Campers represent a significant investment with costs ranging from $10,000 to $50,000. Like most major purchases, financing is a popular option for RV and camper purchases.
Suppose you’re considering purchasing a new or used camper. In that case, it’s essential to learn more about financing and understand how an RV loan will impact your finances, starting with the average term of a camper loan.
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How Do RV Loans Work?
You can apply for an RV loan through a major bank, a credit union, or an online lender. The lender you choose to work with will determine your creditworthiness based on your income, current level of debt, credit score, and other factors.
RV dealerships can also help you with this process and share your application with different lending partners to see who can offer the best deal.
If the lender approves you, they will issue funds so you can buy an RV. You will then make monthly payments to pay off the loan’s principal, interest, and additional fees.
In most cases, the borrower uses the RV or camper as collateral. It means the financial institution will put a lien on the vehicle’s title and has the right to recover the vehicle if you fall behind on your loan payments.
RV Loan Terms
You’ll come across some technical terms you might not be familiar with when shopping around for an RV loan. Here’s what these different terms mean:
- APR or Annual Percentage Rate: The APR is a rate that reflects how much you’ll spend on interest each year, and it can be higher than the interest rate since it sometimes includes additional fees.
- Collateral: Collateral refers to assets you use to secure a loan, and the lender can take possession of the collateral if you fail to pay the loan back.
- Co-Signer: A co-signer is a person who agrees to take responsibility if you fail to keep up with the loan payments. A co-signer can help you secure a loan if you have a low credit score.
- Creditor: A creditor is a person or institution that lends you money.
- Credit score: Your credit score is one of the factors lenders will consider when deciding whether to approve your loan application. The average credit score is 698, and a higher than average score can help you secure a lower APR.
- Default: Defaulting on a loan means failing to pay it back.
- Down payment: The down payment is the sum you pay upfront for purchase before financing the remaining balance. A large down payment means you’ll have to borrow less.
- Pre-Approval: A pre-approval is an offer a lender makes after reviewing your credit score and financial situation. It can give you an idea of how much borrowing will cost, but it doesn’t necessarily reflect the final interest rate.
- Principal: The principal is the amount you borrow. Over the years, you’ll pay back the principal, interest, and additional fees.
Types of Loans for Campers
Over the past two decades, RV ownership has increased by more than 60%. Americans love the freedom and convenience of these vehicles, and financing institutions are meeting the demand for RV financing products with different types of loans.
Secured RV Loans
Secured RV loans are the most common financing option for high-end RV purchases. A secured loan uses the vehicle as collateral to help reduce the risk the financial institution takes.
Secured loans often have lower APRs and fees, and financing is more accessible if you don’t have an excellent credit score.
Unsecured RV Loans
Some lenders offer unsecured loans for RVs but will typically limit how much you can borrow. An unsecured loan can be a good option if you’re looking for a faster application process and have a good credit score. Having a sizeable down payment can also help.
Personal Loans
For smaller RV purchases, a personal loan can be a good option. You can use the RV’s title to secure a personal loan or even use the title of another vehicle.
The downside of personal loans is that interest rates can range from 10 to 28% and tend to be high if you don’t have a good credit score.
What Is the Average Interest Rate on a Camper?
On average, you can find interest rates between 6 and 7% for a new RV. However, this percentage can vary depending on your financial situation, the amount you need to borrow, and your lender.
Here is how different lenders compare.
RV Dealerships
Unless you’re shopping at a Buy Here Pay Here lot, RV dealerships will help you get financing through a third party.
It’s a convenient way to get a loan, but you should know that RV dealerships usually have incentives to recommend one lender over another.
Major Banks
Banks with a nationwide presence typically have the strictest requirements for loan applications. Larger banks tend to have higher fees compared to smaller institutions, and you might get a higher APR for your RV loan.
Conversely, major banks typically have a convenient online application process to get pre-approved.
Small Regional Banks
Small regional banks are usually more affordable for RV loans. Because these banks have a smaller customer base, they tend to offer lower APRs and other perks to attract and retain customers.
Credit Unions
The same is true of credit unions. While they might lack the convenience of a large bank, credit unions can offer lower rates. The National Credit Union Administration caps the interest rate at 18% for personal loans.
Online Lenders
Online lenders are another option worth considering. Because they have no costs associated with brick-and-mortar locations, online lenders can afford to offer lower interest rates.
Online lenders issue 38% of all personal loans and are the most popular option for this type of financing.
How Long Can You Finance a Camper?
Most lenders offer terms that range from 10 to 15 years for RV loans. You can find shorter terms if you opt for a personal loan or make a smaller RV purchase, and you can also find lenders willing to extend your term to 20 years for a luxury RV if you use the vehicle as collateral.
RV Loan Lengths
The loan term and interest rate will vary depending on the lender and product you choose:
For an RV in the $5,000 to $10,000 price range, expect a term of two, three, or five years. Your interest rate will likely be somewhere between 7 and 12%.
Using the RV as collateral is a must for purchase in the $10,000 to $30,000 range. You can find terms that range from 60 to 240 months or five to 20 years. Interest rates start at 6% and can go up if you don’t have a strong credit profile.
You can secure interest rates as low as 5% with long-term loans. You can borrow $30,000 to $100,000 for a luxury camper if you’re willing to use the vehicle as collateral and have a solid financial profile.
If you think a personal loan is a better option, you should expect to pay around 10% in interest over two to five years to borrow $5,000 to $15,000.
Factors That Affect RV Loan Length
Different factors will determine the term your lender is willing to offer:
- What kind of RV are you purchasing? For an entry-level RV, lenders will offer a shorter term and will be more flexible with extending the term to finance a mid-range or luxury vehicle.
- The age of the RV matters if you’re buying a used vehicle. An older RV with high mileage will depreciate faster, representing a higher risk for the lender. Expect a shorter term.
- Lenders will be more flexible and willing to offer a longer loan if you have a good credit score and a low debt-to-income ratio.
- Coming up with a large down payment shows you’re serious about the purchase and reduces risks for the lender, which means you should qualify for a shorter term.
- Unsecured loans represent a higher risk, and the lender will set a shorter term to recoup the money faster.
- A strong proof of income and job security can help you qualify for a longer term. A high 401(k) or IRA balance can have the same effect for retirees.
How To Apply for an RV Loan
Getting financing for an RV is more complex than qualifying for an auto loan since the purchase is usually more significant.
You’ll need:
- Proof of employment and proof of income.
- A bank statement showing you have the funds for your down payment.
- A letter of intent if someone will co-sign the loan with you.
You’ll also need details about the vehicle you want to finance. A price range is sufficient if you want to get pre-approved, but you’ll need a make, model, year, mileage, VIN, and more if you have already found the RV you want to buy.
Here’s how you can apply for an RV loan:
- Once you’ve found a lender, fill out their online application or visit a branch to apply in person.
- You’ll have to share personal details, verify your identity, and agree to a credit check.
- The lender will get back to you with a decision within a day or two. You should know the APR you can get, how much you can borrow, and your qualifying term.
- You’ll have to submit additional proof, including your proof of income and details about the RV you want to finance.
- The lender will review your additional documents and issue the funds.
- You can proceed to the purchase and send the lender proof of insurance and vehicle title if you use the RV as collateral.
RV Loan Calculator
Using the loan calculator will give you an idea of how financing an RV will impact your finances and the total cost of an RV loan.
You must enter the total amount you’re borrowing, your APR, the loan term, and your down payment.
You can also include hidden costs and expenses like origination fees or RV maintenance, tax deductions offered by your state, and depreciation for used RVs.
Should You Buy a New or Used RV?
Each option has its pros and cons. A new RV:
- Typically comes with a comprehensive warranty.
- Gives you access to the latest smart features.
- Will likely get better mileage.
- Is a more valuable asset you can use as collateral.
On the other hand, a new RV will cost more. Unless you have an excellent credit profile, getting financing for a brand new camper can be challenging.
With the same budget, you might be able to get a larger used RV. You’ll likely qualify for a shorter loan term, and a slightly higher APR for a used vehicle since risks are higher for the lender, but it’s a great option if you’re on a budget.
FAQs
Here are a few other things to know about financing an RV purchase.
Who has the best RV financing?
Online lenders are the most convenient option if you need financing fast. Community banks and credit unions will likely offer the best rates.
Can you finance a camper from a private seller?
Yes! A personal loan might be the easiest way to finance a purchase from a private seller.
Can you finance a camper with bad credit?
The answer is yes, but you should expect to spend more on interests and qualify for a shorter term. A large down payment can help.
Can you finance a camper for 10 years?
Ten years is a popular loan term for mid-range RV purchases. If you plan on spending at least $12,000 on a camper, ten years is a realistic term that most lenders will approve.
Do you need RV insurance to get a loan?
If you use your RV as collateral, your lender will require you to carry full coverage insurance to protect this asset.
Can someone co-sign an RV loan?
Yes, a close friend or relative can co-sign your loan, and having a co-signer can help you negotiate better terms.
Are RV loans tax deductible?
You can deduct what you spend on interest if you choose to itemize your deductions.
Can you buy an RV with an auto loan?
No. RV loans and auto loans are two different types of financial products.
When should you refinance your RV loan?
You can save on interest and fees by refinancing your RV loan once your credit score improves or you get a better job with a higher income. You can also refinance to secure lower monthly payments if you’re retiring.
