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A recreational vehicle (RV) loan is used to finance the purchase of a new or used RV, motor home or trailer. Recreational vehicle loans come with various Annual Percentage Rates (APRs), loan amounts and terms, which together translate into monthly payments of varying sizes.
Comparing these rates and terms can be confusing, especially if you don’t fully understand how to calculate the numbers. This simple and easy-to-use RV loan calculator can help you understand and estimate your payments.
How to use this RV loan calculator
To use this RV loan calculator, enter the amount you will need to borrow, the interest rate and the term. Then click Submit to see your estimated monthly payment and the total interest paid over the life of the loan.
Use the calculator to determine if you can afford the RV loan you’re considering, or if you may need to find a cheaper option.
RV Loan Calculator
How to get an RV loan
There are two main ways to get an RV loan: You can either get a personal loan or take out a traditional RV loan.
A personal loan is usually an unsecured loan, which means that you don’t need to provide any collateral (something of value like a savings account) to secure the loan. Personal loans generally range from $ 500 to $ 100,000, depending on the purpose of the loan, and have repayment terms between one and seven years.
However, personal loans may not always provide sufficiently large loan amounts or sufficiently long loan terms. In this case, you may need to apply for a traditional RV loan, which is similar to a car loan for a car or truck. The lender will give you the money to buy the RV and use it as collateral for the loan, making it a secured loan. Recreational vehicle loans often also require a down payment of between 10% and 20%; personal loans don’t.
The loan application process for either is similar: you will need to meet minimum credit score and potential annual income requirements; submit a formal request to an online bank or lender, including your personal information, such as your social security number (SSN) and income; sign the loan documents; and start repaying your loan once you receive the funds.
What is a good interest rate for an RV loan?
The best interest rates for RV loans start at 4% but can go up to 11%. Interest rates vary depending on your credit rating, the amount you borrow, and the total repayment term.
In general, the shorter the term, the lower your interest rate, provided your credit is good to excellent. For example, Compass Credit Union offers APRs as low as 4.24% for 48-month loans for new RVs, while a 180-month loan for a new RV has a starting rate of 7.24%.
RV loan alternatives
If you are unsure if a traditional RV loan is right for you, consider these alternatives.
Personal loans are the most common RV loan alternative because you can use them for just about anything. If you’re buying an RV for less, it’s worth pre-qualifying with some of the top personal lenders to see if you can get a better loan deal.
Loans typically range from $ 500 to $ 100,000 and have rates as low as 3% and terms of one to seven years, depending on the purpose of the loan. The repayment terms are a major drawback of a personal loan. If you want to be able to pay off your loan beyond seven years, it may be best to consider a traditional RV loan.
Home equity loan
If you do not qualify for an RV loan or receive a high interest rate from the lender, you can take out a home equity loan and use that proceeds to purchase an RV.
A home equity loan allows you to borrow against the value of your home if you have built up equity and pay off your loan amount between five and 30 years. Most lenders require that you currently hold between 15% and 20% of equity, which is the difference between the current appraised value of the home and the remaining mortgage balance.
Interest rates on a home equity loan, typically between 3% and 7%, can be lower than on an RV loan because the lender can use your home as collateral. But that’s also the downside of taking out a home equity loan: If you default on a home equity loan, the bank can foreclose on your home.
Another major downside to home equity loans occurs when the value of your home suddenly drops. In this case, you will not be able to sell the house for a profit because you will owe more than it is worth.
Before 2018, borrowers could deduct the interest paid on a home loan from their taxes, but now they can only do so if they use the funds. to improve or repair their house.
Before taking out a home equity loan, determine if you plan to move in the next few years. If you are, a home equity loan may not be worth the risk.
401 (k) Loan
If you have money in a 401 (k) with your current employer, you can borrow and use those funds to purchase your RV. When you take out a 401 (k) loan, you repay the interest on your own 401 (k) account instead of paying interest to a bank.
Money withdrawn from a 401 (k) loan will no longer be invested in the stock market, meaning you could miss out on potential returns, which is one of the main drawbacks of a 401 (k) loan.
Also, if you quit your job for any reason before the loan is repaid, you must repay what you borrowed on or before tax day that year, although some employers may demand immediate reimbursement. Otherwise, it will be considered an early withdrawal and subject to applicable taxes and penalties.
Before taking out a 401 (k) loan, talk to an investment professional about the downsides and how to make sure your retirement goals don’t suffer.
Frequently Asked Questions (FAQ)
Do I have to make a down payment on an RV loan?
Many lenders require that you include a down payment of between 10% and 20% when taking out an RV loan. So, for example, a $ 20,000 RV through a lender that requires a 20% down payment would require $ 4,000 up front.
What credit score do i need for an RV loan?
Lenders who offer recreational vehicle loans have more stringent requirements than auto loan companies. You generally need a credit score of at least 660 to qualify for an RV loan.
You can check your credit score online for free on different credit websites. Some credit card providers provide free scores to customers and non-customers, including Capital One, American Express, and Discover.
If your credit score is below 660, you may not be eligible for an RV loan. In this case, you should try to find a lender who accepts co-signers to increase your chances of approval and help you get a lower interest rate. However, most RV lenders do not allow co-signers on the loan, although this varies by lender.
What is the term of an RV loan?
Since recreational vehicles generally cost more than a new car or truck, the term of an RV loan is much longer than that of a regular car loan. While a typical auto loan term reaches seven years, the standard RV loan term lasts between 10 and 15 years. Some lenders provide 20-year loans.
How do I know what interest rate for my RV loan I will receive?
Before completing a formal RV loan application, you can sometimes pre-qualify with specific lenders. When you pre-qualify, you submit your personal information and the lender will tell you the interest rates and terms you might qualify for without harming your credit score. Be sure to apply to a few different lenders to compare a variety of quotes.