After months of lockdowns, scared Americans who are desperate to travel are buying recreational vehicles (RV's) so they can enjoy some type of vacation this summer.
Sales of “Covid campers” are so brisk that some RV dealers are having difficulty keeping them in stock, just as the traditional start of camping season and summer travel season arrived on Memorial Day.
Some states have closed public campgrounds during the coronavirus pandemic, though more are allowing RVs and other campers to stay, according to a chart from the RV Industry Association. RV dealers are open for business in most states.
How To Buy An RV
There are plenty of RV dealerships to buy from. But before walking onto a sales lot or making an online appointment, there are a few things to consider.
The first is deciding what type of RV you need. There are motorhomes that can be driven, and towables that must be towed by another vehicle. The prices can be similar, so it may come down to your comfort level of driving a motorhome versus towing a trailer.
You can start with pop up campers or small travel trailers to make RVing easier. Mid- to large-size RVs are also available. One of the biggest types of RVs is a fifth wheel RV with a special hitch that attaches to the truck bed and has two levels with a large amount of room.
Buying New vs Used
It’s cheaper to buy a used RV instead of a new one, but there are advantages and disadvantages to each.
Besides saving money, here are some other advantages to buying a used RV:
Can rebuild and restore it to your liking.
May find an RV that’s not in production anymore.
As with buying anything used, you can never be sure of what happened before your purchase.
Some of these risks of buying used might be:
- No warranty from the manufacturer.
- RV may have problems you can’t see, which can lead to high repair costs.
- High cost of upgrades to new technology.
Similar to CarFax, you can do your best to get a historical report from your RV by checking out RVchecks.com
How To Finance Your RV
RVs can cost from $10,000 to $300,000, depending on the style and features. Most motorhome prices start at around $100,000, according to Camper Report.
A moderately-appointed camper trailer pulled behind a truck might cost $20,000, while a fifth-wheel can be $40,000.
How you pay for it depends on your finances. If you have enough cash, buying an RV outright can save you from paying interest charges on a loan.
Unsecured personal loans from $1,000 to $100,000 for one to five years are an option at interest rates that currently average around 11%. An excellent credit score or collateral aren’t required to be approved for personal loans
. If you fall behind on payments, you won’t risk having your RV repossessed.
You may be better off getting an RV loan, which can be used to buy a new or used RV and is often cheaper than a personal loan. Financing is through an online lender, bank, credit union or the RV dealership you’re buying from.
Like a car purchase where the car is the collateral, the RV will serve as collateral for the RV loan.
Most RV loans have repayment terms of 10-15 years, with some as long as 20 years.
According to Bankrate, if you have excellent credit an RV loan can start at around 4.5% interest. Rates could be as high as 24% for buyers with poor credit, such as a FICO score below 580.
A larger down payment than the 10% typically required by RV companies can lower monthly payment and make qualifying for a loan easier.
Don’t expect an RV loan to be cheaper than a car loan. RVs are considered luxury items, causing lenders to be more cautious about lending money for items that are expendable in times of financial crisis.
Owning an RV has other costs besides the purchase price. They include:
Gas and maintenance.
Camping and storage fees.
Insurance Costs For RV Owners
If you’re buying an RV with a loan, your lender will require RV insurance before it approves financing. The bigger and newer the vehicle, the more expensive insurance will be.
RV insurance will cover the same things your home and auto insurance covers, and often more. Every state has minimum liability insurance requirements, though you may be able to set the collision and comprehensive limits.
Comprehensive coverage is for if your RV is stolen or damaged by an animal or storm, for example. After making a claim, you’d first have to pay a deductible before collecting money from the insurer.
You may also want to buy extra insurance for your RV, to cover such things as:
Attached accessories such as awnings and satellite dishes.
Upgraded interiors and custom features.
Total loss replacement.
Uninsured and underinsured motorists.
Living in your RV full-time.
Driving across state or country borders.
You’re probably going to be using your RV part-time for vacations only, so you may want to buy vacation liability insurance. It has a common limit of $10,000 that provides comprehensive and collision coverage. If you injure someone or damage property, this cheaper form of insurance will cover you.
RV insurance is only in use when the vehicle is on the road. If you store it at your house or at a storage facility during the winter, for example, then you can add a storage option to your insurance policy to cover fire, theft and storm damage while in storage. This should lower the premium.
Prices for any type of RV insurance are all over the map. RV insurance can cost from $125 to $25,000 annually, according to Bankrate.
Insurance and the purchase price are the biggest costs of RV ownership, and should include shopping around for the best deal.