How to get an RV loan: 3 steps for financing an RV

Recreational vehicles — or RVs — can cost anywhere from under $10,000 to over $500,000, depending on the class, model and condition. An RV loan can be a great way to finance them. And there’s no shortage. You can find RV loans through online lenders, banks, credit unions and RV dealerships.

What to do before getting an RV loan

Before you commit to a loan, check your credit score, have a down payment and compare rates with at least three lenders.

• Check your credit score: Lenders typically require a score of 670 or higher. If your score is lower, try improving your credit score before submitting a loan application.
• Know your price range: Ideally, you should have at least a few models picked out before you apply. It will determine how much you’ll need to borrow, and you can consider different lenders depending on whether you’re looking for a new or used RV.
• Save up for a down payment: Though not required by all lenders, a down payment is typically 10 to 20 percent of the RV’s purchase price. Even when it’s not necessary, it can reduce the amount you borrow — saving you money on interest.
• Compare lenders: Look at eligibility requirements, interest rates and repayment terms to come up with a list of viable options.

Steps for financing an RV

The RV loan application process is similar to applying for an auto loan, but getting approved is often harder. That’s because lenders tend to have stricter requirements for these types of loans, given their large amounts.

1. Prequalify with multiple lenders

Before submitting a full application, get quotes from the lenders you’ve researched. This process, known as loan prequalification, will not hurt your credit. It helps you determine your purchasing power and possible monthly payment before you shop.

If you are purchasing from a dealer, look for one that works with multiple lenders. This may increase your chances of being matched with a competitive offer.

2. Complete an application

Once you’ve settled on a lender, complete and submit your full application. Although this may vary from one lender to the next, you’ll likely be asked to provide some basic information.

• Your full name and date of birth
• Your Social Security number
• Your employer’s contact information
• Proof of identity and address
• Proof of income, such as copies of recent tax returns, pay stubs or W-2s

3. Sign the loan agreement

The loan agreement outlines the loan terms, including your payment amount and due date. Review the fine print and sign if you’re comfortable with the offer.

Depending on the lender, the funds may be deposited into your account as soon as the next day. If you finance through a dealership, you may be able to get financed and purchase your RV on the same day.

Getting approved for an RV loan: Factors to consider

RVs are expensive and often labeled as luxury items. This means financing may come with more stringent qualifications than a car loan, and may even resemble the criteria to qualify for a mortgage.

Credit score

As with applying for any type of loan, a solid credit score is important. Lenders use credit scores to gauge your level of credit risk or likelihood of repaying the loan.

Most lenders require a FICO score of at least 670 to qualify for an RV loan. However, some will allow FICO scores below that threshold. To secure the lowest rates, you’ll need a credit score in the mid-700s or higher. Otherwise, you could end up with a hefty interest rate and incur steep borrowing costs.

Before starting your application, check your credit reports with all three credit bureaus — Experian, Equifax and TransUnion — so you know about any negative marks. That way, you can dispute any errors promptly and take other steps needed to improve your score.

A free copy of your credit report from all three bureaus is available weekly from AnnualCreditReport.com.

Credit history

While credit history requirements vary by lender, every lender cares about your track record of borrowing. This includes making on-time payments on credit cards and any installment loans, such as student loans, personal loans or a mortgage.

Lenders balk at late or missed payments and defaults, as it increases the likelihood of you failing to repay them on time. The fewer you have, the better.

Income

When applying for an RV loan, the lender will ask you to provide proof of income. Lenders may also ask you to produce statements of debts to calculate your debt-to-income ratio (DTI).

Your DTI shows how much of your monthly income goes to paying your debts. Lenders typically want to see that your DTI will stay under 36 percent even after you take on an RV loan. A low DTI indicates you can likely afford additional debt.

Use Bankrate’s personal loan calculator to help determine how much you can reasonably afford to borrow.

Cost

On the low end, you can find a towable pop-up camper for as low as $5,000. High-end new RVs can cost more than $1 million. Before you start shopping, figure out what you want in an RV and what you can reasonably afford.

The age of the RV will also impact its price. A new RV will naturally cost more than a used model. But while it may come with sleek features, you will likely face steep depreciation, just like with a new car.

On the other hand, a used RV will have similar features but cost significantly less. You can also find RVs that are decades old. They won’t have as cushy of features as a recent model, but they will cost significantly less.

Lender-specific requirements

Approval requirements typically vary by lender. The most common variations include minimum credit score and income requirements.

Some lenders may also ask questions about how you plan to use the RV (as a primary residence or as a vacation home). They may also want to know about the vehicle’s condition.

To avoid unnecessary loan denials, check this on each lender’s website or by contacting customer support before applying.

The bottom line

Many lenders can help with financing an RV, whether new or used. To improve your approval odds, assess your credit score and income before proceeding with a formal application. Also, shop around and get prequalified with multiple lenders to find the best deal available to you.