So, you decided to get an RV. Congrats! Welcome to the mobile living lifestyle, you’re gonna love it. But before you can hit the road, you might need to crunch some numbers.
RVs, especially new ones, are a big purchase.
Most RV buyers finance their RVs just like they might with a car or a house. But figuring out just how much you can afford and what rates to expect can be difficult. There’s a lot more info out there about applying for a car or home loans than an RV loan.
If you’re not exactly sure what to expect, plug your info into our handy RV Loan Calculator above to get an idea of what you can expect to pay monthly for your RV.
How do RV loans work?
At first, it’s easy to lump RV loans in the same category as car loans. But when you look at the total cost of many RV purchases, it might be more appropriate to liken them to a mortgage. Because the cost of RVs range so wildly, RV loan rates and terms do as well.
A lower-priced RV might have a loan term under 5 years. Most RV loans range well above that. On the higher end of RV purchases, you could be looking at 20+ year RV loan terms.
When you’re looking at RV loan rates, you might be tempted to extend the life of your loan to get a lower monthly payment. This can be a good option in some instances, but the longer your loan term, the more you’ll end up paying in the long run.
Always calculate the total cost of the RV loan using our RV financing calculator and determine if the lower payments are worth the added overall cost.
Just like searching loan terms, the RV loan rates you find will vary significantly. While rates are determined by several factors, your credit score is the biggest influencer.
Getting an RV loan with bad credit will cost you a lot more than applying with good or great credit, so it’s worth trying to boost your score a bit before trying to secure an RV loan.
Mistakes to avoid before getting your RV loan
Paying the sticker price.
At any RV dealership, you should expect a significant markup on all prices. Before you go shopping, take a look at some online RV-buying sites. They’ll give you a good starting point of what you should expect to pay.
You can even plug info from these sites into our RV Loan Calculator to get an idea of RV loan rates and payments. Once you know what’s reasonable to pay, you can go to the dealer armed with knowledge.
Ask how low their willing to go and give them a conservative number for your budget. You’ll be amazed by how much money a few minutes of haggling can save you.
Underestimating the total cost.
Just like buying a car, the final price you and the dealer agree upon is not the total you’ll end up paying. RV purchases usually come with a hefty list of fees and taxes.
If you’re financing the vehicle, your RV loan fees will also bump up the price. But even counting for all that, RV ownership will cost you. Prepare for maintenance and repair costs, utilities (water, cable, electric, etc.), and campsite & storage fees.
Ignoring your credit score.
Your credit score directly affects how high your RV loan rates will be. Use tools like www.creditkarma.com to monitor and improve your credit before applying for an RV loan. There is a ton of variation amongst RV loan rates, ranging anywhere between 4% and 25%. The difference between those two numbers might seem small but can mean tens of thousands of dollars added to your bill.
A high credit score is key to getting good RV loan rates. Take a few moments to play around with our RV Loan Calculator to see how different interest rates affect your monthly payments.
Not comparing RV loan rates.
On the same thread, credit scores aren’t the only factor in RV loan rates. Different financing companies use different variables in deciding on RV loan rates, and the same credit score can get you vastly different rates.
Many people simply accept the dealership’s financing offer at face value. While the dealership might offer you the best rate available (or enough other perks to outweigh a slightly higher rate) it’s important to know what else is out there and make an informed decision.
You can use our handy RV Loan Calculator to compare different RV loan rates and see how they will impact your payments.
Going upside down.
Going upside down on a loan means owing more than the vehicle is worth. This is much easier to fall victim to than it might seem. Most RVs depreciate up to 30% as soon as it’s driven off the lot, so if you’ve put less than 30% down, even without fees, taxes, and interest charges, you’re already upside down.
Being upside down on your RV loan isn’t a horrible thing, so long as you’re prepared to own the vehicle long enough to flip the loan back over. Otherwise, when it comes time to sell your RV, you’ll find you owe more than you can get from a buyer.
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Hidden costs and expenses to consider before getting your RV loan
We already hit on this point a bit, but it’s important enough to be reaffirmed. First-time RV buyers tend to be particularly unrealistic when it comes to the total cost of RV ownership. You might be prepared to barter your way down from the sticker price, but even the final negotiated cost is far from the total you’ll actually be paying for your RV.
First time RV buyers are often unrealistic about the total cost of ownership.
First, you’ll be hit with the more upfront costs. These are things like fees, taxes, and various add-ons you might choose from your dealership. These aren’t too hard to estimate, but you can always call the dealership to get an even more firm grasp on how much you’ll be paying in purchase fees.
The less upfront expenses are the general costs of RV ownership.
This is the area that first-time buyers tend to ignore most. We’ll break down some of the biggest RV costs you might not be thinking about.
Fuel is expensive!
The first, and most obvious expense, is fuel. RVs are huge and usually painfully inefficient. That means you’re going to be paying an equally painful amount at the gas pump. If you’re planning on traveling decently long distances, the cost could destroy your budget. Make sure you know your MPG and plan/budget accordingly.
You’ll need to pay utilities
One of the benefits of RV life is the ability to fulfill all your needs from the comfort of your vehicle. That makes some people kind of forget that utilities are not included in RV ownership. You’ll need to factor in costs for things like water, electricity, and cable or phone bills.
Maintenance can be a huge expense
Maintenance costs are usually overlooked by those buying new RVs. It makes sense, typically brand new RVs come with warranties to cover maintenance costs, if you’re in that bucket, this probably won’t be a huge factor for you.
If you’re buying a used RV, however, this expense could sneak up on you quicker than you’d expect. Unless you’re a mechanic, it’s impossible to be sure that the RV you’re buying is sound. Even if it’s in great condition, vehicles break down, it’s just part of ownership.
Be prepared for the cost of your RV breaking down, it’s always better to overestimate and avoid being stuck in the middle of nowhere without the funds to get back on the road.
Campgrounds can really add up
The last hidden cost of RV ownership lays in where you’ll be staying. Some RV owners keep their vehicles on private property, if you’ve got the land, this is a great, cost-saving option. If you aren’t so lucky, or if you’re planning to travel often, it’ll cost you.
Campsites are the most popular option for RVers and are fitted with convenient amenities like electric, water, and waste plug-ins. Campsites have a huge range in cost, and can be as little as $5 or as much as $50+.
When you’re thinking about a month’s worth of campsite rentals, those numbers add up fast. Many campsites will work with you to negotiate long-term rates if you’re planning to stay in one area for a long time, and can greatly cut down on costs.
If you want to save money on campgrounds, you might want to try boondocking, or free camping.
Rent an RV before you buy (coupon included!)
One great way to figure out if a particular RV is right for you is to rent one. There are all types of peer-to-peer rentals on websites like Outdoorsy.
You can rent almost any type of RV, from Class A, to Class B, to class C, to Fifth Wheels to truck campers.
When you rent an RV with Outdoorsy, you can make sure you like driving and living in that particular RV.
Use the coupon code “wayward40” to get $40 off any RV rental with Outdoorsy. You’ll see the discount when you check out 🙂
Browse RV rentals below:
Q & A about RV loans:
A: Your RV loan term is the length of time you’ll take to pay off your RV loan. The average RV loan term is 10-15 years, but many factors can fluctuate that term pretty widely.
A lesser expensive loan might last as short as 5 years, while a more expensive loan could range up to 20 years or more.
Be sure to use our RV Loan Calculator to see how different terms affect your monthly payments.
A: RV loans are most often facilitated by the dealership’s financing department. They connect with a lender or several lenders to offer you convenient financing options onsite. You are not limited to the dealership’s financing options when purchasing your RV.
You can also shop independently for an RV loan. The lender will then pay the dealership directly for the vehicle and you’ll finance your payments through the lender. Your RV loan will have a rate and a term which combine to determine your monthly payments. If you make all your payments on time, at the end of your loan term, you’ll have fully paid off your loan and will receive the title of your vehicle. Some RV loans also allow for early repayment, where you can pay more than your monthly payments, pay off the loan sooner, and save yourself some money in interest.
A: Your monthly payment depends entirely on your finances and budget. A used travel trailer might cost you as low as $200/month, while a brand new, top of the line RV could end up costing closer to a rent or mortgage payment. Your absolute first step when shopping for an RV is to figure out exactly how much you can afford and work backward. It’s also important to remember that the monthly payment is not necessarily the most important financial factor. A dealership or lender might be quick to show you how much lower your payments could be if you extend the term of your loan. It might feel tempting to lower your payments to well below your budget, but keep in mind, this means you’ll be paying a whole lot more in the long run.
A: You’re allowed to deduct the interest paid on a loan for your primary or secondary home. Any RV that includes sleeping, cooking, and toilet quarters qualifies as a residence. Since almost all RVs include those elements, your RV likely qualifies. Although this might seem rather simple, we highly encourage discussing this with your accountant before making any big decisions. When it comes to taxes, it is always better to be safe than sorry.
A: You can get an RV loan with almost any type of credit. That doesn’t necessarily mean you should. Bad credit will cost you a whole lot when it comes to financing a purchase like this, and the extent to which your high rates affect the cost might make the buy not worth the cost.
If you have particularly bad credit but really want or need to finance an RV, consider buying used. Not only will the sticker price be way less than a new RV, but you’ll also be able to shorten your loan term, saving even more money on interest. At the end of your term, you might even find yourself able to upgrade to a better vehicle.
Conclusion on RV loans
The most powerful tool to an RV buyer is knowledge. If you’re planning to apply for an RV loan, it’s important to arm yourself with as much of that knowledge as possible. Hopefully, this article was a good start.
As you start your search for the perfect RV, check back with us frequently, and use our RV Loan Calculator tool to get a better idea of how much those RVs will end up costing you.
Don’t forget to shop around, keep an eye on your credit, and seek out an RV loan with the lowest rate and shortest term you can afford.
Other RVing stories you’ll love:
- What does RV living cost? A breakdown of life on the road
- The best small RVs for full-time living
- Small 5th Wheel Trailers: The Ultimate Guide
FREE Boondocking Starter Kit
Want to get started with free camping? Download my FREE boondocking starter guide right now: