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A recreational vehicle (RV) loan provides financing for the purchase of a new or used RV, motorhome or travel trailer. RV loans come with various Annual Percentage Rates (APR), loan amounts and terms, which together result in different sized monthly payments.
Comparing these rates and terms can be confusing, especially if you don’t fully understand how to calculate the numbers. This simple and easy to use RV loan calculator can help you understand and estimate your payments.
How to Use This RV Loan Calculator
To use this RV loan calculator, type in the amount you will need to borrow, the interest rate, and the term. Then 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 may need to find a less expensive option.
RV Loan Calculator
How to Get an RV Loan
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 usually 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 purpose of the loan, and have repayment terms of between one and seven years.
However, personal loans do not always provide high enough loan amounts or long enough loan terms. In this case, 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 it as collateral for the loan, making it a secured loan. RV loans often also require a down payment between 10% and 20%; not personal loans.
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 to a bank or online lender, including your personal information, such as your social security number (SSN) and income; sign loan documents; and start repaying your loan once you receive the funds.
What is a good interest rate for an RV loan?
The best interest rates on RV loans start at 4% but can go as high as 11%. Interest rates vary depending on your credit score, the amount you borrow and the total repayment term.
In general, the shorter the term, the lower your interest rate, provided you have good to excellent credit. For example, Compass Credit Union offers APRs as low as 4.24% for 48-month new RV loans, while a 180-month new RV loan has a starting rate of 7.24%.
RV Loan Alternatives
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 cheaper RV, it’s worth prequalifying with some of the best personal 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 purpose of the loan. The repayment terms are a major drawback of a personal loan. If you want to be able to repay your loan beyond seven years, it may be best to consider a traditional RV loan.
Home Equity Loan
If you don’t qualify for an RV loan or receive a high interest rate from the lender, you can take out a home equity loan and use that proceeds to purchase an RV.
A home equity loan allows you to borrow against the equity in your home if you have built up equity and pay off 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 current appraised value of the home and the remaining mortgage balance.
Interest rates on a home equity loan, usually between 3% and 7%, can be lower than an RV loan because the lender can use your home as collateral. But that’s also the downside of taking out a home equity loan: If you fail to repay a home equity loan, the bank can foreclose on your house.
Another major downside of home equity loans occurs when the value of your home suddenly drops. In this case, you will not be able to sell the house for profit, because you will owe more than it is worth.
Before 2018, borrowers could deduct the interest paid on a home loan from their taxes, but now they can only do so if they use the funds to improve or repair their home.
Before taking out a home equity loan, ask yourself if you plan to move in the next few years. If you are, a home equity loan might not be worth the risk.
If you have money in a 401(k) with your current employer, you can borrow from them and use those funds to purchase your RV. When you take out a 401(k) loan, you pay interest into your own 401(k) account instead of paying interest to a bank.
Money withdrawn from 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 drawbacks of a 401(k) loan.
Also, if you quit your job for any reason before the loan is repaid, you must repay what you borrowed by tax day of that year, although some employers may require a immediate refund. Otherwise, it will be considered an early withdrawal and subject to applicable taxes and penalties.
Before taking out a 401(k) loan, talk to an investment professional about the downsides and how to make sure your retirement goals don’t suffer.
Frequently Asked Questions (FAQ)
Do I have to pay a deposit on an RV loan?
Many lenders require you to 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 up front.
What credit score do I need for an RV loan?
Lenders who provide RV loans have more stringent requirements than car loan companies. You generally need a credit score of at least 660 to qualify for an RV loan.
You can check your credit score for free online at various credit websites. Some credit card providers provide free scores to customers and non-customers, 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 chances of approval and help you get a lower interest rate. However, most RV lenders do not allow co-signers on the loan, although this varies from lender to lender.
What is the term of an RV loan?
Since recreational vehicles generally cost more than a new car or truck, the term of an RV loan is much longer than that of a regular auto loan. While a regular auto loan term is seven years, the standard RV loan term is between 10 and 15 years. Some lenders offer 20-year loans.
How do I know what RV loan interest rate I will receive?
Before completing a formal RV loan application, you can sometimes prequalify with specific lenders. When you prequalify, you submit your personal information and the lender will let you know what interest rates and terms you might qualify for without hurting your credit score. Be sure to apply to a few different lenders to compare a variety of quotes.