RV Finance Term: Understanding the Length of a Loan

RV Recreational Vehicles (RVs) offer the promise of adventure and freedom, but also for most buyers, a hefty price tag. RV loans allow you to finance your dream RV and pay it off over time. To better understand RV loans, we’ll delve into the world of RV finance terms, covering what they are, the range of terms available, and why you may opt for a longer or shorter loan term. We’ll also explore how the interest rate and term length are interconnected, and how you could adjust your RV loan terms, even after the purchase, through refinancing.


rv finance terms

What is an RV Finance Term?

The RV loan term refers to the period over which you’ll repay the borrowed money used to purchase your RV. The loan term dictates the length of time you must make payments (typically in monthly installments) until the loan is fully paid off.

Typical RV Loan Term:

The length of an RV loan term can vary widely, but it typically falls within the range of 24 to 240 months, or 2 to 20 years. Some lenders may offer a loan term outside this range, but most buyers find that a term within this range is the most manageable and popular.


RV Loan Length

Why Would I Want a Longer RV Loan Length?

Lower Monthly Loan Payments:

With a typical fixed interest rate, a longer loan term results in lower monthly payments, which can make the purchase of an RV more affordable for many buyers. This is especially advantageous if you have a tight budget or don’t want a substantial monthly financial commitment.

For instance, if you’re eyeing a Class A motorhome that comes with a higher price tag, opting for a longer-term loan might allow you to comfortably manage your monthly expenses while enjoying the luxuries of your dream RV.

More RV Options:

A longer RV loan term allows you to explore a broader range of RV options since your monthly payments are spread out over a longer period.

Why Would I Want a Shorter RV Loan Term?

Pay Less Interest:

With a typical fixed interest rate, a shorter loan term can mean you’ll pay less interest over the life of the loan. This is because the interest has less time to accrue, ultimately saving you money in the long run.

If you were to opt for a 10-year loan with an interest rate of 5.00%, you’d pay significantly less interest compared to a 20-year loan at the same rate.

Own Your Rig Sooner:

A shorter RV loan term leads to quicker ownership of your RV. If you want to own your RV outright and be free of monthly payments sooner, a shorter loan term is the way to go.

Imagine the freedom of owning your RV outright in just a few years. This means no more monthly payments, allowing you to redirect those funds toward other goals or simply enjoy your RV without the financial burden each month.

Interest + Term Length

The interest rate on your RV loan may be influenced by the loan term length. With many lenders, a shorter term tends to have lower interest rates compared to a longer term. Lenders take on less risk with a shorter term, as there is less time for unforeseen financial changes to impact your ability to repay the loan. Less risk generally equates to lower interest rates.

It’s important to understand the relationship between interest rates and the loan term when choosing your RV financing. Here’s how it works:

Short-Term Loans:

Lenders often offer lower interest rates for a shorter loan term because they can predict market conditions and borrower behavior more accurately over a shorter period. This means you’ll pay less interest over the life of the loan.

For example, if you secure a 5-year RV loan at a 4.00% interest rate, you’ll pay significantly less interest compared to a 15-year loan at a 6.00% interest rate. The shorter term not only reduces the total interest paid but also results in higher monthly payments.

Long-Term Loans:

A longer loan term usually comes with a higher interest rate. This is because lenders are taking on more risk by committing to a lower monthly payment over an extended period, making them more susceptible to market fluctuations and borrower circumstances.
Consider a 20-year RV loan at a 7.00% interest rate; While the monthly payments are lower, you’ll end up paying significantly more in interest over the life of the loan compared to a shorter-term loan with a lower interest rate.

When deciding what loan term is right for you, it’s essential to strike a balance between your monthly budget and your long-term financial goals. While a longer term typically offers lower monthly payments, it could result in higher overall costs due to interest. Alternatively, a shorter term may have higher monthly payments but could save you money in the long run.


typical rv loan terms

How to Adjust Your Term

Life is unpredictable, and your financial situation might change after you’ve purchased your RV. Fortunately, you could adjust your term through RV loan refinancing. To refinance your current RV loan:

Evaluate Your Current Loan:

Gather all the relevant information about your existing loan, including the interest rate, remaining balance, monthly payment, and the current market conditions. Understanding these details will help you make a more informed decision during the refinancing process.

Check Your Credit Report:

A higher credit score often leads to better refinancing options, including lower interest rates.

Before applying for refinancing, take the time to check your credit report. A higher credit score coupled with a history of on-time payments to your current loan could open doors to more favorable loan terms. If your credit score has improved since you originally purchased your RV, you may be eligible for a lower interest rate.

Find out how to get a free copy of your credit report.

Apply for Refinancing:

Once you’ve gathered all your relevant information (be prepared to provide detailed information about your current loan and RV, including the year, make, model, and current mileage) and checked your credit report, apply to refinance your current RV loan. Ironhorse Funding will evaluate your creditworthiness and the value of your RV to determine whether you qualify for a loan.

Before you commit to the term length of your loan, you can apply for pre-qualification with Ironhorse Funding. If you prequalify, you will see an option for rates and term lengths to choose from. The best part is there is no social security number required for the prequalification process through Ironhorse Funding and no impact to your credit score, as this system utilizes a soft credit pull rather than a hard credit pull.

If you choose to accept the prequalification offer, you’ll need to complete the application with your social security number in order to be eligible for loan approval.

Click here to apply for prequalification to refinance your current RV loan.

Understand Your RV Finance Term

Understanding your RV finance term is essential when refinancing your dream RV. Whether you opt for a longer or a shorter term, it’s crucial to consider your financial situation, goals, and how they align with your current budget. Remember you can adjust your loan term through refinancing if your circumstances change, allowing you to continue enjoying your RV with peace of mind.

Choosing the right RV loan term is a significant financial decision that can impact your budget and overall RV ownership experience. A longer-term may lead to lower monthly payments and broader RV options but may result in higher overall costs due to interest. A shorter term may lead to quicker ownership and a reduced interest rate but requires a higher monthly payment.

Ironhorse Funding will help and work with you to carefully evaluate your financial goals, budget, and creditworthiness when selecting your loan term. Additionally, remain informed about market conditions and interest rates, as they play a crucial role in determining the overall cost of your RV loan.

Lastly, remember that refinancing is a valuable option that allows you to potentially adjust your RV loan term after purchase. You could secure a more favorable RV loan term and achieve greater financial flexibility. Ensure your RV ownership experience remains enjoyable and financially sustainable.