It was last year that the RV market reached new heights, according to Bob Parish who serves as chairman of the trade group, Recreation Vehicle Industry Association. And the RVIA’s projection for this year shows continued growth for the RV segment. This strength means more RV financing opportunities in the future for those who want to travel in the comforts of their second home. Find out the in and outs of RV financing, its common terms and features.
From niche to established lenders, prospective buyers can turn to these companies for RV financing. The key is to shop for a loan first before the motorhome.
By preapproval, you’d be able to confirm if you could qualify for a loan and for what amount you are qualified to borrow. It makes shopping for an RV within your budget more practical.
Rates charged on RV loans are priced similarly as auto rates. The rate on a 60-month car loan averaged 4.35% on April 19. The rate could be higher for used cars and RVs.
As to factors that affect your rate, look at your credit, loan amount and loan term.
The cash portion of the RV’s purchase price, the downpayment could also help bring the rate lower. That is, each lender has its own downpayment requirement, some would require 10% while others would ask for 25% depending on the price of the RV.
The length of time needed to pay back your loan depends on the amount being financed and sometimes the type and age of the trailer as it varies among lenders. An RV financing term could be as short as five years or extend as far back as 20 years.
It all boils down to this: a longer-term loan could mean low monthly payments but more interest costs get racked up as the loan amortizes. A shorter-term RV loan doesn’t have the flexibility of a longer-term loan because its monthly payments are higher but it makes the loan faster to pay off.
Making monthly payments on your RV loan could entitle you to a mortgage interest deduction on your income tax return. This incentive is applicable to interest payments made on loans securing main or second homes to which the campers belong. To qualify as a second home, your motorhome should have sleeping, cooking and toilet facilities.