Should I Finance My Camper Or RV?

If you’re on this page, it’s likely you’re contemplating financing your dream camper or RV.

Perhaps you’ve heard success stories about RV financing and you want to know more.

Or, maybe you’re already well-informed and just want some reassurance that it’s right for you. Whatever your situation is, financing is not a decision to be taken lightly.

You need to be aware of all the details— both small and large—before taking the plunge. There are more things to think about than just your finances.

Your future plans and personal goals as a camper or RV owner play a role too. Read on to discover if financing a camper or RV is the right choice for you.

Is Financing A Camper Or RV Right For Me?

Before we dive into everything else, let’s start with the basics. There are a few things to be clear on before we proceed.

Once you get through all the complicated terminology, financing is a pretty simple concept. You receive a loan from an institution (for example, a bank) toward whatever you need the money for.

In this case, your desired item is an RV or camper.

You then pay off the loan and the interest on that loan over a period of time.

Now, there are many different types of loans you can get. There’s financing to pay off anything, from credit card debt to those notorious student loans.

The majority of people who finance campers or RVs take out a personal loan. As the name implies, you can finance almost anything with a personal loan.

They range from as low as one thousand dollars to 100,000 dollars.

You can go to your bank of choice for a personal loan or check financing options with a dealership.

There are even organizations that specialize in financing for RVs or campers, offering special deals.

Most personal loans apply simple interest rates.

This means that you will be charged daily rather than monthly interest.

The terms of the loan will depend on you, your finances, and the institution. Regardless, you’ll have to meet the minimum payment requirements as agreed. Remember to read the small print before signing any loan agreements, even from the bank.

Saving up Versus Financing

Saving up the money to get a camper or RV has one distinct advantage. Once you make the purchase, you’re free and clear of debt.

The camper or RV belongs to you unconditionally. Compare that to financing, where you’ll be paying it off for years to come.

Let’s say you’re financing a travel trailer worth 50,000 dollars and your credit score is excellent.

The average annual percentage rate (APR) on a personal loan is, at the time of writing, estimated to be between 10 and 12 percent if you have an excellent credit rating.

However, these rates can vary significantly, depending on your financial circumstances and the lender. Interest could be as over 30 percent for those with poor credit history. Note that these figures are accurate as of the date of publication.

The interest you pay may add up to more than the price of your RV or camper. Additionally, campers and RVs depreciate in value over time. As soon as you roll out of the dealership, the value of your vehicle will drop.

Remember, once you have finished paying off your loan, the value of your camper or RV will be much less. This is not to say that financing is a terrible idea. Still, you should know the facts before moving forward.

Convenience

One of the most appealing aspects of financing is convenience. You’ll be on the road with your new camper or RV sooner rather than later.

Tax Breaks

Class A motorhomes can cost well over 100,000 dollars. Financing rather than shelling out the whole amount can save you tax dollars.

Think About the Future

The thought of owning your ultimate camper or RV in the near future can be tempting. This is precisely the time when you should slow down rather than rush things.

Before you start checking your credit score and everything else, picture the future. This may sound unrelated to financing, but it isn’t.

Financing is a responsibility you will be taking on for a period of years. There are a couple of things you need to be clear on. You might want to consult your spouse or family members as well. Is your income secure? Are you still able to make the repayments if your circumstances change?

Camper or RV Ownership

Are you absolutely sure that you want to be a full-time camper or RV owner? If you want to finance a camper or an RV, you need to be certain.

Renting a camper or RV a single time and enjoying the experience is great. It definitely isn’t a good reason to think about financing one of your own.

Are you ready for all the responsibilities of camper or RV ownership? Can you picture yourself taking trips regularly and not just once every other year?

Retirement

Certain models of trailers and motorhomes can be akin to second homes (with prices to match).

You might be thinking about living in a trailer or RV full-time after retirement. If you are, have you thought about selling your home?

If you have, you may want to hold off on financing. Taking on a loan is pointless when

you’ll be able to finance your RV or trailer on your own when the time comes.

Review Your Personal Finances

If you’re still leaning towards financing, it’s time to look at your financial situation. Unfortunately, not everyone is going to be an eligible candidate for financing.

Income and Debts

Take an honest look at your income and existing debts. Count in any big expenses you’re expecting over the years.

Make sure you’ll be able to keep on top of your debt. If you can’t pay back your loan on the agreed terms, it’s no joke.

If you let too many payments slip, your credit score could take a serious hit.

Other nasty consequences can occur, like late fees or collection agencies pursuing you.

Your precious RV might have to be sold to avoid serious penalties.

Credit Score

Your credit score is a major influencer when it comes to financing. A person with a poor credit score may be able to take a loan out—but it isn’t worth it.

Your interest rates will be substantially higher if your credit score is poor. An excellent credit score is 750 or higher.

Fair to good credit scores range from 650 to 749.

A poor credit score is between 600 and 649. Anything below 600 is bad—you’ll have trouble getting a loan.

Some institutions are pickier about rating credit scores. For example, one bank can rate your credit score as good, whereas another will rate you as fair.

Ownership Costs

Your camper or RV will be an ongoing expense. Storage, maintenance, and more will cost you money over time. Don’t neglect these costs when you do your final calculations.

Do Your Research

It’s time to get into an investigative state of mind. If you’re set on financing, you’ll need to do as much research as you can.

Don’t take recommendations from friends or family at face value. Look at all the possible alternatives before finally settling on a lender.

Consider A Different Camper or RV

If you’re going to finance, you might want to upgrade your desired model.

Whether you choose a camper or a fifth-wheel trailer, it will depreciate over the years.

If there’s a luxury model or a larger floor plan available, think about it. Is your family likely to expand in the near future, for example?

Financing works best for brand new (or nearly new) campers or RVs.

It isn’t, generally, worthwhile to finance a model over two years old, as they’re seen as a higher risk.

Choosing an Institution

Have all your relevant information (credit score, down payment budget, etc.) on hand during your search. Writing everything down in list form can help.

Compare how each of your potential lenders rates credit scores. Check what the minimum down payment is. Search for promotions that can get you a better deal.

Asking for information is free—pay a visit in person and hear what these places have to offer. Don’t shy away from negotiating when you’re at a dealership. If your loan isn’t from them, you can haggle for a good discount or free upgrade, as a cash buyer.

Watch this comprehensive video for other factors to keep in mind.

Avoiding High Interest Rates

Interest rates are the real killer when it comes to financing. You want to know all the strategies you can use to keep these rates nice and low.

Improve Your Finances

If you have an excellent credit score, skip ahead to the next section.

If not, know that improving your credit score can help lower interest rates.

The better your credit score, the less interest will be charged on your loan. Identify what’s bringing your credit score down and fix it.

For example, an unpaid bill from years ago or a lot of debt. It can take you some time to boost your credit score but will save you money when you eventually apply for finance.

Paying On Time

Late payments can spike your interest rates. Always plan to pay your monthly due on time—you don’t want to fall behind.

If you manage to save a little extra, you can pay more than you owe for the month. This good behavior will be noted by your lender.

Short-Term Financing

Long-term financing might initially seem like the ideal option. With all the other costs of camper or RV ownership, lower payments seem like the rational choice.

Unfortunately, longer financing periods can cause higher interest payments and, therefore, a higher total cost.

Budget responsibly and choose a shorter repayment period.

Bigger Down Payment

Paying more upfront will cost you less later—simple mathematics. The less you owe,

the lower your interest will be.

Calculating The Estimated Costs

Taxes, interest rates, down payments—there’s a lot of numbers to keep track of. You want to have a good idea of what you’ll be paying over the years.

Some financial institutions have online calculators to do the job for you. Others will be able to calculate an estimate for you in person.

If you go this route, ask lots of questions to be sure you don’t miss hidden terms and conditions.

You can also hire a financial advisor if you want to get serious. This might be wise if you’re planning to borrow over 100,000 dollars.

Otherwise, you can use an online loan calculator to give you a base idea.

All you’ll need is your financial information and the terms of the loan.

You’ll be doing these calculations repeatedly for multiple financing options. You want to compare and contrast, remember?

After you have estimated figures for financing, add on the extra costs for your RV or camper—yearly maintenance, storage fees during the off-season, tires, propane, travel expenses, gas, and more.

Before You Take the Plunge

You’re determined to finance your camper or RV, and now you’re ready to take out a loan. Before you make a final decision, contemplate a few last things.

Be Comfortable

Taking on financing can make anyone nervous—it’s a big commitment. Nonetheless, if the thought of financing your camper or RV terrifies you, don’t push yourself.

You don’t want to come to resent your camper or RV. If you’re having second thoughts, give yourself some time to reconsider.

Get Thrifty

Taking on financing involves a lot of evaluation. Consider this an opportunity to check in with your budget and spending habits.

Be realistic—there are probably some things you can cut out. Make coffee at home instead of heading to a café. Eat out only once a week instead of every night.

Reducing small-scale expenses can and will make a difference in your finances. In turn, this will help you stay on top of your loan.

Conclusion

Now you know what to expect if you finance your camper or RV, you should be closer to deciding whether or not financing is suitable for you.

Saving up to buy your camper or RV outright isn’t always possible. If you don’t want to wait indefinitely to enjoy the open road, financing can help.

At the same time, you need to be conscious of what you’re getting into. Being well-informed is essential to avoid disappointment and disaster later on.

Did you finance your camper or RV?

Tell us about your experience with us in the comments. If this article was useful to you, do share it with your friends.