For folks with decent credit looking to buy an RV, an unsecured loan can be a great option without putting your assets at risk. Here are the basics of an unsecured RV loan.
If there’s anything the past few years have made clear, it’s that the popularity of camping and RVs is growing faster than ever. And with production finally meeting demand, it’s a great time to buy a new or used rig.
However, unless you’re liquid with a large sum of cash, you’ll likely need a loan to afford your new vehicle. So, what type of RV loan is best, and what should you factor in before running a credit check?
To help you better understand your financing options, here’s a breakdown of unsecured RV loans.
What is an Unsecured RV Loan?
Unsecured (or signature) loans are good faith loans that do not require any sort of collateral from the borrower and can essentially be used however you want (like other personal loans, Debt consolidation, student loans, etc.). However, to qualify for an unsecured loan, you’ll need to show decent credit and a steady income.
Unsecured loans come with an annual percentage rate (APR) somewhere between 7.49%and 16.14%, with loan amounts spanning anywhere from $5,000 to $100,000. The exact terms, amounts, and rates will depend on the lender.
Assuming you qualify, you will receive the loan upfront and in full, immediately accruing interest on the entirety of the loan amount. From there, you are responsible for monthly payments so as not to damage your credit.
Unsecured vs. secured RV loans
The reality is that unsecured loans are substantially riskier to lenders than secured loans — which require the borrower to pledge collateral. Since unsecured loans have fewer strings attached, lenders generally require higher credit scores and tack on higher interest rates than a secured loan.
A secured loan uses the RV as a form of collateral. If you lack the capital or credit, a secured loan could be a better, more viable option to obtain. That said, you’ll have little grace for missed payments, as the lender may seize your assets after a pattern of delinquency. Should you get an unsecured RV loan?
If you have acceptable credit and are timely with payments, an unsecured loan is the best option considering it doesn’t put your assets in jeopardy.
If you’re unsure of your credit, lenders will generally offer some sort of pre-qualification online (without actually running a credit check), allowing you to get a better estimate as to what your actual terms would be.
Applying for an unsecured RV loan
Once you’re ready to apply for an unsecured RV loan, take a moment and think through the following:
How much do you actually need?
While the lender might offer more, it’s prudent to stick to the predetermined amount you want to borrow for the RV. There’s no need to assume more debt than necessary. As you budget for an RV, factor additional costs like warranties, service plans, and roadside assistance plans prior to meeting with lenders so you know exactly what you need.
Who are the best lenders for RV loans?
You will find a number of lender options, from banks and credit unions, to dealerships themselves. Do they offer pre-qualification? Do they have negotiable terms for repayment? What can you expect in terms of interest rates? Do they come highly rated? Shop around to ensure the most favorable terms for your RV loan.
How much can you pay monthly?
While you may be offered more time to pay back your loan, you aren't required. Make sure there are no penalties for paying ahead of schedule, and consider how aggressive you can be each month. The quicker you can repay the loan, the less interest you’ll have to pay over time.
Ready for a lender?
If you’re looking to finance your RV, Good Sam Finance Center has several flexible loan options and can work with any budget. Contact Good Sam Finance Center for your next loan.