Key learning points
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Typical RV loans range from five years to fifteen years, but this timeline can be shorter or longer depending on the lender.
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Shorter repayment terms can help you save money on interest, but result in a higher monthly bill. Longer repayment terms offer a cheaper payment, but you’ll pay more interest over time.
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The best repayment term for your loan is determined by factors such as your finances and credit score, as well as the RV model you choose.
The term is the second largest factor in determining how much an RV loan will cost. The terms usually last between five and fifteen years. A long term may be tempting to keep monthly payments as low as possible, but it could mean paying thousands – or even tens of thousands – more over the course of your loan.
RV loan terms
RV loans typically have terms of 10 to 15 years. That said, you can still find repayment terms as short as two years or as long as twenty years. It all depends on the total cost of the vehicle, your finances and the lender you work with.
Longer financing terms (15 to 20 years) are generally limited to larger models. That’s because these RVs can be in the same price range as a small house. Many buyers require a financing timeline similar to that of mortgages.
More information: Should you buy or rent a camper?
Factors that influence the term of your RV loan
The following factors play an important role in the length of the repayment term of your loan:
- Loan amount. Lenders typically limit longer repayment terms to larger loan amounts.
- Condition and age of the camper. Just like cars, RVs depreciate in value over time. The value of some models can even decrease by more than 100% 25 percent just in the first three years of use. Lenders often limit the term based on the age of the model to limit risk.
- Your credit score. The higher your credit score, the more term options you will be offered. With a lower score, lenders may consider you a higher risk and offer shorter terms.
- Type of lender. Dealers typically offer longer repayment terms than personal loan lenders, such as banks, credit unions and online lenders. These lenders offer terms ranging from two to seven years, while dealers can offer repayment terms of up to 20 years.
- Your desired monthly amount. A longer repayment term often results in a lower monthly amount. However, this also translates into more interest paid over the life of the loan than if you opt for a shorter repayment period.
How to choose the length of your RV loan
The longer your repayment term, the more interest you pay over the life of the loan, even at a lower rate. For example, a 7.99 percent interest rate on a $50,000 RV loan will cost more than $16,000 more for a ten-year term than for a three-year term.
| Monthly payment | Total interest | |
|---|---|---|
| 3 years | $1,567.00 | $6,397.15 |
| 5 years | $1,014.00 | $10,814.83 |
| 7 years | $779.00 | $15,441.18 |
| 10 years | $606.00 | $22,764.86 |
Loans with a higher interest rate will make a much bigger difference. A $50,000 loan with an interest rate of 17.99 percent will cost you about $15,000 in interest over the course of three years. If you increase your term to seven years, you’ll end up paying more than $38,000.
Choosing a longer term can be beneficial if you are financing an expensive model. It can make your monthly payments more manageable. Likewise, extending the loan term can be smart if you need extra wiggle room in your budget.
That said, RVs decline in value, just like cars. Choosing a longer repayment term can mean more comfortable payments, but it can also come with the risk of getting an underwater loan. This means that you have negative equity because you have more debt than the asset is worth.
If that happens, it can be difficult to refinance the loan. You will also have difficulty selling the RV for enough money to cover your remaining debts, should the need arise.
How to Finance an RV
Follow these steps to get an RV loan.
- Check your credit. Knowing your credit score will help you choose the right lenders to apply for, as each lender has different credit requirements for approval. That said, the higher your score, the better terms and interest rates you can get.
- Compare lenders. To secure a reasonable monthly payment at a low interest rate, compare RV loans. This allows you to estimate your monthly payment and see what loan terms you qualify for.
- Prequalify. Once you’ve found a few lenders you like (at least three), see if they offer prequalification. Prequalifying for an RV loan is a quick way to preview available rates and terms without impacting your credit score. To get started, fill out a quick application with information such as your name, estimated annual income, monthly rent or mortgage payment, Social Security number and date of birth.
- Shopping for a camper. Since you probably already know what type of RV you want to invest in, pre-qualifying for a loan will give you an extra leg up in negotiations when you visit a dealer.
it comes down to
RVs are depreciating assets, meaning they lose value over time, just like cars and trucks. If your loan term is too long, you could find yourself underwater on your loan. And if you owe more than your RV is worth, you could find yourself in a tough financial position.
Therefore, always choose the shortest repayment term that fits comfortably within your budget. This may require you to recalibrate your budget or opt for a cheaper model, but it’s worth it to avoid paying too much in the long run.
