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By Jamie Smith
A recreational vehicle, also known as a camper or RV, provides the opportunity to explore the world around you while enjoying the comforts of home. RVs come in a wide range of sizes and styles, but most include elements that offer a more comfortable experience, including a restroom, beds, and a kitchen for preparing meals. If you love to get out on the open road, you may be thinking about buying an RV. These vehicles are pricey, so it's important to find the right financing option. Check out our guide that breaks down how to finance an RV.
An RV loan is a loan given to a borrower to buy a recreational vehicle. This vehicle category includes several options, such as motorhomes, travel trailers, and campers. These vehicles might be different in size, function, and price. Motorhomes are typically some of the most well-equipped RVs available to buyers, offering the comforts of home on the road. A travel trailer or camper might not have quite as many amenities but can still provide a place to sleep and relax that is more comfortable than a tent.
A qualified buyer can typically get an RV loan for either a new or used vehicle. RV loans are often similar to auto loans in terms and conditions, although higher-priced RV loans might be structured more like mortgages. The repayment terms can range from one to 15 years, while some lenders offer loans that last for up to 20 years.
Some lenders require inspections on RVs before they approve loans to purchase them, similar to the home inspection required on a mortgage loan. An RV loan is secured, which means it's backed by collateral. If the borrower fails to repay the loan based on the agreed-upon terms, the lender can take the RV back.
Before you apply for an RV loan, it's helpful to do some research and look through different options on your own. Every lender has its own requirements for RV loans, so not qualifying for one doesn't necessarily mean you won't qualify for another. It's also helpful to look at the different terms offered and assess which might be the best fit for your financial situation.
The two main types of RV loans are secured and unsecured. A secured loan uses the RV as collateral, which means it can be repossessed. An unsecured loan is a personal loan and eliminates the risk of having the RV taken back if you miss a payment. Personal loans may also be funded faster than secured auto loans so that you can get behind the wheel of your RV faster.
If you haven't found your dream RV yet, setting your budget is an important step in the financing process. RVs vary widely in cost, from a few thousand dollars for a pop-up camper to over a million dollars for a high-end motorhome. Make a list of the features you want and compare the models available to determine which fits your needs.
You should also consider how often you'll use it and where you plan to take it. If you want to explore big cities, a smaller model might be easier to navigate and park. Other factors to consider include where you'll store the vehicle, the cost to insure it, and fuel efficiency. With a firm budget in mind, you can start shopping for an RV that allows you and your family to explore and spend quality time together.
Your credit history will also play a role in whether you can qualify for an RV loan. Lenders often only offer loans for RVs to applicants with high credit scores. Some will only consider people with a credit score of 700 or higher, although the requirements vary by lender. Check your credit score to determine whether you can qualify for an RV loan. If your score is low, you might need a co-signer with a higher score to get the loan. You can also take steps to improve your credit, such as paying down high balances or consolidating debt.
Your income also affects the interest rate you can qualify for when applying for any loan. You need to be able to show that you can repay the loan, so lenders look at the stability of your income sources as well as the amount you earn each month. When applying for an RV loan, plan to provide proof of employment and pay stubs.
The more you can save for a down payment, the less you'll have to finance, so start saving well before you plan to buy the RV. Your down payment will lessen the loan total, lowering your monthly payment and how much interest you'll pay over the life of the loan. Some lenders require at least 10% of the purchase price as a down payment, while others offer more flexible terms. Saving a larger down payment can also help you qualify for a lower interest rate.
You may need to get proof of insurance (or at least the ability to be insured) as part of the qualification process for an RV loan. Take a preemptive step by contacting your auto insurance company to find out if they offer RV insurance and, if so, whether you can qualify for it. If your current provider doesn't offer RV insurance, start comparing companies that do and reaching out for more information. By establishing contact early in the process, you can be more prepared to get proof of insurance when you need it.
Many lenders offer RV loans, both as secured and unsecured loan options. Some RV buyers think they have to go through the dealership to get a loan, but you may qualify for a better rate by shopping for loans on your own. Online lenders may offer better deals to clients because they don't have the same overhead costs as traditional lenders or RV dealerships.
If you decide to secure your own financing, rather than going through the dealership, start by getting preapproved. You can use the amount you're approved for to establish your budget and as leverage to negotiate with sellers. A preapproval letter can also demonstrate that you're serious about buying an RV.
Get a great RV loan from Alliant will ensure you can spend more of your money on memorable weekend adventures.
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