How to finance summer fun with RV and boat loans
Summer is the perfect time for adventure, and there’s no better way to make the most of it than with a recreational vehicle (RV) or boat. Whether you’re planning cross-country road trips or cruising the open waters, securing the right financing and understanding the financial commitment can make your dream a reality.
Lenders design RV loans and boat loans to help outdoor enthusiasts afford these major purchases without breaking the bank. However, understanding loan terms, interest rates, and additional costs is essential to securing the best deal. We’ll explore how to finance summer fun with RV and boat loans, covering everything from credit score requirements to loan amounts and the best financing options available.
Understanding RV and boat loans
RV and boat loans function similarly to auto loans, allowing borrowers to finance their purchase and make monthly payments over a set period.
Loan terms and interest rates
Loan terms typically range from a few years to over a decade, depending on the loan amount and model year of the RV or boat. The loan terms you qualify for will depend on factors such as your credit score, income, and whether the vehicle is new or used.
Interest rates on RV and boat loans vary based on your creditworthiness and the lender’s policies. Borrowers with excellent credit will likely qualify for the lowest rates, while those with lower credit scores may face higher annual percentage rates (APRs).
Factors affecting your loan
Several factors impact the terms of your recreational loan, including:
- Credit score: Lenders typically list a minimum credit score required to obtain a recreational loan. Higher scores lead to better rates.
- Model years: Newer RVs and boats often qualify for longer loan terms and lower interest rates, while older models may have higher financing costs.
- Annual percentage rate (APR): The APR includes the interest rate plus any additional fees, giving you a better understanding of the total borrowing cost.
Calculating your loan payment
Using an auto loan calculator can help you estimate your monthly payment based on the loan amount, interest rate, and term. By adjusting these factors, you can determine the best financing option for your budget. Secure a preapproval to allow you to shop for an RV with confidence, knowing the loan amount and interest rate you qualify for.
Don’t let hidden costs rain on your summer fun
When financing an RV or boat, it’s easy to focus solely on the loan terms, interest rates, and monthly payments. However, ownership comes with additional expenses that can significantly impact your budget. Understanding these hidden costs will help you avoid surprises and make informed financial decisions.
Insurance
Just like cars, RVs and boats require insurance, which can vary based on factors like the model year, loan amount, location, and usage. RV insurance covers damage, theft, and sometimes personal belongings inside the vehicle. Full-time RVers often need specialized coverage, which can be more expensive than standard policies. Boat insurance coverage depends on the boat type, size, and whether the boat will be used in freshwater or saltwater.
Registration and taxes
State laws require RVs and boats to be registered annually. Taxes, including sales tax at the time of purchase, also add to the total cost.
RV registration fees vary by state and may depend on the vehicle’s weight and model year. Depending on where you live, you may also need to pass an annual vehicle inspection to keep you on the road. Boat registration fees differ based on boat length, horsepower, and state regulations.
Storage and transportation fees
If you don’t have space at home, storing your RV or boat can become a significant expense. Off-season storage for RVs can range from $30 per month for outdoor storage to $200 per month for indoor or climate-controlled facilities. Marina slips or dry storage facilities charge monthly fees that vary based on location and boat size. You may need to winterize your RV or boat if you’re planning to store it outside.
You also need to consider the vehicle you will use to transport your fifth-wheel or trailered boat. Your vehicle needs proper horsepower and towing capability to handle heavy equipment, which can significantly increase vehicle wear-and-tear and reduce your usual mileage.
Fuel, maintenance, and operational costs
Both RVs and boats require regular maintenance to remain in top condition. RVs require oil changes, tire replacements, generator servicing, and appliance repairs that can add up quickly. Boats also need regular service, including cleaning and waxing. Saltwater use may accelerate wear-and-tear.
RVs and boats aren’t known for their fuel efficiency. Depending on the model, fuel economy ranges from six to 15 miles per gallon, meaning long trips can become expensive. Boat fuel consumption depends on the engine size, boat weight, and speed. A full tank for a powerboat can cost several hundred dollars.
Campground and marina fees
When traveling with an RV, you may need to stay at campgrounds with nightly fees. Free camping is quickly becoming obsolete, and while campgrounds are still far less costly than hotels, stays can add up. Similarly, boats may require daily, weekly, or seasonal dock rentals when not in storage.
Equipment and accessories
Purchasing an RV or boat is just the beginning — you’ll need additional equipment to enhance your experience. Leveling blocks, generators, basic living necessities, and solar panels add to the total cost of RV life, while boats can require a trailer, safety gear, life jackets, navigation systems, and hobby equipment like fishing gear and water tubes.
Tips to ensure your budget is water-tight
- Improve your credit score: A higher credit score leads to better loan terms and lower interest rates.
- Apply for a loan preapproval: Getting preapproved allows you to know your borrowing capacity and estimated monthly payment, and can give you negotiating power when dealing with sellers.
- Choose the right loan term: Longer loan terms result in lower monthly payments, but may increase the total interest paid over time. Shorter terms save money on interest but come with higher monthly costs. Don’t forget to factor in depreciation!
- Factor in additional costs: Beyond the loan itself, consider insurance, maintenance, storage, and fuel costs when budgeting for your RV or boat.
Financing an RV or boat can make summer adventures more accessible, allowing you to enjoy travel trailers or boating excursions without a large upfront payment. Whether you’re looking for the lowest rates, or flexible loan amounts, careful planning and financial smarts will ensure you get the best possible deal. With the right financing in place, your summer fun is just a loan away!
