The initial cost of your travel trailer or RV will dictate the majority of what your RV payment will be. Other factors of how much your trailer payment will be are down payment, taxes upon purchase, interest rate on the loan, term of the loan, accessories added, insurance, and licensing/registration costs.
Many dealers advertise very low prices per month, but fail to mention these are very long term loans. In order to be at a $150 per month payment like many dealers advertise, you would have to buy a $20,000 trailer with 0 down payment. Finance rate would be 4% and term would be 15 years.
How much is the average RV payment?
The average RV loan can vary wildly, but on average a RV loan is $225-$650. This figure is based upon a $35,000 travel trailer at varying interest rates and payment terms with zero dollars for a down payment. Other travel trailer prices and payments can vary depending on many factors.
Lets go through the process of breaking down the monthly payment cost over different variables. All of these variables will vary depending on the travel trailer you choose, your credit, how much down payment, the term of the loan, the interest rate, etc. Lets get into the RV monthly payment guide.
RV Monthly Payment Guide
Initial Cost of Travel Trailer
Travel trailers or RV’s vary wildly in price. Travel Trailers can cost anywhere from $10,000 to over $100,000. RV’s can cost from $40,000 to upwards of $300,000. On average, I would peg the average consumer spending $20,000-$35,000 to get a good quality travel trailer. For this example, we will use a price of $25,000 for a travel trailer.
Total Purchase Price $25,000
You may be able to add some accessories at the time of purchase to your RV loan, this could include solar panels, generator, weight distribution hitch, or other items. When you add accessories at the time of purchase, you may able to add them to the financing on your travel trailer. If you are looking to get any bigger items, look into purchasing them with your RV as there may be an additional discount or your dealer may throw in a hitch for free. For our example, lets add a weight distribution hitch for $500 included in our purchase.
Total Purchase Price $25,500
Many states have sales tax, if yours doesn’t, woohoo you can celebrate your reduced trailer cost. If not, prepare to add an additional amount to your trailer purchase. The average state tax rate in the United States is 6.5% over all 50 states but range from 0% up to almost 10%. Lets use 6.5% in our example. 6.5% of the purchase price would total $1,657.50 on this transaction.
Total Purchase Price $27,157.50
If you have money laying around, it is a good idea to put some money down on your travel trailer purchase and may even be required by some lenders, but make sure to save some for some accessories and gear. If you put $5,000 down on our example price of $25,000, you would only need to finance $20,000. The amount of a down payment can directly affect how much of your purchase will need to be financed. For this example we will use a down payment of $2,500 so you can have some money left over for your accessories or a generator.
Total Financed Price $24,657
At the time of this writing, RV loan rates range from 4.74 to 6.79%. A longer term also affects these rates as will your credit score and many other factors. If you have a relationship with a local bank, this may be the best way to get a good rate. We have seen some local banks advertise 1.99% recently, but could not find any of these promotions while doing our research.
For a loan under $25,000 terms we have found popular term ranges from 48-144 months or 4-12 years. The term can drastically change a payment amount, for example, if you finance $25,000 over 4 years at 5%, you would pay $575 per month. Under those same parameters, a 12 year loan would result in a $231 monthly payment. The kicker is that over the 4 year loan you would pay $2,635 in total interest whereas over the 12 year loan you would pay $8,296.
What is my RV payment?
If you make this purchase and pay on a 5 year loan using the above parameters, your payment will be $575 per month. Below is a table of monthly payments based on the term of the loan based on 5% interest as well as a row showing the total interest paid.
|Length Of Loan||4 Years||5 Years||8 Years||10 Years||12 Years|
|Total Interest Paid||$2,424||$3,042||$4,953||$6,274||$7,632|
In house financing vs your own Lender
It is always a good idea to compare lenders rates as the lender your dealer typically uses may have higher fees or rates. When we were shopping, we found lenders that were lower than our dealer by 1% or more. This can make a big deal over the life of the loan especially if it is on the long side. In good faith, you can always ask your RV dealer to match the loan to give them the business, but if they can’t, try and save money where you can. Always remember, auto loans are easy to refinance, so if rates go down, you can always refinance very quickly.
In addition to your trailer purchase, you will have to pay annual registration fees. Typically these may range from $100-130, or may vary depending on your state. Licensing your vehicle will give you plates so you ar legal to drive on the roads. Some registrations may give you the option to buy a parking pass to your states parks. This may be a good idea. For our state, the option is $40 additional dollars per year. But each time we go to a state park it costs $7 to get in. So this $40 at time of license saves us after 5 times we go in.
Your new travel trailer will require insurance. For our 21’ unit, we pay $430 per year or about $35 monthly. This seems to be a fairly cheap number for the piece of mind of full coverage. Always check with your insurance companies for the best rate and play around with different coverages. We found that we could add coverage for other items and our liability for only a couple of bucks more per month. It’s worth the extra time to get the right rate for you.
To sum up this article, we have given you some examples of different payment terms. What you pay for your travel trailer, interest, and term are the largest factors on your RV monthly payment. When you are shopping, you will find your sweet spot for your budget with the cost as well as term, and your interest rate will be determined based on what bank you use and what current market rates are. We hope you enjoy the process when you are purchasing a trailer, it is a difficult and stressful time so make sure to take a deep breath and have fun!
These monthly prices may seem a bit high, but we have an article that describes how you can help offset some of your RV purchase price by renting it out to others, or even get it paid for.
What are typical RV terms?
Typically, RV loans range from 4-15 years. As your RV purchase gets more expensive, you can choose a longer term to lower your monthly payment. If you are financing a large RV typically over 50,000 some banks will lend up to 20 years.
Is an RV Tax Deductible?
Under current regulations, a RV is deductible as it can be qualified as a second home. The interest is what you could save by deducting from your taxes, but typically this will just reduce your expenses, but the interest you pay to the bank will still be more.
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