How Many Years Can You Finance an RV?

The RV industry is booming, and consumers have a wide variety of models to choose from when deciding which rig best fits their needs and budget. There are luxurious Class A motorhomes with six-figure sticker prices and small pop-up campers that won’t break the bank. But if you have your heart set on an RV and don’t have the cash to purchase it, you’ll need to secure financing before hitting the open road. 

Though the prospect of spreading out the terms of an RV loan can be enticing, make sure you know what you’re getting into before signing on the dotted line.

How a recreational vehicle loan differs from an auto loan

RVs for sale at Motor Home Center in Auburn, Maine, in 2002
RVs for sale | John Patriquin/Portland Press Herald via Getty Images

RV financing is similar to an auto loan in that you’re borrowing money from a bank or credit union to purchase an item. Like an automobile, a recreational vehicle is used as collateral to secure a loan.

Where the loans differ are in the repayment terms. RV loans generally extend longer than auto loans. A substantial down payment of at least 20% will increase a buyer’s chance of being approved for an RV loan, which is not the case with auto loans.

Also, RV loan qualification requirements are more stringent. As we at MotorBiscuit previously reported, it’s possible to get an RV with less-than-perfect credit, but having limited debt and good income will be important.

RV loan terms

Most auto loan terms range from five to seven years, but RV loans can stretch to 20 years for a high-priced rig. The loan will cost significantly more than the purchase price because of excessive interest payments over the length of the loan.

Aside from banks and credit unions, RV dealerships have gotten into the financing game, making it lucrative for their businesses to provide loans with high interest rates and extended terms.

RV dealers are infamous for pushing lower monthly payments, but in essence, the loan will cost you more over time. Be wary of a deal that seems too good to be true.

According to Bankrate, “While an RV loan is similar to an auto loan, loan terms are generally longer, and the transaction is oftentimes more complicated, like a mortgage.”

Is financing an RV a good idea?

Financing an RV is a big decision and one you shouldn’t take lightly. Verify that you have a credit score of at least 700 before proceeding to take advantage of the best interest rates.

Banking officials also consider your debt-to-income ratio when determining your creditworthiness. Southeast Financial says that, as a general rule, your household debt should be less than 40% to qualify for an RV loan.

Current interest rates for RV loans start around 4.29% for borrowers with excellent credit. The interest rate can be as much as 11.89% or higher for borrowers with poor credit scores.

According to Credit Karma, buyers need to understand that RVs depreciate quickly in value, as much as 20% in the first year. “If you plan to sell or trade-in the RV in the future, you may not be able to get enough money back to pay off your loan,” the personal finance company warns.

Financial guru Dave Ramsey says that although RV’ing is cool, financing a loan isn’t a good idea because of the depreciation. He claims that “mathematically speaking,” it’s not a sound investment. Ramsey recommends not financing anything that decreases in value. 

If possible, purchase your RV with cash and enjoy the open road without a loan hanging over your head.

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