More people than ever are buying a recreational vehicle to enjoy the freedom of the open road. According to the RV Business Indicators for 2015, more than 9 million households now own an RV – the highest number ever recorded. And the pool of RV owners is expanding to younger buyers. Unlike in previous years when most RV owners were around retirement age, buyers aged 35-54 now make up the largest segment of RV owners.
So how do you go about making the RV dream a reality? While a few folks are ready and willing to plunk down cash to pay for their RV in full, the reality is most people buy their RV with an RV loan.
There are a couple of good financial reasons for getting an RV loan rather than paying cash. For instance, if you do have enough cash on hand to pay in full for an RV, that money may earn you a better rate of return as an investment than the amount you might save on interest. In addition, if you liquidate an existing investment to pay for your RV, you may incur capital gains taxes or face early withdrawal penalties on CDS. Everyone’s financial situation is different but you’ll want to think about these factors before you make the final decision on how to pay for an RV.
Tax Advantages to Financing an RV
If you do decide to finance your RV, the interest payments on your RV loan may be tax deductible. This only applies if the RV can be considered a second home. The security for the loan must be the RV itself and have basic sleeping, toilet, and cooking facilities. There are several other requirements that may affect your ability to tax the RV loan interest as a tax deduction so be sure to consult your tax advisor for information concerning your particular case.
To learn more, you can also contact the Internal Revenue Service at (800) 829-3676 and request two booklets that cover the tax deductibility of RV loan interest: “Publication 936 – Home Interest Deduction” and “Publication 523 – Selling Your Home.”
RV Financing Basics
If you are thinking about getting financing for an RV this year, here are a few financing tips to keep in mind as you shop.
- You can get pre-approved for an RV loan just as you would a car loan or a home loan
- Interest rates are generally tied to car loan rates
- Most RV loans are simple interest, fixed rate loans
- Down payments range from 10% to 20% with satisfactory credit
- In some cases, you can consolidate all your parts, accessories, service agreements, RV insurance and more into one simple monthly payment
- Terms on RV loans typically range from 10 to 20 years
Here at Ketelsen RV, we finance more RVs than anyone else in the Midwest so we understand what you need and how to make the process easy for you. We’d love to help you get started on a lifetime of camping adventures. Talk to Ketelsen RV of Hiawatha, Iowa about financing your next RV or, if you’d like to take an RV for a test drive, call or stop by today and one of our RV experts will be happy to help.
