How to Finance an RV Purchase

RV driving in desert

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According to the Recreational Vehicle Industry Association, some 9 million RVs are on the road in the United States, the highest number ever. Many are considering an RV purchase as they retire, or as a way to share the beauty and excitement of the country with their children.

Seasoned RV owners and those aspiring to buy their first vacation home on wheels are frequenting RV and Camping shows and dealerships across the nation. Once they settle on their choice of recreational vehicle, financing will be the next step. Most people don’t go to the dealership with cash to buy their brand-new RV. Like with large purchases, such as a home or car, most will need to finance the RV.

If you’ve ever bought a home, a car, or a boat, you know what a hassle it can be to secure financing for these big purchases. You also know that making the right choice in financing can save you thousands of dollars and make payments more affordable.

Plan Ahead for Financing

There are things you need to know, and factors that will influence your financing, which are important considerations when buying an RV.

Current Interest Rates 

Like home and auto loans, RV loan terms and interest rates are not static. Rates will increase and decrease depending on market trends. RV rates shadow auto loan rates, so if you know that auto loan rates are low, it may be time to pounce on getting an RV loan.

Credit Score 

Your loan interest rate will be dependent on your credit score. The higher your credit score, the lower the interest rate you will receive. A low credit score doesn’t mean you can’t find a good deal, though. Shop around to find someone who can work with your credit rating and get you the lowest rate possible. Sites like Credit Karma will give you your current credit rating scores without charge.

Down Payment

Depending on how much cash you offer up front, you can get a better APR (annual percentage rate), terms, and more. Ideally, you’d want to put up to 10 percent of the total cost of the RV down. This not only helps you get a head start buying the RV but will lower monthly payments.

Ways to Finance an RV

You can finance with the dealership, or with a third party such as your bank and each of these options has benefits and drawbacks.

Dealer Financing

Before you decide to finance through your dealer and drive out with your RV, it is important to do your research. Check their reviews to see if any customers have mentioned financing and their interest rates. If it's possible, talk to other customers to see if they are happy with the deal they got. 

There are some bonuses when you choose to finance through the dealer. The process is usually fast and convenient because you don’t need to go back and forth between the lending institution and the dealer. Some dealers offer very low financing rates through time-limited promotions and sales. 

There are some downsides to financing through the dealer as well. Usually, rates won’t be as competitive, and you won’t have as many APR and payment options to consider. The salesperson might use high-pressure sales tactics to get you to sign before you’ve shopped around.

Only finance through the dealer if you are confident they will work with you to find the best deal possible. 

Bank or Credit Union Financing

The bank also comes with its pros and cons. Working with the same institution or lender you have worked with before can give you confidence that they will work with you to find a great deal. A big advantage of financing through your bank is that there won’t be an intermediary like at the dealership. You will get direct to consumer pricing without the dealer markup. 

There are also some disadvantages of working with the bank. Usually, they present you with the best possible deal they can make, so there isn’t any negotiating. It’s one deal or no deal. Also, financing through the bank may take a few days—you can usually walk in and out of a dealership in one day.

Making Your Financing Decision

See what offers the dealership and your bank will give you, then go with the better financing deal. When an RV dealership realizes you aren’t going to finance through them and you’re looking at other offers, they may get more generous.

One of the best things you can do is to get pre-approval through your bank and take this paperwork with you to the dealership. Often a dealer would like you to finance with them so you can use this as a bargaining tool. The most important thing is to provide yourself with several options, so you can pick the best deal and buy the RV of your dreams.

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