Owning an RV is a dream for many people.
Maybe you want to travel the country without having to worry about booking lodging.
Or go camping without giving up all of the creature comforts of home.
RV life isn’t as cheap as it may seem. Here’s a guide toRVing on a budget.
A recreational vehicle provides you with freedom to explore.
But this dream also comes at a cost.
Buying an RV can set you back anywhere from $35,000 to $300,000, according toCruise America.
Thats why many buyers choose to finance their purchase with an RV loan.
What Is an RV Loan?
An RV loan finances the cost of buying a recreational vehicle.
When you sign an RV loan, youre agreeing to pay back the lender over time and with interest.
The terms are typically longer than car loans and they carry higher interest rates.
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In that case, your loan will be more similar to a mortgage than an average car loan.
An RV loan with longer loan terms means youll have lower monthly payments.
However, youll end up paying more interest over time.
For smaller RV purchases, you may be able to use a personal loan.
You could choose a financial institution that you already have an account with, but you dont have to.
Getting quotes from multiple banks, credit unions or online lenders will help you find the best deal.
Or you could use an online loan marketplace, likeLending Tree, to compare rates from different lenders.
Getting preapproved for an RV loan before you shop shows youre a serious buyer.
Youll also have more negotiating leverage to get an RV dealer to offer you better financing.
Some lenders for RV loans have a minimum threshold for taking out a loan.
Most other RV loans are secured loans with the RV itself being the collateral.
If you were to default on a secured loan, the lender could repossess your RV.
If you default on a personal loan, your lender would not be able to take away your RV.
However, they could sue you for defaulting on your loan.
Note that your financial obligations for your RV will go beyond your loan repayments.
Ideally, you should have a credit score of 700 or higher before applying for an RV loan.
Take stock of how youll be using your RV.
Will you need extra space for your grandkids?
Do you need something suitable for off-road adventures?
Also see to it to shop around for lenders.
Getting quotes from multiple lenders can help you find the best deals.
You could save up enough cash to buy an RV outright without the need for financing.
This may require setting a savings goal and spreading out the cost over several years.
Frequently Asked Questions
The length of an RV loan can vary widely.
You could get a short 12-month RV loan or a loan as long as 20 years.
Just be aware, the longer the loan term, the more youll pay in interest.
Having a credit score of at least 700 shows lenders you are in good standing to responsibly borrow money.
Interest rates for RV loans tend to fall between 4% and 6% for those with good credit.
Lenders look favorably on borrowers withdebt-to-income ratiosunder 40%.
However, some lenders will consider buyers with debt-to-income ratios up to 50%.
Nicole Dow is a senior writer at The Penny Hoarder.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
