If an RV seems to be a dream come true, but you don’t have substantial cash deposits to hand, the solution could be to consider RV financing.
Nowadays you can take a loan from the comfort of your home, by simply clicking on one of the hundreds of websites with a host of benefits such as “no fees, no prepayment penalties, no appraisals or home equity requirements”.
Maybe you’re considering purchasing an RV because life on the road has become increasingly popular and you want to check it out. An RV vacation has many perks, as you’re able to travel and bond with nature having a kitchen with microwave, fridge, and stove, a TV and VCR, beds, living and dining areas and bathroom with shower. Sounds much better than a tent, right? Certainly, a great way to travel if you have children.
However, keep in mind that this could transform into a very expensive vacation. An RV loan can be between $5,000 and $100 000 and could extend to a period of 20 years, with fixed installments starting around 4.74%.
When it comes to RV finance, there are plenty of variables to take into consideration. We’ll cover these in more depth in the rest of the article and help you get the best deal possible for your RV loan. But first of all, let’s take a look at some of the best RV finance providers.
Best RV Financing Providers
While there are people in need of money, there will always be companies willing to lend them the amount they need for a “little” interest on the side. There can be some pretty awesome RV financing providers, but there are also those that seek only to make a profit. We’ve done our research and have found four RV financing providers that stand out. You should consider accessing their sites if you’re in a need for a loan, but once again, make sure you read all of the details available on their websites.
Lightstream (Highly Recommended)
LightStream is best known on the market for offering some of the highest borrowing amounts and lowest rates, plus no fees, on its unsecured personal loans. You can get anywhere from $5,000 to $100,000 with Lightstream, with low APRs (annual percentage rate).
Lighstream offers flexible loan terms. What got us struck on their site was the “customer satisfaction guarantee”. And it sounds like this: LightStream offers $100 back for unhappy borrowers who have had their loan for less than 30 days.
What kind of sorcery is this and where is the catch? There is no catch, but you must contact the company and fill out a questionnaire to receive the $100. And to make sure it has few unhappy customers to fill the questionnaire, Lightstream assures it will beat any competitor’s interest rate by one-tenth of a percentage point, requiring you just to show you are approved by the competitor for a regular fixed-rate loan with the same amount, term, purpose and payment method.
Applying for a loan on their site is not a complicated task. All you have to do is select your loan purpose, view the range of potential interest rates you might receive and you can begin the easy online application process, additionally, you can opt for a co-signer if you desire.
From these 3-4 positive notes alone Lightstream stands out. So what’s wrong with it? Well, it’s not a magic genie as it doesn’t grant wishes for everyone. To qualify for a Lightstream loan you would need to have a good to excellent credit history plus several years of credit history and furthermore, a strong record of on-time payments.
Good Sam RV Loans
Good Sam Finance Center offers competitive RV loan rates for new and used RV purchases, private party RV purchases and RV refinancing for existing RV loans. According to their website, the Good Sam Club is the world’s largest RV owner’s organization with over 1.7 members nationwide.
With APRs that go from 4.59% to 7.69%, Good “old” Sam offers clients loan amounts between $10 000 and $150 000+. Yes, if you manage to reach an agreement with the company, you could be up for a loan that exceeds $150 000. Loan terms are anywhere from 5 to 20 years but just like what we had at Lightstream, conditions are impossible for those with bad credit. First of all, you should have a credit score of 690 or better. Then there are changeable conditions that affect your interest rate, like the model and year of the RV.
But it’s not just requirements from their part, as they offer a multitude of member benefits including discounts of 10% on nightly rates every time you stay at any of the 2,100+ Good Sam-endorsed RV parks and campgrounds, or discounts at RV parts, services and accessories, RV books and magazines, the GoodSam RV Travel & Savings Guide and Good Sam Emergency Road Service.
You can apply for a loan by fax/mail or by phone, but we’ve tried the online loan application. It’s a little bit complex, as it requires you to fill collateral information (e.g. Vehicle, Year, Make & Model) and personal information (e.g. Date of Birth, Social Security Number), followed by employment and income information. Completing this application should take between 10-20 minutes. The good part is that the site has a “save” option, which allows you to start the application now and finish it later. Your information is secured with a password that you create.
The site doesn’t look like much, but it has the right tools for an individual in pursuit of an RV loan. The loan calculator lets you calculate your monthly payment or calculate your loan amount.
The site also has a FAQ section and another one that lets you submit any question that you have.
RV Financing USA (Great for Bad Credit)
With very good reviews on social media, RV Financing USA is on the market since 2003 and has carried out over $2 billion in loan applications. They have new lending programs with competitive rates for qualified applicants and offer RV financing for purchases from dealers and individuals as well as refinancing for your existing RV loan for good and bad credit. Yes, you’ve read correctly. RV Financing USA can be a solution for those with bad credit score.
According to the site, the minimum credit score required for a loan is 550. They make applying for an RV loan a fast and easy process even if you have had credit challenges in the past.
First, you have to pick an RV you’d like to buy and submit the year, make, model, and model number. Then apply online using a Norton Symantec secured website. When it comes to providing income proof, RV Financing USA requires a pay slip and W2 if paid hourly or salary. If you are retired, a benefits letter or bank statement. In the case that you are self-employed, they want 2 years tax returns. That’s the “hard” part. After all of that, you can sign with one of their certified RV loan signing agents and acquire your RV.
The bad credit loan can be achieved even by those who had a previous bankruptcy. However, besides the credit score (minimum 550), there are other aspects that vary from the “good credit” loan. There is a $10 000 minimum loan amount and a $75 000 maximum amount, while the maximum loan term is 12 years.
Of course, as we’ve mentioned above in the “RV Financing with bad credit” section, no lender is giving money to those who are looking to transform their future RV in a permanent home. That’s why RV Financing USA clearly states that RVs to be used for temporary or permanent residences are not permitted under their lending programs. And even under the bad credit program, the company may refuse you if you have a high debt ratio, unverifiable income, multiple bankruptcies or large, outstanding collections.
What’s the difference between the bad credit loan requirements and those for a good credit loan? Well, RV Financing USA’s good credit RV loan program rewards customers who have worked hard to achieve a high credit rating and are offering them terms up to 20 years with competitive rates and discounted service warranty products.
To qualify for this program, you’ll need to have a minimum credit score of 680, while other aspects may disqualify you to receive an approval. Among those things are unverifiable income, bankruptcy, outstanding collections, delinquent payments within the last 24 months, limited installment history or a NADA value of RV too low.
Regardless of the program, rates range from 4% to 17.99% based on your credit, the collateral you are purchasing, the state that you live in, and other factors. A plus for RV Financing USA, from our point of view, is that, for loans over $100,000, it offers 20 years terms.
Regarding the website, it’s simple, with a lot of free space. Not looking like 2019, but it’s quite OK. And they do explain one big issue that they’ve encountered. Specifically, the company issued a warning for their clients by revealing a scam involving a group of individuals posing as My Financing USA that has targeted their customers or anyone who applied on their website. So keep an eye open for this type of scams.
USAA
Unlike the previous two companies, USAA has a modern website, one that offers much information (like coverage options and advice on topics such as how to live in retirement, plan your estate or buy or sell a home or car) in a quick to access way. And let’s just start by saying that USAA’s customer satisfaction ratings are among the best in the industry. This means the company really knows what the clients need and how to satisfy their grievances.
USAA has rates as low as 5.75% but can go up at 14.74%. But it’s kind of a complicated system and you really need to see the full table to figure out. It depends on the loan term, the amount you take and how good your credit score is.
But if these details are common for all lenders, the next thing saw us with our jaws wide open – USAA offers 100% financing with little to no money. However, they do specify with little letters that the total loan amount cannot exceed USAA’s determination of vehicle’s value plus tax, title, and license.
Applying for a loan is easy and can be done in three steps. First, you have to complete the loan application. To do so, you’ll need to have an account, which is not hard to create. After you fill all the empty spaces on your loan application, you wait to receive a decision. If your file is OK, then you call a number to complete your purchase. USAA also offers RV refinance, so keep that in mind.
RV Loan Calculator
RV Finance Getting a Good Deal
Even though it might sound difficult at first, with some proper research, you can find the best offers. But first, let’s make a few things clear…
What a lot of people don’t know is that you can claim an RV as a primary or secondary residence, with this having a positive impact on your federal taxes as a deduction. If a vehicle has areas designed for sleeping, cooking, plus toilet facilities, it can be declared a residence. This means that as long as the RV is used as a security for the loan used to buy it, the mortgage interest could be deducted from your taxes as a homeowner.
Because RVs usually cost much more than regular passengers vehicles, the loan looks more like a mortgage than a typical car loan. Furthermore, there’s no point in purchasing an RV you barely can afford. It may be brand new now, but further, down the line, you’ll need to make investments in it.
Additionally, think of how much gas it takes or if you even have where to store it when you’re not using it. Details like these can prove to be quite important for an individual that depends on a loan to afford an RV.
Secondly, most people have the tendency of accepting the first offer they have on the table. Grabbing the first loan available shows how much you still have to learn, financially speaking. And that could be a reason why you have a rather poor credit score.
You don’t want to settle for the first offer you come across. Treat RV loans like every decision you had to take in your life. You didn’t marry the first girl that kind of walked into your space, right?
That’s the same with RV loans. You never want to assume that RV loan rates are equivalent to auto loans in size or duration because you’re going to have a tough life in front of you, living from paycheck to paycheck.
Many RV loans have a 20-year term, which can make an RV seem much more affordable than it actually is. However, much like any other kind of loan, you don’t want to grab the first offer you have when in the necessity of financing one recreational vehicle.. When trying to secure a loan for your RV, make sure you study how auto loans differ from unsecured RV loans before making a decision.
And third but not least, plan for your future. All things can depreciate and RVs make no exception. A new RV can depreciate as much as 30% the moment it’s driven off the dealership’s lot, so keep in mind that you’re be owning more money than your “property” values if you decide to sell it in the future. What’s the solution to save yourself from owing more money than your RV goes for? make a large down payment, if possible. That way, you’ll owe as little as possible in the years to come, should you decide to sell it or trade it in.
RV prices can go from a few thousand dollars to over $100,000, so another solution is to climb up the ladder. Try acquiring a cheaper one and upgrade every time you have the money flow in your favor. Basically, if you initially purchase a lower-priced model you can easily pay off, you’ll be able to trade it in for an improved model later. And remember that RV loan rates are not the same as those of auto loans and buying such a vehicle can turn into a complex process. Especially when you’re having issues with your credit.
Ok, now let’s move to some real facts and see what options you have for financing your next RV, in various situation.
RV financing with bad credit
Now that we’ve learned a couple of things about RV loans, it’s time to answer a first important question – what can we do to maximize our chances to get an RV loan with bad credit?
First thing first – you need to figure out what are you going to use the RV for. Then, what engine capacity, what facilities your heart desires, what model. These details are pretty important. That’s because if you look to maximize your chances for an RV loan approval, then you should be looking for ones less than 10 years old, with the loan amount between $5,000 and $40,000. Not an absolute ceiling, but it’s better to be between this margin. However, when you decide on a budget, keep in mind that an interest rate that’s higher than usual is something you should expect. Often between 15-20%, in most cases.
You may get an approval for your loan, but lenders do want to make a profit and your bad credit score can become ideal for them. That’s if you pay back on time.
We don’t feel like it’s necessary to mention, but we’ll do it anyway: When filling in the papers, it’s very important to go for “part-time use” RVs and travel trailers. As you may figure out, banks don’t normally want to lend money to those using their RV as a temporary or permanent home, for obvious reasons. And while there’s still a possibility to receive a loan even if your credit score is below 550, it should be over this margin to have a decent opportunity.
If you get through and receive the loan, then it’s up to the next stage – payments. Your final payment will depend on a number of factors, like the loan amount, loan term (how many months), and the interest rate you get approved for. You can’t actually be fully prepared from this point of view before you talk to lenders… But be advised – study well these elements before putting your signature of those papers. You may believe you can handle the interest rate now, but financial stability should be a must because these loans are a long-term deal. And let us tell you that 20% isn’t easy to pay off.
Unfortunately, these are the interest rates for those with bad credit. In any loan situation, the rate is always negatively correlated with your credit score. In other words, the higher your credit score, the lower the rate, and vice versa. This is how a bank thinks and works and the situation will always be the same. It’s like in a relationship – if you mess things up, it will take a whole lot of apologising and making amends to achieve forgiveness. A bad credit score basically tells a story about you. It kind of says to the bank that it’s risky loaning money to you.
The fact that RV loans tend to draw slightly higher rates than car loans do has also a pretty good explanation. Your lender assumes that if things go south for you, then your RV payment will be a lower priority than your house or car payment, for instance. That’s because an RV is not considered to be a necessity.
But before you start making plans with your future RV acquired on loan, keep in mind that most banks (and we’re generous when saying most, because is basically all of them) look for some money down before accepting your loan. Usually, it’s somewhere between 8-10%, yet it can go higher, depending on the bank and other aspects that hinge on the RV that you want, your credit score etc.
We’ve talked about how important financial stability is, yet we want to come back to the topic to make sure we’ve covered all that it is to discuss. Though you may have hurt your credit score in the past, having a strong income in the present surely qualifies you for a customer with serious intends. Also, if someone else in your household has recently started receiving an income, it can make a serious difference in how the lender sees your application.
This is, however, the positive note on the matter.
On the side, there’s the scenario in which you’re buried in debt and have existing loans that are already above a certain level compared to your assets and income. Loaners will verify your debt-to-equity ratio and most likely will give you a thumbs down. The best advice is to try paying off at least one of your existing loans and come up with a plan showing off how you can pay off more in the future. It may affect your momentum and your plans with the RV, but at least can positively adjust your credit score and someday you’ll afford a much better vehicle.
RV financing terms you need to know
You’ve probably met some terms that are not quite familiar by this point of the article. Don’t you worry, because we’ve gathered some of the financing terms you need to know and explained them as best as possible for everyone to understand.
Let’s start with the basics. What’s a credit score? A credit score is a numerical expression based on a level analysis of a person’s credit files and basically represents your trustworthiness in front of lenders. It’s primarily based on a credit report information typically sourced from credit bureaus. Finally, with your credit score in their hands, lenders who qualify for a loan, at what interest rate, and what credit limits.
And with the phrase above we’ve put another term on our checklist – interest rate. Keeping it short, the amount a lender charges for the use of assets expressed as a percentage of the principal is what we call an interest rate. In fewer words, it’s what banks earn from lending you money.
We didn’t discuss the following term, balloon payment, because not creditors offer it and it depends on your loan term, but it’s too important to leave it without the proper introduction. A balloon payment is a large payment due at the end of a balloon loan, such as a mortgage, a commercial loan, or, in our case, an RV loan. A balloon loan is typically for a relatively short term, and only a portion of the loan’s principal balance is amortized over that period. The remaining balance is due as a final payment at the end of the term.
If you’re in a bit of a jam with your current RV loan, then certainly you need to know about refinancing. This happens when an individual is unable to pay and represents the replacement of an existing debt obligation with another debt obligation under different terms.
The terms and conditions of refinancing may vary, impacted by several economic factors such as inherent risk, projected risk or banking regulations. And while we’re on the subject, let’s explain what inherent risk is: the risk posed by an error or omission in a financial statement due to a factor other than a failure of control. While a projected risk is when the bank takes on a particular task (your loan) that may cause exposure (you not paying it).
An easy to understand term is down payment. It is used when referring to a type of payment made in cash during the onset of the purchase of an expensive good or service. In this case, banks will almost always ask for a percentage of the loan. It is quite important to perceive what a down payment is as it will affect your interest rate.
Let’s take an example: if you borrow $80,000 on a loan with a 5% interest rate, you owe $4,000 in interest in the first year of the loan alone.
However, if you have a $20,000 down payment, you only need to borrow $60,000. As a result, during the first year, your interest is only $3,000, saving you $1,000 in the first year alone. And while we’re at terms used to calculate your monthly recreational vehicle loan payments, let’s talk a little about what a rebate is – an amount paid by way of reduction, return or refund on what has already been paid or contributed. In more simpler words, is like a sales promotion that banks use to attract clients.
RV Financing FAQ
How does RV financing work?
Before you even start thinking of obtaining RV financing, you must find out what your credit score is, as your loan will evolve around this aspect. After you’ve done your research on what lender is the most suitable for your needs and means, the easiest way to proceed is to complete their online application. It’s not that complicated on how it works – you usually fill the details of the RV you want, complete with your personal details and income proof, and if you’re approved (with interest, loan term and payments established with your consent), then you get a notice.
Afterwards, you get the RV (or the seller gets the paycheck and handles you the RV), leaving you with monthly payments for the lender. Usually, there aren’t penalties for late payments, especially for those with a good credit score, but it will eventually downgrade your credit score. In case of need, lenders can propose a refinancing, offering you more suitable interest, loan term and payments for your situation.
How hard is to get RV financing?
For those with a good credit score, it’s not that difficult. In fact, they also receive some perks from the lenders for being always on time with their prior payments. Folks with bad credit will have a more difficult time finding the right lender, as they will have higher interest and payment. And most lenders don’t accept people with a credit score below 550. In both cases, all they have to do is request a loan (via mail, fax, phone, online or at a certified RV loan signing agent). If the loan gets approved only depends on the data they’ve supplied and if they’re eligible for the kind of loan that they’ve asked for.
We’ve written a great article on how to finance an RV if you’d like more information.
What do I need to know before financing an RV?
First of all, it’s essential to know your credit score as it will influence the way you proceed in your actions. Then, you should have already established the RV model that you want, with all the details required (year, make, engine). Some financing terms are not to be ignored when adventuring in a loan. You should be able to understand terms like interest rate, down payment, refinancing etc. If you’re not familiar with them, we’ve explained most of them in a section of the article.
It’s not mandatory, but is something we recommend people before getting a loan – you should always plan further into your future. Have you got financial stability? A 10-year loan is hard to handle if you don’t know where you’ll see yourself down the line.
How much is RV financing?
The sum you can get with an RV financing depends on the lender, your credit score and the loan term). As you can figure out, most banks don’t want to lend you an amount that exceeds your financial possibilities. And your credit score is usually an indicator of what you can pay back. If you had trouble before paying a certain amount and your earnings have remained the same, no lender will give you more than you previously had.
For a sum that goes beyond $100,000, even with an excellent credit score, banks don’t like to take chances and they’ll put you on a 20-year term. This way, your monthly payment will never exceed your possibilities and you’ll be able to always pay on time, even if it does take a bit longer.
How long are RV loans?
The time frame for an RV loan is very different and it depends on numerous factors, including the type of lenders – banks, credit unions and other finance companies. RV loans range from 7-15 years, but it can also be extended to 20 years for loans of $50,000 or more on qualified collateral.
Is it better to get a 20-year loan?
No one wants to get a 20-year loan and pay the interest on such a big period of time. But the biggest advantage of a long term loan is that you can get lower monthly installments. You save money that you can spend on a daily basis, even though, on the long run, you pay more to the bank.
What will my interest be?
Your interest rates are determined by several factors including the loan amount, financial terms, and your credit history. An individual with a low credit score will most definitely have issues even with getting a loan. In any loan situation, the rate is always negatively correlated with your credit score. In other words, the higher your credit score, the lower the rate, and vice versa.
Will my RV loan rate be fixed?
Most lenders offer fixed RV loan rates, meaning your monthly payment will remain locked in throughout the life of your loan. If you know you have a fixed amount to pay every month, it will be easier to keep it going with payments. If at any time your financial status gets a hit and you can’t afford the monthly payment, refinancing is always a good solution.
What other factors determine what interest rate I get?
Besides your credit score, there are a bunch of other factors that influence the interest rate your lender applies to you.
- It depends if the RV is new or used. An older used model will get a higher interest rate than a new RV.
- Your down payment will affect your interest rate. If you finance the RV on a zero down program the interest rate will be higher. And that’s a big “if”, because very few lenders offer zero down payment loans. Banks will almost always ask for a percentage of the loan.
- The term of the loan will affect the interest rate. The shorter the term the higher the rate, the longer the term the lower the rate.
- The amount financed will affect the interest rate. The lower the amount the higher the rate, the higher the amount the lower the rate.
Am I required to have a down payment?
Most often a 10% minimum down payment is requested by the lender as part of your commitment in making the payments. The lender will finance up to 90% of the total purchase price including the sales tax on the vehicle.
And while there are a few lenders that boast their “little to no down payment” programmes, it’s important for you to understand that a significantly important initial payment will save you money in the future. The more money you feed out of your own pocket, the less is the amount you’ll have interest on. To better comprehend, let’s take this example – if you borrow $100,000 on a loan with a 5% interest rate, you owe $5,000 in interest in the first year of the loan alone.
However, if you have a $20,000 down payment, you only need to borrow $80,000. As a result, during the first year, your interest is only $4,000, saving you $1,000 in the first year alone.
How does RV financing work when I trade an older model for a newer one?
You get a new loan for the amount you still owed on the old vehicle plus the different price for the one you want to acquire. Basically, what happens is that the dealer sends a check to your bank to pay off the remaining balance on the trade-in, as of the trade date. The amount of the payoff will be less than the sum of the remaining payments because you stop paying interest on the old loan after the payoff date.
Our advice is to almost always trade your older unit for a newer one before you finish your initial financing. For your pocket, it’s a much better solution to do it then instead of waiting to completely pay off your loan before purchasing a new one.
Can I write the interest off on my income taxes?
The answer is positive as a self-contained RV is considered a second home and the interest paid is deductible. That’s if you are not already deducting the interest on a second home. An RV is considered a qualified residence if it is one of the two residences chosen by the taxpayer for purposes of deductibility. To qualify it must provide basic living accommodations; meaning it has cooking, sleeping and bathroom facilities with fresh water and wastewater holding tanks. To get things properly done, you should ask your tax advisor about what is required to write the interest off on your RV.
Do I need to have insurance on the RV to get a loan?
Insurance is required when you close on the loan. That’s because the law requires motorhomes to have liability insurance while being driven on the road in most states. Keep in mind that lenders accept loans just for RVs that clients take as recreational vehicles
How much does it take to receive a response from the RV lender?
Usually, it takes anywhere between 24h and 72h. But lenders specialized on RV loans often give their response the same day you complete your form. That’s if your information is easy to verify and they don’t need to check more of your financial background.
Should I finance the RV or pay cash?
It makes more sense to finance your RV purchase. By doing so, you can maintain your personal financial status without liquidating any assets. A good RV costs a lot of money, so you’ll be forced to make some financial sacrifices in order to afford it cash down. It doesn’t sound right to downgrade your lifestyle just to buy an RV that will automatically lose its value the second you turn the engine on. You can also take advantage of writing off the interest on your income taxes if the RV qualifies.
