Are you looking to get into the RV lifestyle? If so, are you also looking at financing options? Financing will probably be necessary on a new class C, or higher, RV. The good news is that there is more than one way to finance your purchase.
The key to understanding RV financing is to first determine what you want. Different types of RVs have their own price points for both new and used vehicles. If you plan to start small, you might be able to get a used RV at a fairly affordable price.
From Trailers to Motorhomes
For the purposes of this post, an RV is any type of camping vehicle. It can be as big as a class A motorhome or as small as a teardrop trailer. Even camper vans and converted pickup trucks are in the mix. The question you have to ask yourself is this: what do I want to start with?
Most people start small and go from there. Perhaps your ultimate goal is a class A motorhome with all the bells and whistles. Before you spend that much money, start with a smaller class C motorhome. Figure out if RVing is something you really want to do before you invest in a class A.
If you are thinking more along the lines of a fifth wheel, a smaller camping trailer is a good place to start. This is separate from a tent camper, which is essentially a pop-up camper with a solid base and a canvas roof and sides.
Typical Financing Options
Paying cash for your first RV would be nice, wouldn’t it? In the absence of that much cash, you are looking at financing. Below are the most typical financing options new RV owners turn to:
1. Auto-Type Loans
If you are buying from a dealer, you should be able to arrange financing similar to an auto loan. Dealers tend to have relationships with a small handful of lenders. They work with customers to come up with affordable monthly payments. And like auto loans, RV loans come with competitive interest rates and relatively short terms.
2. Long-Term Loans
If you are looking at a motorhome or fifth wheel with an exceptionally high price tag, you may have to arrange for a long-term loan that is essentially the equivalent of a mortgage. Plan to put at least 20% down. Also plan to invest in some extras like AirSkirts RV skirting and a maintenance package. Why? Because the lender will expect you to take good care of your RV.
3. Home Equity
Some people finance the purchase of an RV via the equity in their homes. One homeowner might take out a home equity loan while another utilizes an existing line of credit. In either case, utilizing home equity to buy an RV is not a bad idea as long as you can afford the monthly payments. Just don’t fall behind or you could put your home in jeopardy.
4. Credit Cards
One last option is to utilize credit cards. Though this strategy is not recommended (interest rates are prohibitively high on credit cards) there are those who would rather pull out the plastic than apply for a new loan. The other downside is that dealers willing to accept credit cards often attach an extra fee to cover their payment processing costs.
It has been said that there is more than one way to skin a cat. Well, there is also more than one way to finance the purchase of an RV. You have options if you are looking to buy that first RV this spring.