The term RV stands for recreational vehicle, and while you may have an image in mind of what an RV looks like, in reality, there are a variety of vehicles that fall under the category of an RV. These vehicles often feature living areas, sleeping spaces, cooking facilities, and even bathroom facilities.
RVs range from ultra luxurious to utilitarian with only the essentials. In order to get the best RV loan rates for your new vehicle, it’s important to understand which type of RV you plan to buy, what the RV loan rates today look like, and even to consider the best used RV loan rates to get a great deal on your new recreational vehicle.
What Qualifies as an RV?
When it comes to getting an RV loan, it’s important to know which vehicles qualify as RVs and are eligible for the best RV loan rates or best used RV loan rates. While the general term for an RV can include a variety of vehicles, RVs are usually separated into four main types: class A, class B, class C, and travel trailers. It’s important to know which type you are considering so you can qualify for the best RV loan rates.
These RVs are at the high end of the price range but also offer the most amenities and spacious living areas. They usually include a large living space, dining areas, sleeping areas, and bathroom facilities; some offer towing capabilities to haul smaller vehicles. Class A RVs are bus-sized, great for living on the road, and make long-term travel very comfortable.
These RVs are about the same length as your average van which makes them easier to drive than longer Class A vehicles. They are often referred to as campervans, have raised roofs to increase interior living space, and offer cooking and sleeping amenities but usually have smaller bathroom facilities.
These RVs are smaller than Class A RVs and usually include a simple cooking and sleeping area, living space, and bathroom facilities. You can think of them as a cross between A and B class vehicles. These RVs save space by positioning the sleeping area over the cockpit of the vehicle.
The last type of RV on our list includes RVs you hitch up and pull behind your vehicle, such as:
- 5th Wheel Trailers
- Tent Trailers
- Folding Trailers
- Travel Trailers
These vehicles require you to have a truck with enough towing capacity to haul the type of RV you purchase. However, travel trailers range from very small and basic to large and luxurious. Travel trailers are smaller than other classes of RVs, are less expensive, and more versatile because you can detach your vehicle from your truck for day trips when you’re on the road.
What Are Typical RV Loan Terms?
Getting the best RV loan rates or the best used RV loan rates lowers the amount you’ll need to pay on your RV over the life of your loan. Typical RV loan terms vary depending on your credit history and score and the lender you choose to borrow from. While RV loans may seem similar to car loans, they usually fall under recreational or specialty loans and may have stricter borrowing requirements than a car loan, because they are considered a luxury vehicle.
In general, RV loans are secured loans that use the RV as collateral. Typical RV loan terms range from 6 to 20 years and usually require a 10%-20% downpayment to purchase. At Southeast Financial, we typically offer loans with 0% down and rarely require more than 15% down and specialize in recreational vehicle financing to help you get the best RV loan rates and best used RV loan rates.
What Is the Average RV Interest Rate?
Interest rates vary but typically range between 4%-20%. Your credit score plays a large role in determining what interest rate you are eligible for, and improving your credit score before making a big purchase can help you save money in the long run. The lower your rate, the less money you will need to pay your lender over the lifetime of your loan.
How to Get Lower Interest Rates
Getting the best RV loan rates and best used RV loan rates depends largely on your credit score. In general, the higher your credit score, the lower your interest rate will be. You may also be able to get the best RV loan rates and best used RV loan rates by offering a bigger down payment on your vehicle. This will help you reduce your monthly payments and may help you get a better interest rate on your vehicle.
Another good rule of thumb for finding a great RV loan rate is to pay attention to current car loan rates. RV loans and car loans tend to follow the same trends. If car loan rates are down, it’s likely RV loan rates are lower as well and it may be time to snatch that RV you’ve had your eye on.
What Credit Score Is Needed to Buy an RV?
If you have a lower credit score, getting approved for an RV loan will be more difficult and it’s likely you will have a higher interest rate.
There are other factors, aside from your credit score, that lenders take into account when determining your RV loan eligibility including:
- Debt to Income Ratio
- Employment History
- Down Payment Amount
Each of these factors can help you get approved for an RV loan. If you’re still struggling to get approved even after taking additional steps and providing additional information, don’t stress. Taking the time to improve your credit so you can qualify will help you save money over the term of your RV loan and get the best RV loan rates and best used RV loan rates.
How Many Years Can You Finance an RV for?
Most lenders offer loans for 10-15 years but some offer loans up to 20 years or more. Longer terms may be used for loans over $50,000 but are often not offered for less expensive RVs.
Can you finance an RV like a house?
RV financing is more like car financing than home financing; however, the terms of RV loans can be nearly as long as home financing with terms up to 20 years. Like a mortgage, a specialty loan for an RV often uses the vehicle as collateral to back the loan should you fall through on your payments.
Can You Get a Mortgage On an RV?
RV loans aren’t eligible for a mortgage. They also vary slightly from car loans. RV loans usually fall under their own category for recreational or specialty loans because they are considered luxury vehicles. Despite not being eligible for home loans, RVs can act as a second home when it comes time to file your taxes.
What Qualifies an RV as a Second Home?
Generally, an RV only qualifies as a second home if it has all the facilities you need to fully live in your RV. This means it must have a sleeping area, cooking area, and toilet facilities. All classes of RV and 5th wheels can qualify if they have these features.
Are RV Loans Tax Deductible?
If your RV meets the above requirements, you can get a tax deduction with a home mortgage interest deduction on your RV as a second home. Trailers or towed vehicles are generally not permitted to use a home mortgage interest deduction unless they contain permanent eating, sleeping, and bathroom facilities. Check with your tax professional to see if your vehicle allows for a tax deduction.
Can You Depreciate a Motorhome?
If you use your motorhome for business purposes, you can claim it as a business asset and depreciate any of your expenses like insurance, gas, and maintenance on your RV over a five year period. This can be a great way to save money if you plan to purchase your RV for business purposes.
What Is the Best Month to Buy an RV?
The price of an RV can vary widely depending on when you purchase your vehicle, and buying during the right time of year can help you save thousands of dollars on your RV purchase and get the best RV loan rates and best used RV loan rates. The best months to purchase your new RV are during the winter. This is because it’s the off-season and people aren’t looking to hit the road for some outdoor adventures while the weather is freezing.
Purchasing a used RV from a private seller is also a good decision during fall and winter because many people don’t want to cover the expense of storing their RV during the winter. Alternatively, buying your new RV in the spring or summer will cost you more because it’s peak season and more people are looking to buy an RV so they can hit the road.
Top Mistakes to Avoid When Buying Your RV
It’s easy to get caught up in the excitement when it’s time to buy your new RV. You can’t wait to get the best RV loan rates or best used RV loan rates, get behind the wheel, and hit the road on a new adventure. But before you hit the road, there are some important things to keep in mind.
- Do Your Homework: Getting the best RV loan rates and best RV for your family requires a little research on your part. Doing your research ensures you’ll get the features you want without overpaying.
- Check Storage Space: Be realistic about the amount of gear you’ll be taking with you on trips. You don’t want to purchase an RV only to discover you can’t fit everything you need.
- Find the Perfect Size: You don’t need an RV that’s too big, but also don’t want to be stuck in one that’s too small. Consider your needs and purchase accordingly.
- Plan for Parking: Before you move or stay in any park, make sure you are aware of all the rules and regulations.
- Bring a Generator: You’ll need your own energy source while you’re on the road, generators or solar panels can make this part of your life much smoother.
- Purchase for Purpose: That RV might look beautiful, but you should always consider needs before appearances. Research the features that are available and determine what you need.
Getting the Perfect RV
If you already have an RV, RV refinancing can help you save money and free up your monthly budget for more time on the road. Visit Southeast Financial to find out our RV loan rates today.