Budgeting for an RV requires a savvy understanding of how loan interest, loan type, RV cost, downpayment, loan duration, and credit history affect the total price you’ll pay for your rig. Luckily, there’s a calculator for that.
Shopping for an RV requires honest introspection about what you can and can’t afford. And given that most consumers finance at least a portion of their RV cost, responsible budgeting requires a clear understanding of what your Annual Percentage Rate (APR) will be, how it’s determined, and deciding what’s feasible for your budget.
During these initial stages, tinkering with an RV loan calculator can help you gain a better understanding of how different loan factors can affect your monthly payment and total cost. While no RV loan calculator results are set in stone with a lender, knowing yours provides a good starting point.
How it works
An RV loan calculator helps bridge the gap between what a lender and borrower expect from a loan. It’s a tool to prevent you from entering into an irresponsible agreement that might leave you saddled with payments you can’t afford.
The loan amount and APR provided by a lender are contingent on variables that alleviate or aggravate the risk to the lender. Remember, lenders are always after a safe bet. They are more willing to lend to borrowers likely to make payments on time and in full, and they look at the following primary factors to determine the health of the loan.
- Loan amount requested
- Term length
- Credit score
- Loan to value
How much do you want to borrow? How long will it take you to pay back the loan? How likely are you to pay back the loan? Answers to these questions will swing how much the lender charges in interest. Once you know the APR, you can factor in the monthly payments and overall price of the RV.
How to use an RV loan calculator
You will find two main types of loan calculators on lenders' websites.
The first type provides an estimated monthly payment and total cost based on the loan amount, duration, and APR. Manipulate any of these three categories, and the monthly payment and total cost will change as well. This type of loan calculator displays the true cost of an interest over time, and users can toggle the APR amount to understand the difference even 1% can make.
Note, this RV loan calculator doesn’t include formula weights like your credit score which will be key in determining what APR the lender provides you.
The second type of RV loan calculator requires you to provide an assortment of information with one notable missing component — the APR. This type of loan calculator provides you an approximation of what APR to expect based on other factors like your FICO credit score, loan duration, and down payment amount.
This is the lenders' way of showing you how they will weigh your score, and which credit rate to expect. From there, you’ll see the expected monthly payment.
Interest rate examples
Consider the first type of RV loan calculator. If you were to borrow $50,000 (loan amount) for 120 months (loan duration) at 8% APR (interest), you could expect to pay $606.64 each month, for a total of $22,796.80 paid in interest and $72,796.89 paid for the RV all said and done.
Now, what happens if you bump your interest rate to 12%? Your monthly payment jumps to $717.35, your total interest to $36,082.00, and your total RV cost to $86,082.00. Just with a 4-point increase in interest.
This illustrates the importance of negotiating your APR as low as possible. As you explore loans, use a simple format loan calculator to quickly compare APR’s.
The second type of RV loan calculator — like that provided by the Good Sam Finance Center — is more nuanced. Here, the information you provide determines the approximate APR you would pay based on things like your credit history, the type of RV, and the loan amount.
Estimating the loan amount
As you begin shopping for an RV, consider the loan amount category and how much you estimate to pay. To get a truly accurate understanding of your month-to-month payment from an RV loan calculator, you need to understand the true cost of the RV, which, for first-time buyers, can include some unforeseen yet necessary expenses.
The ticket price on an RV doesn’t include recommended RV support options — or the auxiliary features that will protect your purchase long-term. Some of these could include the following:
- Limited warranties
- Gap
- Installment contracts
- Tire and wheel protections
While these add to your total cost, they often prove to save you far more further down the road of RV ownership. Consider Good Sam protections like Roadside Assistance and Extended Service Plan–both of which save owners thousands on repair and emergency costs. When included at the purchasing point, you increase the loan amount but save long-term.
So consider factoring in additional amounts into your loan estimate to cover these important protections. That way, you can make a more appropriate, responsible purchase agreement you can enter with confidence.
Have questions about your loan options? Contact the Good Sam Finance Center experts to learn more about the loans they offer for RVs, and boats. Already know what you’re looking for? Apply for a loan today.