RV Financing Basics

Getting a good deal on RV financing is quite similar to other types of finance. There are a few basic guidelines that are applicable, irrespective of whether you are a first-time RV buyer or a seasoned pro.

Basic Rule #1

A good credit history is required. An RV is a big-ticket item, comparable to buying a house or a boat, and as such credit standards are high. Buyers are traditionally considered as “credit-worthy” customers.

Basic Rule #2

RV financing is a long-term loan with terms between 10 to 20 years. The loan term you choose will depend on your income and expense. The longer the term, the lower your monthly payment. If you are comfortable with making a higher monthly payment, then choose a short tenure. Keep in mind that the interest rate will be higher on a longer term loan.

Basic Rule #3

The down payment required may vary among different loan companies, but the general rule of thumb for RV financing is a down payment of 12 to 15% of the showroom price. It is advisable to pay the maximum amount you can afford as down payment, since this will ease your future burden and save money with lower interest rates.

Basic Rule #4

Before signing a loan agreement, read the fine print carefully. Many buyers are dazzled by the lucrative deals given by the dealer and the excitement of owning an RV.  Do not overlook minor fees such as loan processing fees, penalties for late payment and early pre-closure. In fact, these are loan terms which you must first look for and negotiate with the lending company. Ensure that there are no penalties payable, should you want to close your loan before the expiration date, or if you want to make bulk payments towards the loan principal when you have liquid funds available.

Basic Rule #5

Find out if the interest payments on RV financing are eligible for any tax breaks. Generally, interest paid on RV loans is considered on par with a second home loan or mortgage, simply because of the special characteristics of an RV – many people prefer to live in their RVs and may forego the traditional home model. To become eligible for tax rebates, you should not already have an outstanding second mortgage and the RV must have sleeping, kitchen and bathroom facilities.

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