How to qualify for an RV loan

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Buying a recreational vehicle, also known as an RV, is a significant expense that can move anywhere $35,000 to $1 million or more. Many people turn to RV loans to fund such a large purchase.

The application process for an RV loan, which is available through online lenders, banks, credit unions, and even some RV dealers, is similar to a car loan application. However, RV loans offer larger amounts of cash than typical auto loans, and the qualification requirements are often a bit more complex.

What you need to know before getting an RV loan

RV loans are a form of long-term financing for the purchase of an RV, caravan or camper. Although not car loans, RV loans share some similar characteristics. As with a car loan, for example, the vehicle serves as security for the loan.

“An RV loan is typically a simple interest rate loan, similar to a car loan, generally with longer terms,” ​​said Scott Greene, head of marine and RV loans at Truist.

Typically, RV loans offer repayment terms of one to 15 years, but some lenders may even offer repayment terms of up to 20 years. However, borrowers who can afford higher payments can opt for shorter terms.

Before you apply for an RV loan, you need to know how much money you want to borrow, and generally you need to have identified the RV you want to buy, Greene said.

What you need to qualify for an RV loan

Because RVs are considered a luxury item and require a significant amount of money to borrow, eligibility requirements for RV loans are generally strict and often similar to those for a mortgage.

“To qualify for an RV loan, a borrower generally requires a steady source of income and a good credit history — typically including evidence of satisfactory repayment of a similar amount and type of debt,” said Michael Lax, executive vice president and head of RV Marine Sales for Bank of the West.

credit-worthiness

As with applying for any type of consumer credit, a solid credit history is an important part of your qualifications. Lenders use credit scores to assess your credit risk, or the likelihood of your loan being repaid. Credit scores in the mid-700s or higher usually secure the best interest rates.

“Most lenders require a FICO score of 680 and above. However, some specialty lenders allow FICO scores below 680,” Lax said.

Before you begin your application, check your credit reports with all three credit bureaus — Experian, Equifax, and Transunion — so you know your score in advance. This way you can take all the necessary steps to improve it. A free copy of your credit report from all three bureaus is available once every 12 months on AnnualCreditReport.com.

income

When applying for an RV loan, you need proof of sufficient income to pay off the monthly loan payments and any of your other existing debts, Greene said.

“Consumers also need to understand the additional RV expenses that are incurred outside of the monthly RV loan payment,” Greene said. “For example; additional fuel costs, property damage insurance and storage costs – when not at home.”

While the ability to pay for these additional costs is not part of a lender’s considerations during the application review process, it is important to understand the full extent of the expenses when considering whether you can afford an RV.

Use Bankrate’s Personal Loan Calculator to determine how much you can reasonably afford.

credit history

While credit history requirements may vary by lender, it’s important to have a solid track record of borrowing and paying down your debt responsibly.

For example, Lightstream looks for multiple years of credit history and credit history with different account types. This may include major credit cards, installment debt, and mortgage debt, as appropriate. A good payment history with few arrears or challenges in paying off debt is also important.

Lender-Specific Requirements

Additional application requirements typically vary by lender and are lender-specific. Because RV loan applications are typically more rigorous, some lenders require tax returns, financial statements, and a detailed credit history.

“Some lenders may require proof of income, proof of assets, proof of residency or use of the RV,” Greene said.

How to apply for an RV loan

RV loans are offered by banks, online rental companies, and even RV dealers. To apply, you must complete an application that will be reviewed and evaluated by the lender. It’s a good idea to get quotes from multiple lenders to make sure you’re getting the best interest rate, loan terms, and repayment schedule for your needs.

“When you’re buying from a dealer, it’s best to work with the dealer who has access to multiple lenders and can match you with the right lender for your specific circumstances,” Lax said.

Working directly with a lender sometimes allows you to apply for financing before purchasing your RV and get pre-approval so you know how much money you have to spend.

Once you have decided on the RV you want to buy and have completed the credit approval process, you sign a credit agreement that sets out the credit terms. Depending on the lender, the money can be deposited into your account the very next day.

bottom line

Whether you are buying a new or used RV, there are many lenders that offer financing. However, approval can be as complex as applying for a home mortgage. Therefore, determine in advance exactly how much you need to borrow and whether you have the income and creditworthiness to support a successful application. It’s also a good idea to check out multiple lenders to get the best deal for your needs.

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