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How to Finance an RV

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According to the RV Industry Association, more than 11 million U.S. households own an RV, and millions more are hoping to buy one. If you dream of seeing the country from the familiar interior of your own recreational vehicle, you may be wondering about financing an RV. Here's how to finance an RV and start your next adventure.

What is an RV loan?

A recreational vehicle (RV) loan is money fronted by a lender to pay for an RV. Your job is to repay that loan with interest, generally in equal monthly installments.

A secured RV loan means that the vehicle serves as collateral, and the lender can repossess the vehicle if you fail to make payments. If that idea makes you uncomfortable, you can use a personal loan to pay for the RV instead. Most personal loans are unsecured loans, which means the lender can't take your possessions if you miss payments. However, the lender can still sue you -- so only take out a loan if you're confident you can pay it back.

Looking for a list of lenders?

If you're looking for a list of online lenders who could finance your RV, head over to our expert-compiled list of best personal loans. If you're not sure if you're ready to apply for a loan, keep reading -- there are a few important things you'll need to think about before deciding to finance an RV.

How to finance an RV in 5 steps

The amount of money you borrow, loan term, and down payment all impact how you finance your RV. Given the wide range of RV types on the market, you could need anywhere from $10,000 to $300,000 for your vehicle, with most motorhomes beginning around $100,000.

Here are the steps you'll need to take to get RV financing:

1. Make sure your credit is in shape

The minimum credit score for a loan varies, but higher is always better. A higher credit score means you're more likely to get approved for a loan with a low interest rate. That can save you thousands of dollars. Check your credit score online now, and if it's low, take steps to improve your credit score.

2. Make a budget

Decide how much you want to borrow before falling in love with an RV. That will help you keep your head and avoid making an emotional decision. Take a look at your monthly budget, factor in the costs of owning an RV -- such as maintenance and insurance -- and decide how much you can easily afford.

3. Save the down payment

Many RV lenders will require a down payment of 10% to 20%, so if you don't yet have that money in the bank, it is time to start saving. By making a larger down payment, you'll also be able to qualify for a lower APR and lower your monthly payments.

4. Shop around to find the right RV and the right RV loan

Outside of buying a house or getting married, financing an RV is one of the biggest purchases you're likely to make in your life. Take the time to find the right vehicle and rate shop lenders to find the best loan rates. These are the most common RV loan options:

Dealership recommended lenders: Your first introduction to RV loans will likely be through a dealership, as they often have existing relationships with banks and credit unions. Once the RV dealer has told you about their preferred lenders, you'll need to compare those lenders' loan rates against other lenders'.

Bank or credit union: An RV loan through a bank or credit union is secured, meaning your RV acts as collateral. For that reason, you can expect the interest rate to be lower than an unsecured loan. Generally, RV loans range from 10 to 15 years. Many banks and credit unions will extend that to 20 years, which will lower your monthly payment.

Personal loan: If your credit is high enough, you can get an RV loan with a competitive rate from the best personal loan lenders. But the biggest advantage of a personal loan is that most personal loans are unsecured. With an unsecured RV loan, the lender does not have a legal right to repossess the RV if you miss payments. That said, it is not advisable to take out any loan if you aren't confident you can pay it back. Also note your repayment term is likely to be shorter than a secured loan and the interest rate will be higher because there is no collateral protecting the lender -- as a result, your monthly payment will probably be higher if you go with this option.

Once are ready to buy your RV, stick to your budget. There is only wiggle room on the price if you allow it. Let dealers know that you’re a serious buyer and will not spend a penny more than you have budgeted. Doing so will help ensure you can always make your loan payment on-time.

You can use the personal loan calculator below to play around with different loan terms and amounts. Look for a combination that results in a monthly payment that fits your monthly budget comfortably.

Financing an RV: Personal loan calculator
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5. Sign loan documents

Now you've done all the legwork, you can fill in the loan application and provide your lender with the documents it needs. You'll likely get a decision in a couple of days. Read the paperwork carefully before signing to ensure that you fully understand what you are committing to.

Alternatives to RV financing

If you picture yourself living life on the road, RV loans are not the only option. Here are two others:

Lease: Have you ever dreamed of doing something -- like horseback riding around the Grand Canyon, downhill skiing in Vale, or swimming with the sharks in Fiji -- only to find out that you really disliked the activity after trying it once? RV travel can be like that. If you cannot afford to pay for an RV right now, that's okay. Lease an RV for long enough to see what you think of the lifestyle. You may love it, or you may be eternally grateful that you did not take the big financial plunge before experiencing an RV trip for yourself.

Cash: Save your money and buy an RV outright. Paying cash means no monthly payment, no interest charges (or other fees), and more money to put away for a rainy day. If you're going to have fun in your RV, why not do so without an extra financial burden around your neck? To help yourself save more effectively, consider opening a separate savings account specifically for your RV fund.

Learning how to finance an RV is a significant first step on your path to life as a road warrior. Now, all you need to learn is how to empty the waste system and what to do if you get a flat tire. In the meantime, safe travels.

Still have questions?

Here are a few other questions we've answered:

The Ascent's best personal loans

Looking for a personal loan but don’t know where to start? Our favorites offer quick approval and rock-bottom interest rates. Check out our list to find the best loan for you.

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