With a wide range of costs, loans, rates, and terms, financing a camper involves a lot of variables. But with a little research and understanding of your finances, there are plenty of options.
RV ownership has become increasingly attractive over the past few years. And with inventory finally catching up to demand, buying an RV has never been more possible.
But buying a camper is still a considerable investment. In most cases, it requires financial support — raising a number of questions about financing:
How do you finance a camper? Should you buy a camper with cash? When can you refinance a camper?
To minimize stress and help you navigate the process, here are the basics for financing a camper.
Camper financing 101
Similar to any other loan, financing your RV is as straightforward as applying for a specific amount through a lender, and then paying it back incrementally with interest. But your RV can effectively double as a home, making things a little more complicated and potentially expensive.
Secured loans vs. unsecured loans
There’s a lot to unpack when it comes to loans, but there are two main types of RV loans, secured and unsecured. Secured loans are backed by the asset itself (in this case the RV), whereas unsecured loans don’t require any sort of collateral. A secured loan will allow you to borrow more for a longer term but at the risk of repossession of the RV for missed payments. Unsecured loans are often easier and quicker to obtain — and do not use the RV as collateral — but come with higher Annual Percentage Rates (APR) and shorter loan terms.
Length and terms of camper loans
Whether you’re going for a hundred-thousand-dollar motorhome to modest-sized $10,000 campers, your loan amount will be based off of the cost of your RV as well as your FICO credit score. The size of the loan and your FICO credit score will also determine the length of your loan; but generally speaking, most RV loans span 10 to 15 years — however, they can certainly be longer or shorter depending on the loan amount.
You should also note that although zero down payment options are available, a down payment is likely to be required; so expect to front at least 10% to 20% of the purchase price.
Refinancing a camper
If you didn’t initially get a competitive APR rate due to credit, the good news is that, eventually, you’ll be able to refinance to something a little more budget-friendly. That said, a typical camper loan requires a year’s worth of payments before you should apply to refinance.
APR (Interest rates) on camper
Good APRs depend on your FICO credit score. As you can imagine, the higher your score, the better your APR, while a lower score will likely require a more substantial down payment. Making timely and consistent payments will eventually improve your credit score and open up more refinancing options down the line.
Should you pay for a camper in cash?
Okay, but what if you have cash in hand? Should you still finance your camper? That depends on your level of liquidity as well as the APR’s available.
If you’re in a position to assume the full cost of an RV, and leave plenty of room for any potential expenses that pop up down the road, that’s almost certainly the way to go. However, the average consumer doesn't have the kind of capital to just buy a brand new rig off the lot — making financing a common, practical option.
It’s also worth noting that RV loans come with a fixed simple interest rate, so your payback amount will be a straightforward number based on the length of the loan. Plus, through financing you can also purchase Guaranteed Asset Protection (GAP) insurance, meaning any depreciation of your RV will be covered in the unfortunate event that it’s totaled. Paying in cash would mean you’d only receive the real-time value in the case of an accident.
Where can I get a camper loan?
When it comes to RV loans, you have options to compare between banks, credit unions, and RV dealerships to find the most competitive terms and rates.
Refinancing a camper
Some Credit Unions and banks will usually offer auto loans as opposed to a true RV loan. What this means is that they’ll usually have shorter terms, somewhere between 36 to 84 months, compared to a 10 to 20-year loan through an RV lender or dealer. Also, RV loan interest is often tax-deductible, considering that in many cases you can claim your rig as a second home (check with your accountant).
Camper loans through a dealership
Dealerships tend to be better outfitted for RV loans, considering they have a closer ear to the ground when it comes to competitive APR’s from preferred lenders. Also, given the fact that they’re incentivized by you buying one of their units, they’re more likely to give you flexible terms based on your FICO credit score and down payment.
Next steps
Make time to connect with your financial advisor and get a handle on your budget, credit, and expenses before pulling the trigger on a new RV. From there, lock down a budget-conscious camper loan and know your terms to get the best bang for your buck.
Ready to finance a Camper?
If you’re looking to finance your RV, Good Sam Finance Center has a number of flexible loan options. With interest rates as low as 7.12%, and options for credit scores as low as 600, contact Good Sam Finance Center for your next loan.