Bank vs. credit union: Which is better for an RV loan?

May 31, 2022

By Lois Sullivan

Bank vs. credit union: Which is better for an RV loan?

Bank vs. credit union: Which is better for an RV loan?

An RV is a major investment with a price tag that may fall anywhere from $10,000 to $300,000. If you don't have this kind of cash in your pocket, you'll need to secure financing for your RV. Banks and credit unions are two of the most popular options for financing an RV. Here's what you need to know about these two types of lenders.

How RV financing works

As with any loan, RV financing provides you with upfront funds to purchase the RV. You will then need to pay back the loan over a set period of time with interest.

Lenders understand that there is a risk with any loan that they provide. For this reason, they will request information from you and assess these facts carefully. Some of the things a lender will look at include your:

  • Credit score and credit report
  • Income
  • Recurring expenses, such as a mortgage
  • Liquid assets like stocks and bonds
  • Employment history

Your credit report is one of the most informative things that a lender can evaluate. This document covers the prior seven years and details:

  • Current and past lines of credit
  • Payment history, including late payments
  • Prior bankruptcies or foreclosures
  • Unpaid accounts in collections
  • Recent applications for credit

Lenders want to see that you've made timely payments, have a low debt-to-income ratio, and have not recently acquired or applied for new lines of credit. The higher your credit score, the better your loan terms could be.

Options for RV financing

Buyers typically have four financing options when purchasing an RV:

  • Unsecured personal loans from online lenders
  • RV dealership financing
  • Secured bank loans
  • Secured credit union loans

These options are very similar at face value, but there are some key differences that you should know about.

The benefits of a bank for RV financing

Some banks offer financing that you can use for an RV. If you're a member of the bank, you may even qualify for a discount or special terms on an RV loan. When it comes to vehicle loans, banks typically offer larger loans than credit unions. This could make a bank the better option if you're purchasing a particularly expensive RV. 

The drawbacks of a bank for RV financing

Banks are for-profit organizations and are therefore looking to make as much money as possible. This means minimizing their risk and maximizing their income. For customers, that could mean less favorable loan terms than credit unions.

Securing an RV loan from a bank can be difficult if you don't have a good credit score and a favorable financial situation. Banks will carefully evaluate how much of a risk you present. If the bank feels that an applicant is too risky, the bank is likely to reject them. 

The benefits of credit union RV financing

Credit unions operate differently from banks. Credit unions are not-for-profit organizations owned by the members. As a cooperative institution, a credit union concerns itself primarily with serving its members. Profits earned by the credit union go toward offering members greater benefits. This means that a credit union may offer lower interest rates and more favorable terms than a bank.

The drawbacks of credit union RV financing

You must become a member of a credit union to access their RV financing. Though you can apply for a loan without joining the credit union, you will have to join once approved. Joining a credit union can be easy and becoming a member has its benefits.

How to choose the best financing option for your needs

Before you start applying for RV financing, you should put together a budget for your new purchase. Evaluate your monthly income and expenses and determine how much you can reasonably afford to put toward a new loan payment. Once you have your essentials accounted for, you'll know how much is left for your recreational vehicle.

Determine how much you can put toward a down payment for your RV. The larger your down payment, the smaller your loan and loan payments will be. A large down payment can also help you secure more favorable loan terms. Once you know what you're putting down on the RV and how large your monthly payments can be, you'll know what parameters you must look for in your loan. Consider applying for a few different loans to see which one offers the lowest interest rate and monthly payments. In most cases, you'll find that it's better to go with a credit union than a bank.

If you're interested in securing credit union financing for your RV, Alliant Credit Union is a great place to start. You can apply for your loan online or give our team a call at 800-328-1935 to get the approval process started.

Make your open road dreams a reality with a great RV loan

A great rate on an RV loan from Alliant will ensure you can spend more of your money on memorable weekend adventures.

Want to learn more about financing an RV? Check out these articles:


Up your Financial IQ

Sign up for our monthly newsletter to help you stay at the top of your financial game.