A Guide to Qualifying for RV Loans with Low-Interest Rates


When shopping for RV loans, looking around for the best interest rates is as important, if not more important, than securing the loan itself. This is because it can sometimes mean the difference between a luxurious RV and a total financial burden.

For instance, a loan whose interest, when accumulated till the end of the repayment period, exceeds the initial amount of the vehicle is often not worth it. Loan interest is one of the primary ways that lenders and dealers make profits out of their RV sales

Here are some ways to avoid being at the mercy of lenders’ sometimes exorbitant rates.

Put your credit account in order

Before applying for a loan, obtain your free credit report. If you have a bad credit history, unpaid debts on your credit card, or a credit score lower than 640, it might be in your best interest to hold off on your loan application for a few months.

Lenders typically consider borrowers with the earlier-mentioned credit situations a higher risk. You should make sure to review your credit records and get any errors rectified immediately. Pay outstanding bills and make a habit of prompt payments to better qualify for a low-interest rate.

Save sufficiently for your down payment
The more capable you appear to afford your loan, the less risky you look to the lender.
20% is the down payment requirement for most RV loans, and not being able to provide this will limit your ability to negotiate a lower interest rate with the lender. What’s more, making a higher down payment reduces the total amount of interest you pay in the long run.

Work on reducing your debt-to-income ratio
DTI, which is the percentage of your monthly income that is used to repay debts gradually, can affect the lender’s optimism to finance your RV loans at a lower rate.

A DTI that is higher than 45% communicates that you already have a considerable amount of your income going into debt repayment and may not be able to pay back a new loan. If they must take the risk on you, then it will be at an excessive rate.

You can guide against this by waiting a few more months to pay off some of your debts to increase your purchasing power.

Do a thorough shopping around
Getting a low-interest rate depends on your ability to shop around and compare RV financing rates and terms. Some lenders are more flexible than others in negotiating terms, and if you can commit more efforts to your search, you will most definitely get a reasonable rate.

Consider extending your loan duration
We recommend that this option be considered last. This will often mean that the overall interest at the end of the loan duration will significantly exceed that which you would have paid if the loan were to last for a shorter period.

But if what you seek is affordability and do not mind paying more in the long run, then extending the duration of your loan lowers your monthly interest rate. This approach will provide you with more financial stability.