From filling up the gas tank to insurance to the vehicle itself, purchasing an RV can be an expensive investment. If you’re considering buying an RV, it’s crucial to understand how RV loans work. Your loan terms may vary widely depending on numerous factors.
Financing for recreational vehicles can get confusing. These vehicles’ size and complexity are just two reasons why RV loans are so long and why they’re separate from other auto loans. We’re here to help you better understand these loans so you can determine your ability to purchase an RV.
Why are RV loans so long? To learn more, contact Canada Powersports Financing.
Factors That Determine Your RV Loan Term
Several factors are at play in determining why RV loans are so long. These factors will vary based on your financial and credit situation and the RV you intend to purchase.
The size of your RV loan, meaning the dollar amount, will alter the length of the loan term. These terms will change with different financial institutions. However, the following parameters can give you a general sense of loan size to loan term:
- Loans under $25,000 have terms of five to seven years
- Loans of $25,000 to $50,000 have terms of 10 years or less
- Loans of $50,000 to $100,000 have terms of 10 to 15 years
- Loans over $100,000 may have terms of 20 years or more
Always check with your lender to know the exact terms of your loan.
RV Type and Age
Motorized recreational vehicles, trailers, and experimental-type vehicles may qualify for different loan terms.
Lenders may offer shorter loan terms if the RV you intend to purchase is older. For example, the loan term for an RV that’s ten years or older often is five years or less.
Your Credit Score
Why are RV loans so long? As with any auto loan, an RV loan’s terms will vary based on your credit score. With a good credit score, you’ll likely be able to secure a lower interest rate and a lower loan term.
Unlike auto loans, some RV loans are unsecured. An unsecured loan does not use collateral. In other words, the lender cannot repossess the RV in question if you’re late on payments.
However, unsecured loans typically have higher interest rates and shorter payment periods.
Lenders generally offer unsecured loans for smaller RVs. Nonetheless, your approval for a loan depends on your credit score.
For larger luxury RVs, banks may only offer secured loans. Therefore, they will be able to repossess the RV if payments aren’t timely.
RV Loans from Canada Powersports Financing
So why are RV loans so long? Though their size and complexity contribute to a loan’s duration, several factors affect the final loan terms. Depending on the buyer, RV, and other considerations, loan terms can vary significantly.
Canada Powersports Financing is the place to go if you require reliable RV financing. Apply online today!