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A typical time frame for a recreational vehicle (RV) loan is 10 to 15 years, though it’s possible to find RV loans with shorter or longer terms, depending on the lender and how much you need to borrow.
If you’ve ever had a car loan, you likely know that they’re typically shorter by comparison. RV loans can be longer since you may be borrowing a larger amount of money. You may find differences in what you’ll pay for an RV loan in interest and fees and what’s needed to qualify.
If you’re considering an RV loan, it helps to know what to expect before you apply.
Key Takeaways
- RV loan terms often range from 10 to 15 years, though they may be shorter or longer depending on your needs and the RV’s cost.
- Compared to car loans, RV loans can differ with regard to the range of interest rates offered and the fees you’ll pay.
- Choosing a shorter-term loan can help you pay off your RV faster while saving you money on interest.
- Putting more money down is one way to reduce how much you need to borrow for an RV loan.
Example of a Longer vs. Shorter RV Loan
When you’re shopping for an RV loan, there can be a substantial difference in cost and payments between a shorter- and longer-term loan. Here’s an example that illustrates how much you might pay using two different loan terms.
| RV Loan Cost: 5-Year vs. 15-Year Loan | ||
|---|---|---|
| Loan 1 | Loan 2 | |
| Amount | $100,000 | $100,000 |
| Term | 5 years | 15 years |
| Annual percentage rate (APR) | 7% | 7% |
| Monthly payment | $1,980.12 | $898.83 |
| Sales tax | $1,000.00 | $1,000.00 |
| Total interest | $18,807.19 | $61,789.09 |
| Total paid | $119,807.19 | $162,789.09 |
As you can see, the five-year loan option saves you just under $43,000 in interest charges. That’s a substantial savings, but your monthly payment would be more than double what it would be with a 15-year loan. When comparing a shorter vs. longer RV loan term, it’s important to consider what matters most to you: affordable payments or interest savings.
Warning
An RV loan with a variable interest rate can be risky if rates rise. Higher rates can increase your monthly payment and total interest.
Factors That Affect Your RV Loan Term
Different factors can influence your RV loan term and how much you’ll pay each month and in total. Understanding how these loans work can help you find the right loan for your situation.
Loan Amount
The amount you need to borrow can directly affect your loan term. The larger the loan, the longer the term is likely to be. The lender may set thresholds for loan terms based on the amount that’s borrowed. Or you may be given the option to choose a shorter or longer loan term, depending on how much you plan to borrow.
Type of RV
The amount you can borrow along with your loan term can be determined in part by the type of RV you are buying. For example, lenders may offer different financing terms depending on whether you’re buying new or used. There may also be differences in loan terms based on length or whether the RV is equipped with special or high-tech features.
RV Age
The age of the RV that you’re interested in buying is also important, as lenders may restrict loan terms for older models. That has to do with how RVs depreciate in value over time. Lenders may be averse to extending loans for assets that are likely to lose most of their value before the loan term ends.
Note
While it’s possible to get RV financing for older models, some lenders may only offer loans for RVs that are no more than 10 to 15 years old.
Credit Scores
When applying for any type of loan, including an RV loan, lenders will consider your credit reports and scores. Your credit scores tell lenders how responsible you are when it comes to managing credit and debt.
A higher credit score can help you to qualify for more favorable loan terms and interest rates. A good credit score is generally 670 to 730 on the FICO credit score range. In this range, you typically have a good chance of getting approved at decent rates, although each lender has its own criteria.
How to Decide the Length of Your RV Loan
If you’re ready to apply for an RV loan, it’s a good idea to do some estimated calculations before to get an idea of how much you might pay. You can use an RV loan calculator to run the numbers. Some of the things to consider when estimating your cost include:
- RV price
- Trade-in value, if you’re trading in an RV you already own
- Down payment
- Estimated interest rate
- Sales tax
You can calculate different loan terms to see how a shorter or longer term might affect your monthly payment and total interest paid. You can then compare those payments to your monthly budget to determine what amount would be affordable.
Remember to keep the RV age and model in mind, as well as your credit scores, since those factors can affect the terms that a lender may offer. Taking time to shop around and compare the best RV loans can help you find the right lender to work with.
Is an RV Loan Similar to Other Loans?
An RV loan is similar to other types of term loans or installment loans, in that you’re borrowing a set amount of money that must be repaid monthly with interest. RV loans are secured loans, since the RV itself serves as collateral. If you fail to make payments, the lender could repossess the RV.
What Documents Do I Need to Apply for an RV Loan?
You’ll need to have documents such as proof of ID as well as proof of income and assets to apply for an RV loan. That includes documents like W-2s, tax returns, pay stubs, and bank account statements. You’ll also need to provide the lender with some information about the RV you’re planning to buy, including the sales price, make, model, and age.
Do I Need to Know What RV I Want Before Applying for a Loan?
It may be possible to get pre-approved for RV financing without knowing exactly which model you want to buy. However, the lender will need to know which RV you’ve decided on when you officially apply for the loan. You’ll need to share details about it, including the purchase price.
What’s a Good Interest Rate for an RV Loan?
A good interest rate for an RV loan is the lowest rate that you’re able to qualify for, based on your credit scores. That being said, a rate below 10% is generally good, and the lower it is overall, the less expensive the loan will be.
What Credit Score Do You Need for an RV Loan?
Lenders can set different minimum requirements for the credit score needed to qualify for an RV loan. Generally, a good credit score in the 670 to 739 range can be sufficient to qualify you for most loans, though you’ll typically need an excellent score to get the best loan rates.
The Bottom Line
A loan can bridge the financial gap when you’re looking to buy an RV. Taking time to compare your options for RV loan terms is important, and your choice of loan length can affect your monthly payments and how much you pay in interest overall.
Once you get a loan to buy your dream model, you can take the next step and get the right RV insurance to protect it.
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