Purchasing an RV is a significant investment, and it’s not a decision you should take lightly. When financing an RV, there are several key steps you should take to ensure you make the best financial decision. Whether you’re a first-time buyer or upgrading, understanding the financing process can save you money and reduce stress. Following these steps will help you finance your RV

4 Steps to Secure the Best RV Financing Options

1. Setting a Realistic Budget

Before you begin exploring RV financing options, setting a firm budget is essential. RV prices vary widely—from budget-friendly used models under $5,000 to luxurious motorhomes costing millions. By establishing your budget early, you can avoid purchasing an RV that might be difficult to pay off. Your goal is to find an RV you can enjoy without being weighed down by the monthly payments. Here are key factors to consider when determining your budget for financing an RV:

Determine Your Monthly Payment

Start by calculating what you can comfortably afford for a monthly. Begin by adding up your fixed monthly costs, including your mortgage or rent, car payments, and other living expenses. Subtract this total from your monthly income to determine what’s left for discretionary spending.

A good rule of thumb is to allocate 15-20% of your disposable income toward your monthly RV payment. For example, if your monthly income is $6,000, and your expenses are $4,500, you have $1,500 in disposable income. In this case, you should spend between $225 and $300 a month on your RV payment.

Additionally, make sure to consider RV finance rates, which will impact your budget. Use an online RV loan calculator to estimate your monthly payment based on the loan amount, interest rate, and loan term. 

Consider Hidden Costs

Beyond the loan payment, financing an RV involves additional costs. Other expenses include RV insurance, maintenance, fuel, campground fees, and storage fees. These other costs can add up quickly, so it’s important to factor them in from the beginning to avoid surprises down the road. Being thorough in your budgeting ensures you’re fully prepared for RV ownership.

• Sales Tax: Depending on your state, this can add thousands to the purchase price.
• Fuel Costs: RVs are fuel-thirsty, so factor in the price of gas for long trips and how you can save on gas.
• Maintenance and Repairs: Regular upkeep is essential for any RV, and unexpected repairs can add up.
• Insurance: RV insurance is a must, so be sure to shop around for the best rate.

RV Loan Terms

Your loan term is another vital element when budgeting for financing an RV, typically ranging from 5 to 20 years. Shorter loan terms (5-7 years) come with higher monthly payments but save you money on interest over the loan’s lifespan. Longer terms (10-20 years) lower your monthly payments but result in higher overall interest payments. Choose a loan term that aligns with your financial comfort zone. You should consider your long-term goals and potential life changes, like buying a home, starting or growing your family, or retirement. These potential life changes can affect your ability to afford an RV payment over time.

Also, keep down payment requirements in mind—larger down payments often secure better RV finance rates and shorter terms. Double-check your loan terms for any prepayment penalties, especially if you plan to pay off the loan early. Overall, your loan terms need to fit your current budget and align with your future financial plans.

Trade-Ins

If you already own an RV,  trading it in is a smart way to make RV financing more affordable. A trade-in can significantly reduce the amount you need to finance, lowering your monthly payments and overall loan amount. Factors like the make, model, age, mileage, and overall condition affect your trade-in value. Well-maintained, newer models usually get higher offers. To get the best deal, research your RV’s value online and get appraisals from multiple dealerships. Once you know the trade-in value, you can apply it toward your new RV purchase. 

2. Save for a Down Payment

A strong down payment can make RV financing much more affordable. Most lenders prefer a down payment between 10-20% of the RV’s price. The more you can put down upfront, the lower your monthly payments will be. A larger down payment could also help you secure a better interest rate. If you’re financing an RV, you can build your down payment by: 

• • Set Savings Goals: Aim to save at least 10-20% of the RV’s price to reduce your loan amount and monthly payments.
  • Automate Savings: Set up automatic transfers to a dedicated savings account to make saving easier and more consistent.
  • Cut Back on Non-Essentials: Temporarily reduce non-essential spending, such as dining out or entertainment, to increase your savings.
  • Sell Unused Items: Consider selling unused or extra belongings to increase your down payment.
  • Use Windfalls Wisely: Direct tax refunds, bonuses, or other unexpected income toward your savings for your down payment.

3. Improve Your Credit Score

Your credit score helps determine your interest rate and RV financing terms. A higher credit score can qualify you for lower interest rates, saving you money over the lifespan of your loan. Having a strong credit score can open the door to RV deals. Ideally, you should aim for a credit score of 700 or higher to get the best RV finance rates. However, many lenders may still consider applicants with lower credit scores at a higher interest rate.

If you need to improve your credit score, take these steps before applying for RV financing:

• • Check Your Credit Report: To learn about and find potential issues with your credit report, request a free credit report from agencies like Experian, Equifax, or TransUnion.
  • Pay Down Debt: Reduce high-interest debt, such as credit cards, to improve your credit score.
  • Make Timely Payments: Make sure all your bills are paid on time each month. Missed or late payments can hurt your score.
  • Dispute Errors: Correct any inaccuracies on your credit report by disputing them with the credit agencies.
  • Avoid New Debt: Hold off on applying for new loans or credit cards before applying for RV financing to keep your credit score stable.

4. Explore Multiple RV Financing Options

After setting your budget, saving for a down payment, and checking your credit score, it is now time to browse RV financing options. Taking the time to compare interest rates and loan terms from different lenders can save you money. Here’s a breakdown of the RV financing options available and how you can find the best one:

Dealership Financing

Many RV dealerships, including those partnered with RVUSA, have in-house financing departments. It’s convenient because you can buy your RV and get financing in one place. Most dealers offer up to 20-year loan terms, but shorter terms usually have lower RV finance rates. Get pre-approved by several institutions and compare those terms with the dealership’s offer. It’s always smart to compare the interest rates and terms to guarantee you’re getting the best deal.

Bank or Credit Union Loans

Banks and credit unions can offer more competitive rates than dealerships, especially if you have a strong relationship with the institution. Look for RV loans specifically classified as recreational or specialty loans. Credit unions, in particular, are known for offering lower interest rates than traditional banks. While you might have to provide more paperwork and meet stricter criteria, the potential savings can be worth it. Most credit unions also offer rate discounts for customers with strong credit scores or those willing to set up automatic payments.

Online Lenders

Online lenders are a great resource for comparing multiple offers at once. Online lending websites allow you to submit your information and receive multiple free RV financing quotes. This makes it easier to compare interest rates and terms. When searching, check whether online lenders offer loans specifically for RVs. Specific recreational loan terms are tailored for larger purchases like RVs and written for RV owners. 

Personal Loans

If your credit score or income doesn’t qualify you for traditional RV financing, a personal loan is another available option. Personal loans are easier to qualify for but come with higher interest rates and shorter repayment terms (5-7 years). This option may work if you’re looking to finance a smaller RV or need more flexibility. Remember, though, that the higher rates can make your RV loan more expensive.

Tips for Shopping Around

• • Get Pre-Approved: Before visiting dealerships, apply for pre-approval with banks, credit unions, or online lenders. This gives you leverage when negotiating financing terms at the dealership.
  • Compare APR, Not Just Rates: To get a full picture of the cost, make sure to compare the Annual Percentage Rate (APR), which includes both the interest rate and additional fees.
  • Negotiate Loan Terms: Don’t hesitate to negotiate RV financing terms, whether it’s through a dealership or a bank. Ask for better rates or shorter terms to reduce your overall interest payments.
  • Check for Hidden Fees: Before signing on the dotted line, ask about application fees, prepayment penalties, and any hidden costs. You could also negotiate for no fees. 

By comparing RV financing options from different sources, you can secure lower interest rates and better loan terms, ultimately making your RV more affordable.

Find RV Financing Options with RVUSA

Financing an RV can seem overwhelming, but by following the right steps, you can make a smart and informed decision. Whether you’re following a budget, improving your credit, or exploring multiple RV financing options, each brings you closer to your dream RV.  You can navigate the process confidently by preparing thoroughly and using tools like our free RV financing tool. Remember to compare offers and carefully consider the RV loan terms that best suit your finances and future goals.

 Frequently Asked Questions About RV Financing