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Initiate a no-obligation “soft pull” on your credit, providing you the advantage of understanding your purchasing capacity on an RV loan.
This allows you to shop for your dream Recreational Vehicle (RV) within your budget before dinging your credit.
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Qualify For A RV Loan
Obtaining Recreational Vehicle financing is a straightforward process; however, individuals boasting a credit score of 600 or above can access more favorable rates and terms. Those with excellent credit are better positioned to qualify for special introductory rates offered by lenders. For those with credit scores in the mid-500 range, there are still loan options available.
What is the Minimum Credit Score for an RV Loan?
There is no definitive minimum credit score required for an RV loan, but there are some banks that will consider applicants with scores in the 640 or 670 range. Typically, you will need a credit score of at least 680 to get approved for an RV loan.
- 640-670 Range: Some banks might consider applicants within this range.
- 680 and Above: Generally needed for approval, with higher scores leading to better terms.
The higher your credit score, the lower your interest rate will be, which will save you money over the term of the loan. Additional credit limitations and requirements typically apply for scores under 700.
To get a personalized estimate, use an RV loan calculator to determine your estimated monthly payment based on your FICO credit score. This tool can help you understand how different credit scores impact your financial obligations.
By knowing your credit score and how it affects your loan options, you can make more informed decisions and potentially save money in the long run.
Lenders typically assess your credit and may request specific details, such as:
Personal Info:
Name, date of birth, phone number, address, social security number
Financial Info:
Income, monthly expenses, employer information, DTI
RV Info:
Whether it is used or new, age, and estimated value
Your RV Has Never Been Closer
Motorhome Loan Criteria
Securing financing for an RV shares similarities with obtaining loans for cars, trucks, and other recreational vehicles, where the acquired vehicle serves as collateral for the loan. Initially, you’ll search for an recreational vehicle that aligns with your needs and budget, then proceed to submit an application. A down payment, typically ranging from 10% to 20%, is usually required, though variations may exist.
Furthermore, eligibility for motorhome financing entails meeting the criteria established by the financial institution. Lenders commonly assess your income, liabilities, credit score, and may consider factors such as employment stability.
Meeting the bank’s requirements for securing an RV loan involves a thorough evaluation of your income, obligations, credit history, and other relevant factors, including employment stability.
How To Compare RV Loans
LOAN
AMOUNTS
Your eligibility for an RV loan, including the maximum loan amount offered, is determined by factors such as your credit score, credit history, income, and the value of the RV. If you are in need of a substantial loan, certain lenders may impose higher income and credit score criteria. Additionally, lenders assess elements like debt-to-income ratio and employment stability when evaluating your eligibility for RV loans.
ANNUAL PERCENTAGE RATES
The annual percentage rate (APR) of an RV loan represents the comprehensive cost of borrowing money, encompassing both the interest rate and any additional fees. A higher credit score generally results in a lower APR for Rec Vehicle loans. Fees associated with RV loans may include taxes, title fees, registration fees, and loan processing fees.
REPAYMENT
TERMS
The length of your loan repayment determines the timeframe for settling your Recreation Vehicle loan. Opting for a more extended term lowers your monthly payments but results in higher overall interest costs. On the flip side, choosing a shorter term increases your monthly payments while offering savings on interest in the long run.
QUALIFICATION PROCESS
Each lender establishes unique eligibility criteria, but most consider factors such as your credit score, income, payment history, and debt-to-income ratio. Improving your credit score and managing existing debt can boost your creditworthiness in the eyes of lenders.
Discovering the Best RV Loan Terms
When it comes to RV loan terms, there’s no one-size-fits-all answer. The right term for you can range from 10 to 20 years, depending on several factors.
Factors to Consider:
- Financial Situation: Evaluate your current financial health and future income projections.
- Age of the RV: Newer RVs might qualify for longer terms.
- Loan Amount: Larger loans may benefit from extended repayment periods.
Short-Term vs. Long-Term Loans
Short-Term Loans (10-15 Years)
- Pros:
- Lower overall interest costs.
- Faster equity building in your RV.
- Cons:
- Higher monthly payments.
Long-Term Loans (15-20 Years)
- Pros:
- Lower monthly payments.
- Easier budgeting for larger borrow amounts.
- Cons:
- Higher total interest paid over the life of the loan.
It’s crucial to balance your need for manageable monthly payments against the desire to minimize interest costs. Consulting with a financial advisor can provide personalized guidance tailored to your unique situation.
What is DTI?
Recreational Vehicle Loan Income and Debt Info
Lenders commonly utilize a debt-to-income ratio (DTI) to assess an individual’s eligibility for an RV loan. This is because a person may have a substantial income but also carry a significant amount of debt, whereas another individual may have a lower income but a much lower level of debt. The ratio is generally what holds significance for an Recreational Vehicle loan lender. Generally you should stay under 36% DTI ratio, however there are exceptions.
To calculate your DTI for an RV loan, you’ll need two pieces of information:
- Your gross monthly income
- The total of your monthly debt payments, including house/rent payments, car payments, personal loans, student loans, and credit cards.
Imagine your monthly income is $7,500, and your monthly debt, which includes the new RV payment of $245, adds up to $2,745. Calculate the debt-to-income ratio (DTI) by dividing your debt by your income, yielding a DTI of 36.6%. While it’s near the 36% guideline, it remains within an acceptable range. Congratulations, you’ve successfully met the DTI requirements for your RV loan!
Here are a couple other examples to illustrate possibilities:
how Much does your credit score matter?
Credit Score When Applying for a Camper Loan
Your credit score serves as a comprehensive indicator when applying for an RV loan, and a higher score generally bodes well for your creditworthiness.
This numerical representation aids lenders in deciding whether to approve a loan and, if approved, at what interest rate and duration. Lenders assess the risk associated with each loan applicant, and a high credit score suggests a likelihood of timely payments on the new RV loan.
Key factors influencing your credit score, listed in order of importance, include:
-
Payment history (timely repayment of debts)
- Outstanding balances, especially in relation to available credit (favorable with a credit utilization of 30% or less)
- Length of credit history (established good credit is advantageous)
- Recent credit applications (multiple applications in a short period may raise concerns)
- Types of credit accounts (a diverse credit mix is beneficial)
While we often refer to a single credit score, consumers actually have three different scores. Lenders may use varying scores for decisions on RV loans and other types of loans. Although the scores are generally similar, they may not always be identical.
The top three credit reporting agencies—Experian, Equifax, and TransUnion—oversee consumers’ credit and provide lenders with scores. You can review your credit reports from these agencies annually at no cost, with AnnualCreditReport.com being the government-sanctioned platform for this purpose.
As far as what’s considered a good score, here’s the rubric for Experian’s credit score (FICO®):
- Exceptional: 800-850
- Very good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
Just like with any other part of the RV loan approval process, each lender will have their own criteria for what credit score is acceptable. If you want to increase your credit score to qualify for an RV loan, consider the following tactics:
-
Make all debt payments on time, ensuring at least the minimum amount is paid.
- Maintain a low credit utilization by using no more than 30% of your available credit.
- Only apply for credit when necessary.
- Inquire with the lender about the possibility of conducting a soft credit inquiry rather than a hard one to avoid it appearing as an official application, particularly if you are still in the process of considering your options and not yet prepared to apply.
Additionally, it is important to review your credit reports to ensure that there are no inaccuracies that could negatively impact your credit scores. Contact the agencies to address any errors and take the opportunity to look for indications of identity theft. If you notice anything suspicious or incorrect, taking action to rectify the issue can improve your credit scores.
Budgeting For your New RV
Other Monthly costs to consider when buying a new camper
The previous discussions have focused on the potential loan amount a lender might consider for financing an RV purchase. It’s crucial to also consider your personal financial circumstances and how this investment will fit into your budget.
When choosing an RV to buy, assess the size of the down payment you can realistically afford while still allowing room for savings. Additionally, take into account the ongoing expenses associated with RV ownership.
- Fuel costs
- Campground fees
- Regular maintenance expenses
- Repairs
- Monthly insurance premiums
- Parking fees
This information can guide you in making an RV purchase within an appropriate price range.
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Great people to work with and very knowledgeable about the RV purchasing process. Highly recommend Elite.
Thomas McCarthy – New RV Owner
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