Purchasing an RV can be a costly investment, prompting some to consider financing options. However, navigating the financing process can be perplexing for those unfamiliar with RVs, as they fall somewhere between a house and a vehicle/trailer.

To alleviate this confusion, we’ve compiled a guide on financing an RV that provides clear and concise information. Additionally, we’ll provide real-life examples to give you a better understanding of the costs associated with RV financing.

5 Most Common Ways to Finance →

The complexity of financing is attributed to the multitude of available options.

There are several ways in which people choose to finance their RVs.

• * Dealership Loans
• * Bank Loans
• * Personal Loans
• * Home Equity Loans
• * Credit Cards

1. Dealership Loans →

RV dealerships often offer their own financing options, similar to car dealerships.
However, these loans are usually just bank loans that the dealership processes for you.
They'll take your information and send it to the bank they work with to provide financing options.
Sometimes the dealership will add extra interest to make a profit from both the RV and the financing.
For instance, the dealer may get a 4% interest rate from the bank but charge you 5%.
This means you pay more in interest than you would if you worked with the bank directly.
Some dealerships argue that they can get you better loan rates because of their relationship with the bank.
Financing through the dealership can also speed up the process and reduce the number of people you need to deal with.

2. Bank Loan → Tips 2024

Financing an RV is possible through your bank rather than the dealership. Simply visit your bank to inquire about their interest rates and financing options.

Prior to visiting the dealership, you can obtain pre-approval for a loan to ensure you have adequate funds to buy the RV.

One benefit of working with the bank directly is the ability to negotiate your own interest rate. Moreover, you’ll know the amount you’re approved for before you start browsing RVs.

It’s pointless to shop for a $200,000 RV if your loan approval is limited to $50,000.

3. Personal Loan → Tips 2024

If you don't want to use your RV as collateral for a loan, you can opt for a personal bank loan instead.

These loans are unsecured and are available to people with good credit or those willing to pay higher interest rates.

While getting a standard bank loan is usually the better financial choice, a personal loan may be more suitable in certain circumstances.

For instance, if you're purchasing a used RV, you may not qualify for a traditional bank loan.

This is because the bank considers the used RV to be unsuitable collateral.

In such cases, a personal loan is a viable option. Additionally, some people use their social security benefits to fund their RV travels.

4. Home Equity Loan → Tips 2024

Homeowners can secure financing for an RV by taking out a home equity loan that uses their home's value as collateral.

This loan option is particularly beneficial for those who have significantly paid off their mortgage or have seen a significant appreciation in their home's value.

The downside to this loan is that if you fail to make your payments, you risk losing your home, which would leave you with no other place to live.

5. Credit Cards → Tips 2024

Your credit card might be an option for purchasing a smaller RV.

You can either swipe it at the dealership or use a cash advance or courtesy check.

Some credit card companies, like mine, send me checks that I can use for anything.

These checks can be written out to the dealership or to myself for cash in the bank.

The benefit of this financing is that you may receive 0% interest for the first year.

However, the interest rate can climb as high as 10% or 20% after that initial year.

How Long Can RVs be Financed For?

The standard loan period for RVs through dealerships or banks is typically 10 to 15 years, which is twice as long as most vehicle loans and half the length of most home loans.

Personal loans and home equity loans, on the other hand, can be obtained for shorter or longer periods, ranging from just a few years to up to 10 or 15 years.

Credit cards, however, do not have specific terms and can either continue indefinitely or be paid off immediately.

It's important to keep in mind that the longer the loan period, the more interest you will ultimately have to pay.

6 Clever Ways to Save Money On Financing An RV →

Irrespective of the loan type you choose to fund your RV, there are some tactics that can help you cut down on your RV expenses. Here are some practical tips that you can implement.

• Put a bigger downpayment down.
• Get a lower interest rate.
• Make larger payments.
• Write your loan interest off on your taxes.
• Refinance.
• Get a shorter loan.

1. Put a Bigger Downpayment Down →

To reduce the amount of money you borrow for an RV, the best approach is to make a substantial downpayment when you buy it.

You can accomplish this by either saving up more money before the purchase or bargaining for a better deal on the RV you're trading in at the dealership.

Even a modest $1,000.00 increase in your downpayment can lead to significant savings in the long run.

For example, a 15-year loan of $20,000.00 at a 5% interest rate will accrue $8,468.57 in interest over the loan's duration.

However, a 15-year loan of $19,000.00 at a 5% interest rate will result in $8,045.14 in interest. By simply adding $1,000.00 to your downpayment, you can save $423.43.

2. Get a Lower Interest Rate →

Lowering the interest rate when financing an RV is an effective method of saving money, particularly when purchasing a costly RV. Consider a 15-year loan of $200,000.

If the interest rate is 6%, you will pay a total of $103,788.46 in interest. However, with a 5% interest rate, the total interest paid is reduced to $84,685.71.

By negotiating a lower interest rate, you can save $19,102.75.

3. Make Larger Payments →

By avoiding pre-payment penalties on your loan, you can make larger monthly payments. This way, you can lower the principal amount that accrues interest each month and decrease the time it takes to pay back the loan.

For instance, consider financing a $100,000.00 RV for 15 years at a 5% interest rate.

After the first payment, you will end up paying an additional $41,926.00 in interest and require a full 15 years to pay it off. However, if you pay an extra $50.00 per month after the first payment, you will only pay $38,008.00 in interest and finish paying off the RV 1.3 years sooner.

This is a total savings of $3,919.00. → 

4. Write the Interest Off on Your Taxes →

In our previous post, “Are RVs and Boats Considered Primary Homes?”, we discussed the tax benefits of living full-time in your RV. However, it’s important to note that you can also write off the interest on your taxes if you use your RV as a part-time residence.

To qualify, your RV must have sleeping, cooking, and toilet facilities. The IRS publication 936 provides more information on this topic. If you’re using your RV for business purposes, you can also write off the interest on your taxes. However, keep in mind that you cannot use your RV for personal use if you do this. If you claim the interest without adhering to these rules, you risk getting into trouble with the IRS.

5. Refinance When You Can →

Although you've already funded your RV, you don't have to stop looking for ways to save money on the financing.

When interest rates drop or you've paid off a significant portion of the principal, refinancing your loan to a lower rate may be an option. The downside to this is that a new loan origination fee will most likely need to be paid.

Nevertheless, if you still have a substantial amount of money left to pay on the RV, it may be advantageous to refinance.

At the very least, you could potentially reduce your monthly payments without incurring any extra interest charges.

6. Get a Shorter Loan →

In our previous article called "RV Buying Guide: 10 Clever Bargain Tips and Most Sold Models," we highlighted the fact that choosing a shorter loan term can reduce the total amount of interest you pay. As an illustration, we provided the following example.

• * 10-year loan at 5% interest on a $100,000.00 motorhome. Total interest paid is approximately $27,278.00.
• * 15-year loan at 5% interest on a $100,000.00 motorhome. Total interest paid is approximately $42,342.00
• The difference between paying the motorhome off in 10 years versus 15 years is $15,064.00.
• As you can see, this is substantial savings on interest and this number will only go up as the size of the loan goes up.
• * On a $200,000 loan at 5% interest over ten years, you’d end up paying a total interest amount of approximately $54,557.00.
• * On a $200,000 loan at 5% interest over fifteen years, you’d end up paying a total interest amount of approximately $84,685.00.

The difference between paying this motorhome off in 10 years versus 15 years is $30,128.00.

More Financing Examples →

Below are additional examples of RV loans with varying interest rates and loan amounts, which can help you estimate how much your RV loan might cost you. The loan amount, loan term, interest rate, monthly payments, and total interest paid are all listed in the table below.

$25,000 loan amount with 0% interest rate: Monthly payments of $265.16, total interest paid of $6,819.65.

$25,000 loan amount with 0% interest rate: Monthly payments of $277.55, total interest paid of $8,306.15.

$25,000 loan amount with 0% interest rate: Monthly payments of $210.96, total interest paid of $12,973.56.

$50,000 loan amount with 0% interest rate: Monthly payments of $530.33, total interest paid of $13,639.31.

$50,000 loan amount with 0% interest rate: Monthly payments of $555.10, total interest paid of $16,612.30.

$50,000 loan amount with 0% interest rate: Monthly payments of $421.93, total interest paid of $25,947.11.

$100,000 loan amount with 0% interest rate: Monthly payments of $1,012.45, total interest paid of $21,494.17.

$100,000 loan amount with 0% interest rate: Monthly payments of $790.79, total interest paid of $42,342.85.

$100,000 loan amount with 0% interest rate: Monthly payments of $843.86, total interest paid of $51,894.23.

As shown, changing even one variable can have a significant impact on the interest paid and monthly payments. For instance, choosing a 10-year loan instead of a 15-year loan on a $25,000 loan can cut your interest in half, and it will only cost you an extra $50.00 per month. On the other hand, selecting a higher interest rate and a longer term for a larger loan can double the interest paid but reduce monthly payments by over $200.00. Ultimately, the best way to save money is to make reductions by decreasing the loan amount, interest rate, or loan term.

Simply by making larger payments towards your loans, you could save tens of thousands of dollars solely on interest.

Other Financing Considerations To Consider

Carrying a loan and getting a loan has other implications for you to consider as well.

Here are some complications that care arise through the use of loans.

• * You may have to get an inspection on your RV.
• * You’ll have to carry more insurance on your RV.
• * Your credit score will go down…and then up.

RV Inspections
It's possible that your bank will require a pre-purchase inspection on a new RV purchase, even if it's brand new. While this is not typically necessary for lower-priced RVs, it's common for RVs that are priced at over $250,000.00.

Here you can see examples of what RV inspection typically costs.

You’ll also find this to be the case on used RVs as well. →

When you decide to finance an RV, the bank will have a stake in it and will want to ensure that you’re purchasing one that holds value. As the age of the RV increases, the probability of the bank needing an inspection for financing purposes also increases. If the RV is too old, you might not be eligible for conventional bank financing and will need to consider a personal loan or credit card financing. It’s advisable to inspect an expensive or used RV regardless of financing requirements. The financing process also requires you to have comprehensive insurance coverage on the RV so that the bank is assured that you can still repay the loan if the RV is damaged. You may have to opt for insurance that you don’t prefer and pay a higher premium as a result.

Here’s a list of what your RV insurance should (always) include.

Regarding Your Credit Score →

Financing your RV can impact your credit score in various ways. For one, your debt level increases, and other lenders may consider you a riskier borrower. This could make it harder to finance other purchases and result in higher interest rates. Additionally, some employers screen candidates based on credit scores, which could be problematic if your score drops due to the new loan.

On the bright side, paying off a significant portion of your RV loan demonstrates financial responsibility, which can boost your credit score. This may qualify you for lower interest rates and even allow you to refinance your RV loan for additional savings. You may also be able to refinance other bills, resulting in lower payments overall.

Final Thoughts →

When it comes to financing an RV, there are various options to choose from, each with its own pros and cons. Your personal financial situation will determine the type of financing that suits you best. It's wise to take your time and thoroughly evaluate all the available financing options to secure the best deal. Boosting your credit score, accumulating a substantial down payment, and paying off the RV as soon as possible are three crucial steps you should take to save money and claim full ownership of your RV in no time. We appreciate your feedback on this article. If you have any thoughts to share, please don't hesitate to let us know. (P.S. We take all feedback seriously.)