How many years can you finance a motorhome?

By Elaine Knight
Page last updated: 23/08/2021 | Next review date: 23/08/2023
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Elaine Knight
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In this blog post, we will answer the following question: How many years can you finance a motorhome? We will discuss the advantages of financing a motorhome and explain how you can do it. 

How many years can you finance a motorhome?

Usually, you can finance a motorhome for 10 to 20 years, depending on the type of credit you choose and whether you are using a bank or a finance company. When buying your motorhome, you will need to find a financing solution. Even if you have enough money in your bank account, it is often better to take out a loan or credit.

Surely there are two forms of loan that involves leasing your vehicle:

  1. Rental with Purchase Option: works for new vehicles, over a long period. You pay rent every month and at the end of the rental, you can buy the vehicle if you wish, paying the balance.
  1. Rental with Trade-In Commitment: you set the price for the recovery of the vehicle upon purchase. At the end of your rental, you can choose a new vehicle.

These forms of loan are also called leasing. The advantage is that repairs and maintenance are included.

You can also use collaborative credit to finance a motorhome! It is a loan between individuals, useful if you do not want to go through the banks. Usually, the loans range from 3,000 dollars to 25,000 dollars and the repayment term is fixed in advance. It is not possible to make credits over 1 year, the duration is often between 24 and 60 months.

How does motorhome finance work?

The finance of a motorhome is often offered by the professional seller from whom you buy the motorhome. The dealers have contracts with credit organizations. Financing begins when your vehicle is delivered. 

The advantage is that there is no compulsory contribution and that you can choose the duration of the financing (between 12 and 180 months) as well as the monthly payments. These are also flexible.

You can also take out a loan from your usual bank or a credit institution. You also have freedom in the choice of monthly payments and the duration of the loan. The interest rate remains the same over the life of the loan.

The good news is that if you buy on credit, you have a right of withdrawal of credit for 14 calendar days from the acceptance of the credit offer which automatically results in the cancellation of the sale. The withdrawal is made with the credit institution and with the seller by registered letter with acknowledgement of receipt. Termination of credit alone is not enough.

To finance the purchase of your motorhome or to reimburse your monthly payments, consider leasing your vehicle! Rental platforms between individuals were created a few years ago and offer to put you in touch with travellers interested in renting a motorhome! A great opportunity to save some money and not leave your vehicle in the garage when you are not using it.

Other questions you may be interested in

What do I need in my motorhome?

What are the advantages of a motorhome over a caravan?

Is a motorhome classed as a caravan?

5 advantages of financing a motorhome

The main advantage of financing is that it ultimately allows you to own your vehicle. Also, even though we have access to enough funds to purchase our new RV today, it is often wiser because of the reduced rates to put that amount in the bank where it will earn more interest than the cost of financing.

Let’s see the pros of financing a motorhome:

  1. The monthly payments are reasonable: Financing a motorhome is not (too) expensive. The rates are low – 4 to 5%. And above all, these rates do not change according to the duration of the loan. If you finance for a long time, your loan is not more expensive, but the monthly payments are lower.
  1. Your savings remain untouched: Your savings account, your passbooks and life insurance continue to earn money, which reduces the cost of borrowing by the same amount. And above all, you can recover your savings in case of unforeseen needs. That’s what savings are for.
  1. It is easier to make monthly payments: To give $50,000 in a day is a very serious matter. It can even be a little dizzying. Financing is paying your purchase monthly, just as you pay your taxes on a monthly basis.
  1. You can change your mind: The loan offers you withdrawal periods that do not exist in the case of a cash purchase. 14 calendar days from the signing of the contract. Another advantage: you can make prepayments. 

But above all, buying on credit gives you the right to a whole range of additional services. A motorhome guarantee, which lasts throughout the reimbursement period. A motorhome mutual that covers you in the event of theft or damage. Or even life insurance for the borrowing spouse, in order to secure the loan.

  1. Long-term rental – even better:  Some distributors, builders or financing organizations also offer long-term rentals. You only pay your monthly payments, the distributor will even take care of the maintenance. At the end of a predetermined period, you are offered a purchase option. A worry-free formula, with a budget without surprises. 

How can you finance an RV?

An RV can be financed with the dealer, or it can be financed with a third party, such as your bank. Let’s look at these different financing options.

  1. Financing an RV through a dealer

Before deciding to finance through your dealer and buy your RV, it is important to do your research. Check their comments to see if clients have discussed financing and their interest rates. If possible, contact other clients to see if they are happy with the treatment they received.

There are some bonuses with the choice to finance through the dealer. The process is usually quick and convenient since it is not necessary to go back and forth between the credit institution and the bank. Some merchants may offer very low financing rates through promotions and sales.

There are some downsides to dealer financing as well. Oftentimes, the rates will not be as competitive, and you will not have as many payment options and APRs. The seller may use high-pressure sales tactics to get you to sign up before they have compared prices.

Only finance through the dealer if you are sure they will work with you to find the best deal possible.

  1. Financing an RV through a bank

The bank also comes with its pros and cons. Working with the same institution or lender that you have worked with before can give you the confidence that they will work with you to find a large amount and that you could give leniency in the event that a payment is missed can save you thousands of dollars and make the purchase more affordable over time.

A great advantage of your bank is that there will be no intermediary, as in the dealership. You get straight to consumer pricing without the trademark dealer.

There are some downsides to working with the bank. They usually give you the best deal possible, so there is no negotiation. Therefore, it is one to try or not to try. Also, financing through the bank can take a few days where you can get in and out of a dealership in one day.

Final thoughts

When negotiating financing or leasing, consider the amount of the monthly payment or instalment. If you want, you can use this monthly spending plan worksheet as a guide.

The only appropriate time to consider taking on additional debt is when you spend less than you earn. The extra burden of debt you decide to take on shouldn’t affect how much you set out to save for emergencies or other overriding life goals or priorities. 

If you have more questions or comments about the content, please let us know.

FAQ on How many years can you finance a motorhome?

What is the term of most RV loans?

RV loans can last from two to seven years, but the average is 60 months (five years).

Is it important to get pre-approved for financing before I start buying?

Pre-approval gives you the confidence to negotiate with a seller or private broker knowing you have a pre-approved limit.

How can interest rates vary from lender to lender?

Interest rates can vary widely. A rate of 5.99% for a specialized secured trailer loan for new utilities and those less than six years old could be increased to 12.95% by an unsecured bank loan for the same vehicle, or to 17.95% by a non-bank lender for a personal loan.

References

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