RV Financing – How To Avoid The Pitfalls Of RV Loans

RV financing is a vital subject for most RVers. And this article will show you how to avoid the pitfalls of financing your next RV.

These days it’s not hard at all to spend a hundred thousand dollars or more on an RV.

In fact, for many people an RV is the second biggest purchase that they’re going to make in their lifetime. Right behind their sticks and bricks home.

So how do you pay for such a big ticket item? Well of course, probably the best thing to do is just pay cash for it.

But who has that kind of cash available? So if you don’t have the cash to pay for an RV, in most cases you’re going to need RV financing instead.

And that means that you’re going to need an RV loan. But RV loans have pitfalls that can cost you a lot of money too.

And that’s what we’re going to talk about here. We’re going to talk about a process for getting an RV loan and financing that works best for you.

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Table of Contents

The Best Place To Start

And the first step in this process is something very simple that I encourage you to do. But believe it or not, a lot of people don’t do it.

And that is to have a personal monthly expenses budget to work with.

Make a budget for your expenses
First step – make a budget

It’s really the only way that you’re going to know how much loan payment you can afford.

So you have to know how much money is coming in every month. And you have to know how much money is going out on expenses as well.

Then you can figure out what your costs for the RV is going to be too. And see if it will fit within your budget.

Also, keep in mind that the loan payment is just one of the costs associated with owning an RV.

You’ve also got to budget in things like fuel for going on trips with it. And don’t forget maintenance, repairs, rv insurance, camping costs, etc.

So make sure you include everything in the budget that you’re going to be spending on your RV.

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And that will help you know how much you can afford for the loan payment.

How Much Can You Afford To Pay?

Now once you know how much you can spend every month for your RV, then you need to go online and find an RV loan calculator.

It’s very easy to do. Just go to google and type in “RV loan calculator” and you’re going to get a lot of sites that have them.

A sample RV loan calculator
A sample loan calculator

And honestly, they’re all pretty much the same. All you have to do is enter in the amount you want to finance. And then the length of time you want to finance it.

The calculator will then tell you what the monthly payment will be. So you just keep adjusting the amount to finance to see what the costs will be.

Eventually you can get it to the payment that matches what your monthly budget says you can afford.

At this point you know how much you can spend for an RV loan payment each month.

Should You Buy A New Or Used RV?

Now the next decision will be whether the RV is going to be new or used.

And if you go the new RV route, there are advantages. That’s because new RV loans actually have lower rates.

However, that can be easily offset by something else. And that’s the fact that when you buy a new RV you take a big depreciation hit on it right away.

Especially in that first year of ownership. So buying a used RV means that you can avoid that big hit in depreciation.

And the depreciation cost from there forward as you own the RV is much lower.

Also, you also get the advantage of having most of the bugs worked out if you buy a used RV.

Usually by the first or second year, the new owner finally got through all the bugs that the factory had missed in their quality control.

And so you get the advantage of that as well.

How To Avoid Buying An RV Money Pit

But if you buy a used RV, the loan rate is going to be higher too. So balance all of that out and decide which works best for you.

RV Financing – Your Credit Rating

Now the next point is to know your credit score before you get into RV financing. And this is super critical!

Your credit score is going to directly affect the RV loan rate that you can get.

Know your credit score
Know your credit score before shopping for an RV loan

Therefore a lower score means you’re going to pay more in interest on the loan. And a higher score means you get a better interest rate instead.

So if your credit rating is not good, then start working hard to get that credit score up as soon and as quickly as you can.

Shopping For RV Financing

Alright, the next thing to do is go ahead and start shopping for an RV loan at this point.

That’s because now you know how much you can afford for an RV loan payment.

And you’ve decided whether it’s going to be a new or used RV as well.

So now you can start shopping for the loan itself. And what I recommend is start shopping with your personal bank or your credit union first.

That’s a great place to start since they already know you. They know your finances and your credit history.

So very often they’re going to give you a more favorable RV loan rate. But I don’t recommend stopping there.

Instead, go online and shop some companies like Lightstream, Good Sam, and Alliant.

RV financing companies that specialize in RVs
RV financing companies that specialize in RVs

These are companies who specialize in RV loans. And you may find it easier to get RV financing from them.

So shop them to see what rates they’re going to offer you too. And then you will know what your choices are.

Getting Your RV Loan Pre-Approved

Suppose you find some good rates that really seem to work. Then I highly recommend to get pre-approved with that company, bank or credit union.

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Get pre-approve for an RV loan
Get pre-approve for an RV loan

That way you’re already approved for a certain amount of money on your RV loan.

Then all you have to do is just go out and buy the RV that matches that loan amount.

And since the loan paperwork is essentially done, it makes the buying process much quicker and easier.

What About RV Financing From Dealers?

OK, so now you can start shopping for the RV itself. And that means you’re probably going to go visit some RV dealers to see what they have to offer.

But RV dealers are definitely going to try to give you an RV loan too. They want you to finance your RV with them instead. Why?

That’s because the finance department in an RV dealership is one of the biggest profit centers for that dealer. And they make a lot of money in there.

So here is where you need to be prepared in advance for their sales tactics.

Everything you have done thus far is preparing you to get the best RV financing and loan rate possible.

So be careful to avoid this pitfall that RV dealers lay out for people.

Is An Easy RV Loan Always The Best Choice?

Now it’s it’s true that the dealer is going to make you a loan offer that’s easy.

In fact, the whole point of an RV loan at an RV dealership is it’s easy and simple. They pretty much take care of everything for you.

And a lot of folks like that. But when things are easy, sometimes things that are going on in the background will cost you more in the long run.

Now I don’t recommend that you avoid dealer financing altogether. That’s because sometimes they may actually beat the other loans you’ve found.

But that’s not usually the case. So the point is to compare the loan approvals you already have when you go shopping at the RV dealer.

And if you are prepared, then you already know what loan rates you can get.

And you know the deals that are available to you and what your options are.

How Long Should You Finance An RV?

Now the next thing you want to consider is the length of the RV loan you select. In other words, how long are you going to finance this RV?

And these days, you can finance anywhere from 10 to even 20 years for an RV.

But remember that RVs are not investments! They are depreciating expenses instead.

RVs are depreciating assets
RVs are depreciating assets

They are like your car in that they go down in value every single year. Whereas an investment on the other hand is supposed to go up every year.

RV repairs - don't pay for them

But that’s not what happens with most RVs at all. So my point is, don’t finance an RV for too long.

Now I know it’s tempting to try to get that monthly payment down as low as you possibly can.

But you can get yourself in trouble that way. Because every year that you own an RV, it is depreciating in value on a steady basis.

So you may come to the end of the life of the RV and still have a loan to pay. Nobody wants that. So don’t try to finance an RV loan too long.


Well, let me add a few more things beyond what I’ve covered in this article.

First of all, take the whole RV financing process nice and slow. Don’t go too fast and make a big mistake that you will regret later.

Instead, know what you’re doing and know what your options are. And don’t impulse shop!

If you follow the advice I’ve given you in this article, you can get RV financing that really works.

And you will be happy with your RV loan for many years to come.

Have safe and happy travels my friends!

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