expect you to haggle, so they inflate RV prices.
They usually inflate prices by up to 35 percent in some cases. So approach dealers and talk to them. Find out who will cut their price for that RV you want. If you are a good negotiator, you could save $5,000 or more at this stage.
Once you’ve got the price you want, approach the lender you selected in the previous step and negotiate for even better loan terms. Most lenders will listen and offer you something more like what you want.
By following the steps above, you will likely get a good, inexpensive RV loan with more accessible terms. You are also expected to get the loan term you desire.
Following these steps will also put you in a better position to influence how long you can finance an RV.
What is a Good Interest Rate For an RV?
A reasonable interest rate for an RV loan largely depends on the borrower’s creditworthiness. The average RV loan rates fluctuate between 4.49 percent and 11.89 percent for borrowers with excellent credit scores.
It’s important to note that those with less-than-perfect credit may be subjected to higher interest rates.
Therefore, if you’re asking, ‘What is a good interest rate for an RV?’, it’s crucial to understand that the answer can be relative and depends significantly on your credit profile.
In conclusion, the timespan for financing an RV can significantly vary based on several factors. In response to the question, “How Long Can You Finance An RV?” the standard lengths of financing range from 10, 12, 15, to 20 years.
However, some lending institutions may offer extensions up to 25 or even 30 years, depending on the borrower’s credit standing and the cost of the RV. A longer-term can make monthly payments more manageable and affordable for the borrower.
Lower-priced RVs often come with shorter financing periods of around 10-15 years. In contrast, high-end luxury motorhomes with a higher price tag may have financing terms extending beyond 20 years.
The loan length depends largely on the lending institution’s policies, the borrower’s credit status, and the RV’s overall cost. Potential buyers must consider these factors when determining how long they can finance an RV.