Bad Credit RV Loans: How to Get Approved
If you are ready to hit the open road driving or towing the recreational vehicle of your dreams, but you’ve had credit problems in the past, you may wonder if you can even get RV financing.
Yes, your credit status is an important part of the picture, but some lenders don’t have a set minimum credit score. Others may approve you if you are able to provide a significant down payment or show your ability to repay the loan.
Here, we’ll explore some of the best options for someone with bad credit who wants to finance the purchase of a new or used RV. A big part of the puzzle is first determining what kind of RV best suits your budget and lifestyle.
- The costs of an RV
- How to set an RV budget
- How to get an RV loan when you have bad credit
- Which lenders offer RV loans for people with bad credit?
The costs of an RV
When deciding what type of RV you prefer, first consider whether you want a motorized RV or a towable RV. While motorized RVs are generally more expensive, a towable RV will require a reliable vehicle that can easily haul it. Motorized RVs may require a special license if they weigh more than 26,000 pounds, but that’s most likely a particularly large Class A motorhome.
RV sizes are organized by class, with Class A being the largest, at between 13,000 and 30,000 pounds. Class B RVs are the smallest, between 6,000 and 8,000 pounds. Class C RVs weigh 10,000 to 12,000 pounds. So, for the majority of RVs, your regular license will do just fine. To be sure, check with your state Department of Motor Vehicles (DMV).
How to set an RV budget
In addition to purchase price, there are associated costs of owning an RV, including maintenance and insurance.
Here are the price ranges for new RVs, according to the RV Industry Association:
Folding camping trailers: $6,000-$22,000
Truck campers: $6,000-$55,000
Conventional travel trailers: $8,000-$95,000
FIfth-wheel trailers: $18,000-$160,000
Class B and C motorhomes: $60,000-$150,000
Class A motorhomes: $60,000-$500,000
You could get a considerable discount off these prices if you buy a used RV, of course.
You’ll need proof of insurance before most lenders will release funds for you to buy an RV. Talk with your insurance agent about your options, and make sure your RV insurance meets your lender’s requirements. Your state may have rules about minimum coverage and maximum deductibles, too.
RV liability insurance through Progressive, for example, could be as low as $125 per month. Extras, such as replacement of damaged personal items, pet injury coverage and protection for RV accessories, increase the price. You’ll pay more for insurance if you live in your RV full time, too.
If you don’t have an extra garage space or parking pad, or your homeowners association prohibits RVs, you may have to rent a storage space. Prices for a 10′ x 30′ drive-up enclosed storage unit are between $165 and $315 per month in Charlotte, North Carolina, where LendingTree is headquartered.
RV maintenance costs depend on how comfortable you are taking the DIY approach. Wheel-bearing packs, water heaters and air conditioners are typically serviced annually to prevent problems. Inspections of your RV, including its electrical system (recommended to be checked every six months), water system, appliances and accessories, alignment and furnace, should also be conducted regularly, ideally annually. An annual inspection and cleaning of your RV’s rubber roof is also recommended to avoid expensive repairs. Generator oil changes or gas generator services and chassis maintenance requirements depend on how much you use your RV.
There’s no reliable way to estimate maintenance costs for all RVs, but a rule of thumb might be to set aside about $120 per month. Call your local RV service department to get a ballpark estimate of what it may cost to maintain the RV you want and figure those costs into your budget. Don’t forget to ask about costs associated with winterization and de-winterization if you plan to store your RV for a few months at a time.
Buying, insuring, storing and maintaining an RV, not to mention paying any necessary taxes your state may require, represents a considerable expense. Before you make the commitment, think about renting the type of RV you’d like to buy. This will let you test drive the RVing lifestyle — and a particular model — to make sure it’s a good fit before taking the plunge into RV ownership.
How to get an RV loan when you have bad credit
A bad-credit RV loan will cost you more than a traditional RV loan. As of the date of publishing, we found APRs (annual percentage rates) as low as 4.59% for applicants with good credit. Applicants with bad credit, if approved, may have to pay as much as a 24.99% APR that can go up to their state’s legal limit.
Lenders use your credit history and FICO credit scores to determine how much risk you present. They set interest rates based on their perception of that risk as well as the type of RV you want to buy and its age. Don’t be surprised if your interest rate on an RV loan is higher than your auto loan rate. RVs are considered a luxury item, and they present a higher risk to lenders.
If you get preapproved for an RV loan before you go shopping, you can increase your negotiating power at the dealership. The sales team may take you more seriously if you walk in with a preapproval letter from a lender, which will help you get a better price. You could fill out a single online form and receive several offers from lenders, depending on your creditworthiness.
Increase your down payment
Talk with the lenders you consider when researching your RV loan options to find out how making a down payment could help your situation. Ask if making a larger-than-required down payment could help you get a better interest rate or improve your odds of qualifying for an RV loan. Some lenders already require a down payment of up to 20%.
Work on your credit
FICO credit scores range from 300 to 850. People with lower credit scores are statistically more likely to default on their loan. Poor, or bad credit scores are below 580.
If you want to lower the interest rate you’ll pay, or if you have problems getting approved for an RV loan, you can take steps to help improve your credit.
Which lenders offer RV loans for people with bad credit?
Even with credit that’s less than perfect and FICO scores in the lower tiers, you still have options when it’s time to finance your RV purchase.
- Nationwide availability
- Rates and terms vary
- Lack of in-person customer service
While they may offer RV loans nationwide, they also lack in-person support. If you decide to use an online lender for a bad-credit RV loan, you may be restricted to relatively low amounts and terms.
My Financing USA
Some online lenders, such as My Financing USA, have divisions that specialize in bad-credit RV loans. My Financing USA approves applications with credit scores as low as 550 with terms up to 12 years. Past bankruptcies are OK. Loan amounts range from $10,000 to $75,000. This lender requires a 10% down payment, but you can include your trade-in. There is also a $495 document fee at the time of closing. APRs with this lender could go as high as 24.99%* based on your state of residence, the RV you want to finance, your credit and other factors.
Southeast Financial is another online lender that offers bad-credit RV loans. You may be approved for an RV up to 15 years old if you can prove a stable employment history, a credit score of 550 or higher, a prior positive installment loan history and a minimum annual income of $20,000. With this lender, having a down payment of more than 20% will help your chances of getting approved. Interest rates start at 4.74%* but are based on credit history. Those with bad credit will pay more, although a maximum isn’t defined on Southeast Financial’s website. This lender offers terms up to 240 months.
If you are looking for face-to-face attention, you may prefer to work with your credit union or bank to get your RV loan. You may also find lower rates and longer terms at a credit union, which may consider factors other than your credit.
- Membership required
- Lower rates, possibly even for those with poor credit
If you are a member of a credit union, start there. Ask about its RV loan options. Some credit unions don’t offer them; others require certain minimum credit scores to approve an RV loan. USAA, a bank with membership open to active service members, veterans and their families, offers RV loans to those with “fair” and “needs improvement” credit, but it does not disclose a specific score.
FedEx Employees Credit Association
Your local credit union may offer loan approval on a case-by-case basis without a minimum credit score. For example, members of FedEx Employees Credit Association should talk with a loan officer about their application. They may be approved based on many factors; these include credit score, but there is no set minimum.
FedEx Employees Credit Association will loan up to 100% of a new motorized RV’s purchase price in addition to license and tax and title fees. For new, non-motorized RVs, it will lend up to 90% of the sale price, including tax, title and license. If the RV is used, it will loan up to the used wholesale price.
APRs for good credit at FedEx Employees Credit Association range from 7.29%* to 9.29%*.
- Benefits for existing customers, sometimes including interest-rate discounts
- In-person service
With an established relationship at a bank, your credit score may be less of a factor than at financial institutions where you don’t have a history. For example, Wells Fargo doesn’t impose a minimum credit score but takes each applicant’s situation, including their current debt levels, income and the RV they want to buy into consideration. There’s no application fee, and Wells Fargo doesn’t charge an early payment penalty or origination fee.
If you arrange to have your RV payment deducted automatically from your Wells Fargo bank account, you’ll get a 0.25% interest-rate discount on the loan’s APR.
- Convenience, but it could come at a cost
- If you want a specific brand of RV, your choice for dealerships may be limited
Depending on the RV dealership you work with, you may be able to get an RV loan, even with bad credit. Dealers can connect you to partner lenders. While it may seem like the quickest and easiest way to get RV financing, it also may come at an additional cost.
The dealer could simply offer you the loan from their partner that offers them the highest finder’s fee. This may not be the lender that offers you the best terms and interest rate for your situation, however. If you shop around for a loan at a bank, credit union or online lender first, you can take that offer to the RV dealership and ask them to beat the rate you have in-hand.
“Buy here, pay here” dealers may work with bad credit borrowers, but be cautious. This type of in-house financing could come with particularly high rates or add-ons. If you decide to work with one of these types of dealerships, you’ll have to choose from their available inventory.
Other types of financing
There are other options for financing an RV, including using a credit card or peer-to-peer loan, particularly if you’re considering a relatively low-cost, used RV. But both options typically have higher interest rates than alternatives.
Another option if you can’t qualify for a bad-credit RV loan is to take out a personal loan to pay for the RV. You may be able to get approved for a bad-credit personal loan with a lender such as Avant or First Financial, even with credit scores that fall below 499.
Be prepared to pay interest that reaches the legal limit for your state: as high as 35.99%, depending on where you live. You may also face an origination fee and loan terms as short as 24 to 60 months. You may face additional restrictions on loan amounts, depending on your credit, which could limit your RV choices.
Home equity loans
If your credit is in bad shape but you have equity in your home, you may be tempted to access that money to finance your RV via a home equity loan or line of credit (HELOC). Doing so means you’ll secure your RV loan with your home as collateral. If you default on your payments, you could lose your home. For this reason, we don’t recommend using funds secured with your home to finance an RV.
The bottom line
While RVing is a great way to see the country, with bad credit, it could be a challenge to get financing with terms that are affordable. But after a bit of research and shopping around, you should be able to hit the road for the best views America has to offer. One of the best ways to prepare is to use a loan calculator to help you understand the total cost and make sure the monthly payments fit easily into your budget. Your bad credit means your RV loan may cost you more, but it doesn’t have to be a barrier to owning and enjoying an RV.
*Rate accurate as of August 27, 2019