New vs. Used RV Loans: What’s the Difference?
For some shoppers, buying a recreational vehicle (RV) can be just as pricey as buying a home. After all, an RV can be like a home away from home.
So when it comes to buying an RV, you’re probably looking for ways to reduce the high price tag. Shopping around for great interest rates on a loan can save you money, but you can save even more by foregoing a brand-new RV in favor of a quality, used RV.
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RV loan rates
Whether you’re borrowing $10,000 or taking out a six-figure loan, the rates for new and used RV loans start relatively low.
The best way to find the low rates you want is to shop around and compare a variety of lenders, including some of the banks and online lenders on our list below.
But whether you qualify for great rates will also depend on a few details of your situation. While interest rates on new RV loans aren’t usually very different from used RV loan rates, your APR can be significantly impacted by personal factors like how much you borrow, your credit score, the repayment term you select and the size of your down payment.
|Lender||Starting APR range||Minimum loan amount||Maximum Amount||Terms (months)|
|6.99% – 19.95%||$10,000||$2,000,000+||60 – 240|
|5.99%* – 15.14%||$5,000||$100,000||Up to 120|
|7.74% – 19.95%||$10,000||$2,000,000||60 – 240|
|7.99%||$15,000||$100,000||Up to 180|
New vs. used RVs
Choosing between a new and used RV is similar to choosing between any new or used vehicle. If you don’t mind dropping extra cash for the newest technology and custom upgrades, or just for an RV without a mysterious history, a new RV could be the best choice for you.
Buying brand new can also mean access to more loan options, since lenders have unique restrictions for used RVs. For example, some won’t offer financing for vehicles with high mileage or for RVs over 10 years old.
On the other hand, buying used can mean saving a lot of money. The average RV loses 25% of its value as soon as it’s purchased, and after only three years, a fifth-wheel loses a whopping 45% of its value. By purchasing an older RV, you can significantly reduce the cost to buy and reduce the chance of seeing your asset lose a ton of value.
|New RVs||Used RVs|
Where to get new and used RV loans
Each lender has its own unique pros and cons. Before applying, you’ll want to find out about the lender’s fees and loan terms, and inquire about details that matter to you, like whether or not you can use the financing for private party purchases.
If you’re looking for the most convenient way to finance your purchase, you’ll probably want to apply for a loan at the dealership where you find your RV.
While RV dealers aren’t necessarily lenders, they can collect your loan application, submit it to multiple financing companies and help you secure an RV loan.
While convenient, this option can be the most expensive way to finance a vehicle purchase since dealerships often charge fees that other lenders don’t. And unlike a credit union or bank, the dealership may not care about getting you into a loan that you can afford.
A great place to start your loan shopping is with a bank where you already have an account. Your bank may offer you a relationship discount, and going through a bank means avoiding high dealer financing fees.
Not all large banks offer RV loans, however, including Chase, Capital One and HSBC. Others only offer RV loans through their dealer networks, including Bank of America and Bank of the West. These are a few national banks that do offer in-house RV loans:
- US Bank
- USAA Bank
- TD Bank
Going through a credit union could mean getting the best rates available for your loan, or even getting approved for an RV loan with bad credit. Plus, credit unions often have unique perks to members that you can’t find with big-name banks.
For example, if you don’t qualify for the low rates you want at Patelco Credit Union, you can use their Level Up Program to reduce your rate after you make several on-time loan payments on your RV loan. Patelco and many other credit unions also offer relationship discounts.
On the downside, you may need to become a member of a credit union before applying for an RV loan. Some credit unions have specific requirements for membership, like military affiliation or geographic location, and you may also have to open a checking account and make a small deposit.
Another way to finance your purchase is through an online lender. Online lending can be an affordable option for RV financing, since these lenders don’t have large overhead costs to pass on to you. Online brokers can also help you review a number of offers to find the best one.
Some online lenders specialize in RV loans. Great RV Loan, for example, offers RV loans up to $2,000,000 with repayment terms up to 240 months (20 years).
How to get an RV loan
You may be tempted to start the process by browsing RV listings online or by visiting car lots, but that approach can tempt you to buy outside of your budget. Before talking to a salesperson or falling in love with a specific vehicle, try reviewing our recommended steps to get an RV loan instead.
Determine your budget
Long before falling in love with a shiny new camper or a pricey fifth-wheel, take a look at your budget and determine what you can afford. The type of RV you’re shopping for can make a big difference in the final cost; a new teardrop camper can cost $5,000 or less, while a luxury Class A motorhome can be more than a million dollars. When calculating RV affordability, make sure there’s room for each of these expenses in your budget:
- Monthly payment
- RV Insurance
- Maintenance and repairs
- Site rental, parking and/or storage fees
You’ll also have to cover one-time costs, including your RV down payment, lender fees, sales tax and registration.
Check your credit score
Your credit score is one of the biggest factors that determines your eligibility for loans. The higher your score, the more offers and lower interest rates you can be approved for. In other words, improving your credit can save you a lot of money on your RV loan.
There’s no set credit score that all lenders require, but some do have minimums. For example, the minimum score you need to qualify for a Bank of the West RV loan is 680.
You can view your free credit reports at AnnualCreditReport.com. There are lots of ways to view your credit score, though some require a paid subscription. Your credit card company may offer complimentary access to a version of your score, or you can try using a free credit monitoring service. You can also view your credit score with LendingTree.
Each lender has a different process, but you can typically get preapproved for a loan online in just a few minutes. Be prepared to provide some or all of the following information:
- Vehicle information: Year, make, model, estimated purchase price, down payment amount and your desired loan amount
- Personal information: SSN or ITIN for yourself and any co-applicant
- Income information: Employment details and annual earnings
Getting preapproved is an important step in the loan process. It gives you a firm idea of the rates and terms you qualify for and it may give you some leverage during the negotiation process. Plus, with a preapproved offer in hand, you can ask the dealer to beat the rate and potentially lower your total cost to borrow. This process will require a hard credit pull, which can temporarily cause your credit score to dip by a few points, but the effect is usually temporary.
Find the right RV
Once you’ve reviewed your finances and compared several loan offers, you can begin shopping for an RV that fits your budget.
To find the best deal, consider researching the market value for the RV you want, looking for dealer promotions and even searching through online inventories to find a good listing price.
For a new RV, you may want to consider the value of dealer incentives and complimentary add-ons, like the manufacturer’s warranty or free roadside service. For a used RV, it may be harder to assess the value, but these extra steps will help:
- Hire a certified RV Inspector to inspect the RV, including the plumbing and electrical systems
- Take the RV for a road test
- Pull a vehicle history report
- Review copies of the available maintenance records/receipts
- Check NHTSA.gov for unresolved safety recalls
- Check with your state’s DMV to ensure the title is clear
Finalize your loan
Once you’ve found the RV of your dreams (or the one that best fits your budget), you’ll need to finalize the loan with your RV lender.
During this last step, you’ll sign the loan and purchase documents. You may need to provide the lender with additional documentation, like a copy of your driver’s license and the purchase agreement.
RV loan alternatives
Taking out a loan isn’t the only way to purchase an RV, and it may not be the best fit for you. Here are a few other options to consider:
Some lenders have high minimum loan amounts for RVs, so a personal loan might be the only way to finance a small RV purchase. Just note that personal loans typically have higher interest rates than vehicle loans, since they aren’t backed by collateral.
Home equity loan
If you have equity in your home, you could cash some of it out with a home equity loan or line of credit and then use the money to buy an RV. But there’s a major downside: you’ll have to use your home as collateral. If you are unable to make the payments on your loan, you risk foreclosure.
Not everyone has enough money in savings to buy an RV outright, but if you do, you should consider skipping the loan. Paying in cash can mean huge savings, since you’ll skip the lender fees and interest charges.
Just be sure you don’t deplete your emergency savings. After all, you’ll still need some cash for regular RV maintenance and upkeep.
Frequently asked questions
Each lender allows different repayment timeframes, or “terms,” but some lenders give you as long as 20 years to repay an RV loan.
Many lenders have restrictions on how you can use loan funds, including restrictions on vehicle age. Many lenders don’t allow purchases of RVs over 10 years old, so you may have to shop around if you’re looking for an older vehicle.
There’s no set minimum credit score that you need in order to qualify for an RV loan, but the higher your scores are, the easier it will be to qualify for multiple loans with competitive RV loan terms.