What is a camper loan?

RV loans work the same way as other types of installment loans. If you qualify, the lender will give you a lump sum to pay for your RV and you will pay the principal and interest monthly until it is paid off.

Since RV prices range from $10,000 to $1 million, most people finance them by taking out an RV loan. The process of financing your RV can be as simple as obtaining a personal loan or as complicated as qualifying for a mortgage to purchase a home, depending on how modest or luxurious your RV is.

Understanding how these loans work can help you decide if they are right for you.

What is a camper loan?

An RV loan is a secured loan used to finance the purchase of a camper, camper or caravan. Lenders typically qualify you for an RV loan based on your credit, income, total debt and the specifications of the RV you are financing. Your RV becomes collateral for this type of RV loan and the lender can repossess your RV if you default.

You can also use an unsecured personal loan to purchase an RV. Because your RV is not collateral for the loan, you qualify based on your credit, income, and debt-to-income ratio (DTI). Both secured and unsecured RV loans are usually installment loans, meaning you receive all your money at once and make monthly payments based on the terms you are approved for.

Secured loans

You will likely be offered a secured RV loan if you purchase your vehicle from a dealer. Special discounts or benefits may apply for using a dealer’s in-house lender.

Alternatively, your credit union or local bank may offer secured RV financing with rates and terms based on your banking relationship. Online RV lenders can also offer secured loan options for good and bad credit.

Positives

• You may be able to purchase and finance your RV in one place.
• May have lower rates and fees than unsecured personal loans.
• Higher loan amounts are available than unsecured loans.
• Usually terms of up to 20 years are possible.

Cons

• The lender can seize your RV if you are unable to repay the loan.
• RV may not qualify for financing.
• The approval process may be longer and more difficult if a deposit is required.
• Special dealer or lender benefits may only be available through a preferred lender.

Unsecured RV Loans

You don’t have to have an RV picked out to get a personal loan to buy one. This can give you an edge if you’re buying a used RV and need some quick cash to outbid someone else.

Personal loan amounts typically start at $1,000, making them a good option for financing smaller or older used RVs for occasional use. However, your interest rate will be based solely on your credit profile, meaning the lowest rates will go to borrowers with the highest credit scores. Keep in mind that unsecured interest rates on bad credit loans can be as high as 36 percent, which can result in exceptionally high monthly payments.

Positives

• Fast financing round.
• No risk of losing your camper due to seizure.
• Less documentation required for approval.
• No requirements to qualify for an RV.

Cons

• Typically higher rates and fees than secured RV loans.
• The terms are generally limited to seven years.
• You may not qualify for higher loan amounts.
• It can be difficult to qualify with bad credit.

How do RV loans work?

Depending on the cost and size of your RV, RV loans can work like a car loan or a mortgage. The lender takes into account your creditworthiness, income and how much debt you have to qualify for the loan. Each lender has different requirements that you should consider when choosing the best solution for your finances.

Lenders will also take into account the type of RV you are purchasing, how often you will use it, how old it is and what condition it is in. If it’s a mobile RV (rather than one you’re towing), lenders may also use similar criteria as car loans and assess the vehicle’s mileage, age, make and model.

All this information also affects how much you can borrow and how long you have to pay it off. RV loans spread the payment out over a 20-year period, making the payment more affordable. RV lenders offer a variety of terms and interest rates related to your financial profile.

If you plan to live in your RV for an extended period of time or as your primary residence, additional restrictions may apply. Some lenders won’t finance a vehicle you want to live in full-time.

Interest rates for RV loans

Rates will start around 7 percent from July 2024 – if you have excellent credit. The best interest rates on RV loans typically go to borrowers with scores in the mid-700s or higher. You may also get an extra incentive on your rate with a 10 to 20 percent down payment.

Interest rates for secured RV loans are often lower for newer vehicles compared to older used vehicles. For unsecured loans, your rate depends heavily on your credit score and can range from about 7 percent to 36 percent.

RV loan terms

Luxury RV lenders can offer secured loan terms of up to 20 years, while you may be limited to terms of 10 years or less for older used RVs and trailers. If you choose a personal loan, you are usually limited to a term of one to seven years.

Some lenders allow cosigners

If you’re having trouble qualifying for an RV loan on your own, adding a cosigner with good credit and a stable income can help you qualify. Please note: Your co-signer is also responsible for the monthly payments and will be forced to cover the costs or credit damage if you are unable to make the payments.

Determine if an RV loan is right for you

A secured RV loan can be a good way to finance your coach, camper or trailer if the monthly payment is affordable and you have the room in your budget to handle long-term debt. It is even more important to choose the right RV loan if you plan to live in your RV; a default can be like losing a home to bankruptcy.

If you are purchasing a cheap RV for occasional vacation use, a personal loan may be a better option. It may be easier to finance a smaller loan amount for a shorter term, so that you can pay off your caravan sooner and enjoy paying camping sooner or later. You might also consider renting an RV if you don’t plan on taking it more than once a year.

Where you can get an RV loan

There are different types of lenders that provide RV loans. The best place to get one depends on where you have existing accounts, how much you want to borrow, and what you qualify for.

• Banks. Banks may offer RV loans, and if you have an existing relationship with them, you may qualify for an interest rate discount.
• Credit unions. Many credit unions offer RV loans, and the rates are often lower than those of traditional banks because they are member-owned, nonprofit institutions.
• Online lenders. Online lenders typically offer RV loans with fast financing. Some lenders can transfer your money on the same or next business day.
• RV dealers. Check for in-house financing or financing through a partner lender if purchasing from an RV dealer.