Alternative Ways to Finance Your Dream RV

If traveling excites you, you may have dreamed about having an RV and going to different places with your friends and family. Most probably, the only thing that stops you from buying the RV of your dreams is the cost. An RV is considered a luxury, and having that label puts a pricey tag on it, not to mention that it also directly affects the financing around getting one.

Speaking of financing, you’re probably looking for different ways you can finance your brand new RV. Yes, RV loans do exist, but they don’t come in cheap. That’s probably the reason why you’re looking for an alternative.

If that’s the case, you’re in luck, as we will talk about the alternative financing options for you to get the RV of your dreams. But first, to get a clue on what you should look for in other loans, let’s talk about RV loans first.

What is an RV loan?

RVs range from at least $10,000 to $500,000. As mentioned earlier, RVs are luxury vehicles, making them expensive in general. And since all of us can't afford to buy a new one directly, many turn to finance. If you’re looking for a financing option for an RV, the very first search result that will come up in any search engine is an RV loan. So how does it work?

An RV loan works like any other loan where it will provide you the money to buy a new RV and will be repaid by the agreed terms. The repayment terms depend on the loan, like your borrowing limit, the monthly repayment, and the interest. If you want, you can make it a secured loan where the collateral will be the RV itself.

Compared to a typical car loan, an RV loan is much longer. For RVs worth $10,000 to $25,000, it tends to go for 2 to 3 years. For more expensive ones, it can go for almost 15 years, depending on your lender. That said, RV loans don’t come cheap. Fortunately, there are other financing options as well. Here are some of them.

Personal Loans

Personal loans are fast, easy, and very flexible. When we say flexible, it means that the usage of personal loans is flexible. You can use them in many ways, and in this case, financing an RV. When using a personal loan for an RV, you need to figure out first which RV you want to buy.

When you determine the price tag, you can talk to your lender about it. It depends on your lender if they allow you to borrow that much money as they set the borrowing limit.

Home Equity

First of all, let’s talk about home equity. Home equity is the percentage of what you actually own of your house. For example, your house is worth $200,000, and you have paid the mortgage every month, and now, you owe only $80,000. Your home equity would be $120,000. That means you can borrow against your home equity with a loan or a home equity line of credit.

Depending on your lender and creditworthiness, you can borrow against your home equity up to 80% to 100%. If the percentage is agreed upon, your lender will appraise the house for its value in the market. If you have sufficient equity to finance your RV, the lender would then allow you to purchase an RV of your choice. If you want, you can make the RV the collateral.

Dealer Financing

One thing you can do to finance your RV is to go to the dealer. Dealer financing is a type of loan that originates from the dealer and goes to the bank or another third-party financial institution. The bank would buy these loans and then collect the interest and principal payments from the borrower. You can call it an indirect loan.

When you look at the buy rate, it includes the interest rate that the financial institution quotes to the dealer. The dealer can relay it to the customer and sell it for higher than its actual price. By offering finance to the customers, the dealers can secure a sale much easier and faster than waiting for customers to find financing of their own.

Some dealers even do 0% APR for the first year of the loan to entice more customers to purchase an RV from them. It is a great way to save money for a year before the APR kicks in. You can also learn how to calculate Annual Percentage Rate so that you can determine your APR once the promotion ends.

Conclusion

There are still other ways to finance your RV, but the ones listed here are some of the most optimal ways of alternative RV financing. Not only that, but they are also one of the easiest ones, albeit risky. If you take one of these options and be responsible with it, you can freely ride through the countryside with the RV of your dreams without worrying about its financing at all.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes