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Last Updated on October 23, 2024 by Paul Clayton
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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.
Key Takeaways
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- Standard Loan Terms: RV loans are typically financed for 10 to 20 years, with some lenders offering terms up to 25 or 30 years for high-end RVs.
- Loan Term and Payment: Longer loan terms result in smaller monthly payments but more interest paid over time, while shorter terms mean larger monthly payments but less interest overall.
- Credit Score Influence: A higher credit score improves your chances of securing favorable loan terms, such as lower interest rates and longer repayment periods.
- Factors Affecting Loan Terms: Loan length is influenced by the cost of the RV, down payment, and the borrower’s creditworthiness.
- Avoiding Long-Term Loans: Although long-term loans might seem attractive due to lower monthly payments, they can be more costly over time due to increased interest accumulation.
- Financing Tips:
- Set a budget based on your needs.
- Check your credit score to anticipate loan terms.
- Compare offers from different lenders and negotiate for the best deal.
- Haggle with RV dealers to lower the vehicle’s price before finalizing your loan.
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.
Let’s begin.
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.
They will decide whether or not to give you a loan, the interest rate, and the term based on your score and other factors, such as your assets and verifiable income.
Your credit score determines your loan term, which can be a couple of months or several years. For most people, it is usually between five 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 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 they consider 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 means you will pay smaller amounts monthly, but because of interest rates, you will have to pay a lot more money in the end.
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, which are well-equipped to function as mini homes.
Getting a long-term RV loan may sound like a good idea. 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 repayment period will naturally be more manageable, it will also be more expensive. 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 how to get a relatively cheap loan to finance your RV purchase. You can also 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. There are so many fantastic RV vehicles 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 on loan terms. By specifying your credit score, you can estimate how much interest you will be charged.
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 secured 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 similar to 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 the length of time you can finance an RV.
Check out our other guides to RVs for more great information.
What is a Good Interest Rate For an RV?
A reasonable interest rate for an RV loan largely depends on the borrower’s creditworthiness. For borrowers with excellent credit scores, the average RV loan rate fluctuates between 4.49 percent and 11.89 percent.
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.
Wrapping Up
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 have shorter financing periods of 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.
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