Just like a car or a house, you can also finance the purchase of an RV. Paying cash for an RV isn’t always the best idea, and we’ll tell you why. For most of us without briefcases full of money lying around, financing an RV just makes good financial sense.
But financing a motorhome or travel trailer isn’t exactly the same as a car or home. Learn how the process is different from Ian Baker’s quick and easy video breakdown above. Or, browse these frequently asked RV financing questions to bolster your understanding.
Is Getting an RV Loan like Getting a Loan for a Car?
Getting a loan for an RV is more like getting a loan for a house than a car. Thankfully, RV loans require far less paperwork than home-buying. The transaction is typically quicker and does not require as many requirements or steps.
How Much Can I Borrow?
How much you borrow is directly related to the cost of your RV. Some tiny campers sell for under $10,000, while luxury motorhomes ask over $1 million dollars. Loan amounts can differ greatly. How much you can borrow will depend on your credit score and the cost of your RV purchase.
Will I Need a Down Payment?
Down payments are recommended for any large purchase. Putting down around 20% of the purchase price upfront looks good to lenders and will help you negotiate a better long term interest rate.
How Long Are the Terms?
Again, the length of a loan is an agreement made between you and your lender, factoring in the amount of your loan and your credit history. Many loan terms fall between 10-15 years, but can certainly be shorter or longer, depending on how much you intend to pay monthly.
What Kind of Loans Can I Get?
RV loans fall into two categories:
Secured loans are backed by some form of security, such as the RV itself. With these loans, it’s possible to borrow more money for a longer term, but you run the risk of having your RV repossessed should you miss a payment or two. You can also deduct secured loans’ interest from your federal taxes.
Think of unsecured loans as the fast lane. They are approved faster because they skip the step of providing security. You can “prequalify,” for an unsecured loan. Rates on unsecured loans are almost always higher than secured loans.
Where Can I Get an RV Loan?
It may ultimately be a waste of time shopping around for an RV loan at different banks. RV Dealers have usually done the hard work for you by negotiating with preferred lenders who have offered competitive rates. With hundreds of nationwide locations, Camping World finances in over thirty states. Get pre-approved for a loan with our quick financing application.
How are the Rates?
If you’re looking to finance an RV, it’s also a good time to check your credit score. After all, it’s such a big factor in determining the rates of your loan and the size of your down payment. As you might expect, high credit scores get better rates. While low credit scores will be expected to pay a larger down payment and deal with higher rates. Improve your credit score by paying your RV loan on time, every time.
Can the Interest on My RV Loan Be a Tax Reduction?
Camping-lovers we are, but tax experts we are not. We suggest you consult with a professional CPA if you have specific questions about tax deductions for you and your portfolio. Tax law and rules can often change from year to year. However, there’s good news for RV’ers who use their RV as a second home or home office. Your RV can be deducted for these purposes.
What if I Want to Pay Cash?
I paid cash for my first camper trailer, but in retrospect, it may not have been the smartest idea. My first RV, a vintage airstream, ended up having a host of unexpected expenses pop up which quickly dug into my travel budget. Had I financed, I wouldn’t have felt that pinch as much and could have spread the expenses out over time.
My own anecdote, and most sound financial advice, goes to say that it’s smart to keep cash on hand if you can. You may need that cash for something unexpected, but ideally, you can invest or bank the cash so it accrues interest over time.
What’s Included When I Finance My RV?
Most dealerships will lump together certain benefits when you finance an RV. Here are a few examples:
- Good Sam roadside assistance
- An extended service plan
- Tire and wheel protection
- Gap insurance
- Paint and fabric protection
More than these benefits, you may also find some dealerships covering title and tag fees with your finance deal as well. Always ask for a full breakdown of what is included. If you’re wondering what else to ask, take a look at our 5 things to ask an RV Salesman.