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Updated: Oct 4, 2021, 11:58am
A recreational vehicle (RV) loan provides financing for a purchase of a new or used RV, motorhome or camping trailer. RV loans come with various annual percentage rates (APRs), loan amounts and terms, which together result in different sized monthly payments.
Comparing these rates and terms can get confusing, especially if you don’t fully understand how to crunch the numbers. This simple, easy-to-use RV loan calculator can help you understand and estimate your payments.
To use this RV loan calculator, type in the amount you’ll need to borrow, the interest rate and the term. Next, click submit to see your estimated monthly payment and total interest paid over the life of the loan.
Use the calculator to determine if you can afford the RV loan you’re considering, or if you might need to find a less expensive option.
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There are two main ways to get an RV loan: You can either get a personal loan or take out a traditional RV loan.
A personal loan is typically an unsecured loan, which means you don’t need to provide collateral—something of value like a savings account—to secure the loan. Personal loans typically range from $500 to $100,000, depending on the loan purpose, and have repayment terms between one and seven years.
However, personal loans may not always provide high enough loan amounts or long enough loan terms. In that instance, you may need to apply for a traditional RV loan, which is similar to an auto loan for a car or truck. The lender will give you the money to buy the RV and use the RV as collateral for the loan, making it a secured loan. RV loans often also require a down payment between 10% and 20%; personal loans do not.
The loan application process for either is similar: You’ll need to meet minimum credit score and potential annual income requirements; submit a formal application with a bank or online lender including your personal information, such as your Social Security number (SSN) and income; sign the loan documents; and start repaying your loan once you receive the funds.
The best RV loan interest rates start at 4% but can go as high as 11%. Interest rates vary depending on your credit score, the amount you’re borrowing and the total repayment term.
In general, the shorter the term, the lower your interest rate, as long as you boast good to excellent credit. For example, Compass Credit Union offers APRs as low as 4.24% for 48-month loans for new RVs while a 180-month loan for a new RV has a starting rate of 7.24%.
If you’re unsure if a traditional RV loan is right for you, consider these alternatives.
Personal loans are the most common RV loan alternative because you can use them for just about anything. If you’re buying a less expensive RV, it’s worth prequalifying with some of the best personal loan lenders to see if you can get a better loan deal.
Loans typically range from $500 to $100,000 and have rates as low as 3% and terms between one and seven years, depending on the loan purpose. The repayment terms are one major downside to a personal loan. If you want to be able to repay your loan beyond seven years, then it may be best to consider a traditional RV loan.
If you don’t qualify for an RV loan or receive a high interest rate from the lender, you could take out a home equity loan and use those proceeds to buy an RV.
A home equity loan allows you to borrow against the value of your home if you’ve built up equity and repay your loan amount between five and 30 years. Most lenders require you to currently have between 15% and 20% equity, which is the difference between the home’s current appraised value and the remaining mortgage balance.
Interest rates on a home equity loan, typically between 3% and 7%, may be lower than an RV loan because the lender can use your home as collateral. But this is also the downside of taking out a home equity loan: If you default on a home equity loan, the bank can seize your house.
Another major drawback of home equity loans occurs when your home’s value suddenly drops. In this instance, you won’t be able to sell the home for profit because you’ll owe more than it’s worth.
Before 2018, borrowers could deduct interest paid on a home equity loan on their taxes, but now they can only do so if they’re using the funds to improve or repair their home.
Before taking out a home equity loan, consider whether you plan to move in the next few years. If you are, a home equity loan may not be worth the risk.
If you have money in a 401(k) with your current employer, you can borrow from it and use those funds to buy your RV. When you take out a 401(k) loan, you repay the interest back into your own 401(k) account instead of paying interest to a bank.
Money taken out of a 401(k) loan will no longer be invested in the stock market, which means you could miss out on potential returns, which is one of the main downsides to a 401(k) loan.
Also, if you leave your job for any reason before the loan is paid back, you have to pay back what you’ve borrowed no later than that year’s tax day, though some employers may require immediate repayment. Otherwise, it will be considered an early withdrawal and subject to any applicable taxes and penalties.
Before taking out a 401(k) loan, speak with an investing professional about the downsides and how to ensure your retirement goals don’t suffer.
Many lenders require that you include a down payment of between 10% and 20% when taking out an RV loan. So, for example, a $20,000 RV through a lender that requires a 20% down payment would require $4,000 upfront.
Lenders that provide RV loans have more stringent requirements than auto loan companies. You usually need a credit score of at least 660 to qualify for an RV loan.
You can check your credit score for free online through different credit websites. Some credit card providers provide free scores to both customers and noncustomers, including Capital One, American Express and Discover.
If your credit score is below 660, you may not qualify for an RV loan. In this case, you should try to find a lender that accepts co-signers to increase your approval chances and help you secure a lower interest rate. Most RV lenders, however, do not allow co-signers on the loan, though this does vary by lender.
Because RVs usually cost more than a new car or truck, the term on an RV loan is much longer than for a regular auto loan. While a regular auto loan term tops out at seven years, the standard RV loan term lasts between 10 and 15 years. Some lenders provide 20-year loans.
Before you fill out a formal application for an RV loan, you can sometimes prequalify with specific lenders. When you prequalify, you’ll submit your personal information and the lender will show you what interest rates and terms you may qualify for without hurting your credit score. Make sure to apply with a few different lenders to compare a variety of quotes.
Jordan Tarver is the assistant editor for loans at Forbes Advisor. Before joining Forbes Advisor, Jordan was an editor and writer for multiple finance sites, focusing on loans, credit cards and bank accounts. His goal is to create actionable content that enables people to make sound personal financial decisions. When he is not working on personal finance content, Jordan is a self-help author and world traveler who helps people experience the world and discover themselves.