Many people are looking for ways to live cost-effectively and RVing is a popular way to do this. The trouble many people face is that when researching buying an RV, they read numerous articles about what a challenge this can be.
Purchasing an RV is a big investment, that is true, but it does not have to be scary. The RV market has been on the rise in recent years and there are many styles, sizes, and shapes. This means there is something for everyone. You just need to know a few things before you buy.
The first thing to consider is how much you will be using the RV. Are you living in it full time or just escaping city life a few times a year? The more time you plan to spend in the RV, the more luxuries and space you will probably want. Larger RVs will cost more money.
The next thing to think about is where to buy the RV from. There are online listings you can use and these often may seem cheaper. You will get a better deal by going through a dealership because the RVs will come with warranties. Although in my experience, after you walk away with your RV you can expect very little from the dealership. It’s very important not to walk out and sign contracts until you have checked everything.
You can find used RVs through dealers too and these will have had an inspection completed for resale, but don’t rely on it. Dealerships want to make money and will hide small issues. Dealership pricing may be higher than buying from an individual, but there are experts there to help to solve issues you may find and you get peace of mind knowing the RV is in working condition.
Once you know what RV you want and where you are looking to buy, it is time to look at your finances. You should already have a budget in mind as you shop, but most people decide to finance when buying an RV. If possible, try to get preapproved for a loan before you shop and work out what your monthly payments will be.
Getting an RV Loan
RVs are not cheap, even when pre-owned. That is why financing is a popular option. When you buy through an individual you will likely have to pay cash, but with a dealer or manufacturer, you can get an RV loan to help pay for your new adventure. When it comes to RV loans, there are a few important things to keep in mind.
RV loan terms are usually longer than car loans. They are more comparable to home mortgages, having repayment periods from 10 to 20 years. Try to get the shortest period possible when financing an RV.
Lenders are more stringent, meaning that the more you need to borrow, the more the lender is going to need from you. In most cases income, credit information, tax returns, and bank statements are needed to get approved. Also, the debt-to-income ratio must be under 50%, before you will even be considered.
Down payments are larger as a result of the total loan request being so high. The more you can put down upfront, the lower your monthly payments will be and the shorter your repayment period can be too. 10% of the sales price is typically the bare minimum lenders will require.
You will need a higher credit score than when buying a car, typically around 700. This is not to say you cannot get a loan with a score under 700, but approval will be more difficult. You may be required to put a larger down payment upfront.
RV lenders only consider secured loans which means the RV will be used as collateral. The good news is that secured loans are easier to get, but if you cannot make your payments, the RV will be repossessed.
Most lenders will not finance older RVs. If this is the only type of RV you can afford, it is worth considering a personal unsecured loan.
RV lenders often require inspections of older RVs before deciding to finance them. These inspection fees are your responsibility and can cost anywhere between $120 and $1200.
Choosing Whether To Finance Or Not
Taking out an RV loan essentially puts you in debt. This can be a step backward from the freedom you were looking for with the RV lifestyle. You will need to remember the monthly payment in your budget, which means other areas of living may need to be cut. For those that live a full-time RV life, income needs to be generated while on the road in order to make these payments. Time spent making money is less free time. Having debt can also weigh on you mentally, especially if you have a tight budget.
If RVing is a dream but finances are not favorable, the best place to start is by renting. Rent different RVs to find what you like and what fits your needs and budget. Then make a plan and a budget and start saving. You would have to save for a long time or win the lottery to buy an RV in full, but this is what loans are for. And loans don’t have to be scary. When you plan and save for a decent down payment, you can get an RV loan that will not break the bank.
Buying an RV for living in it or just using it for family vacations is not an investment but a liability and should not be taken lightly. There are pros and cons as with any major purchase, and all parts of the equation need to be considered. There is a lot of fun and freedom to be had with RVing, whether it is full-time or every available weekend. Plan ahead, save, boost your credit score, and then look for the right RV for you. Then, hit the open road.