What to Consider When Buying an RV

April 8, 2024
Owning and maintaining a recreational vehicle could become a bit of a financial headache if you're not careful.

As much as you might love the idea of "RVing," the reality of owning and maintaining an recreational vehicle could become a bit of a financial headache if you're not careful. Here are a few things to consider before buying an RV.

Be realistic about what you want

Understanding how—and how often—you'll use the RV will help you determine the type to buy. Are you looking for basic amenities or deluxe features? Do you need space for an office or additional guests? Most important, how much RV can you afford? From a used camper van to a state-of-the-art motor home, the differences in features and cost can be staggering; prices can range from several thousand dollars to well over $500,000.

When you step aboard one of the new, completely decked-out models, you'll be wowed. But remember: A brand-new RV, like any other vehicle, will likely lose a significant chunk of its value as soon as you drive it off the lot. So, before you open your wallet, take a deep breath and carefully evaluate your priorities.

Don't underestimate ongoing costs

Let's say you find the RV you want at a price you can handle. Have you thought about expenses beyond the purchase price? For example, the usual expenses that come with owning and driving a vehicle—gas, insurance, maintenance, registration, and repairs—could cost a lot more for an RV than they do a regular car or truck. Plus, having a large RV parked in your driveway may not sit well with the neighbors—and could even be against the rules in your neighborhood or city—so you may need to factor in storage costs, as well.

You may think that what you'll save on typical vacation expenses like airfare, hotel bills, and restaurants will balance out these additional costs, and that's a good point. But be sure to also factor in campsite fees and related charges like propane. And with the post-pandemic popularity of RV travel, you may have to reserve your campsites well in advance—which can undercut the thrill of spontaneously hitting the road.

If you plan to finance the purchase, also think about how much that loan will cost you over the long haul. Recent statistics show the average amount financed for an RV is more than $60,000, with terms typically ranging from five to 15 years—or as long as 20 years if your loan is in the hundreds of thousands of dollars depending on the size of your RV. Choosing a longer-term loan can make the monthly payments more manageable, but it also means you'll be paying more interest (see "Loan Ranger," below)—and rates for RV loans tend to be higher than those for auto loans.

Loan Ranger

A longer-term loan may make for more manageable monthly payments, but don't overlook the true cost of such financing.

  • Five-year loan
  • 10-year loan
  • Amount borrowed 
  • Five-year loan
    $50,000
  • 10-year loan
    $50,000
  • Interest rate
  • Five-year loan
    7.9%
  • 10-year loan
    7.9%
  • Monthly payment
  • Five-year loan
    $1,011
  • 10-year loan
    $604
  • Interest paid over life of loan
  • Five-year loan
    $10,686
  • 10-year loan
    $22,480
  • Total cost
  • Five-year loan
    $60,686
  • 10-year loan
    $72,480

Don't let your other goals take a back seat

The key thing is to approach such a purchase as a financial decision like any other. Start by looking at your budget to see if and how it fits in—and remember, this is a want, not a need, and belongs on your nonessentials list.

Next, ask yourself what short-term trade-offs you'll have to make to handle this new expense. If you finance the vehicle, will it increase your debt load beyond a manageable level? More important, are there any long-term consequences to consider? If the cost of buying and maintaining an RV will leave your savings for other goals running low—especially when the goal is retirement—it may be best to hit the brakes.

Try before you buy

You don't have to own an RV to experience life on the road. National rental companies and marketplaces (similar to Airbnb) can point you to a range of RVs for hire in your area. Renting could mean the trip of a lifetime and convince you that buying an RV is right for you. Or it may help you avoid a major case of buyer's remorse down the road.

 

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk, including loss of principal.

The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.

Supporting documentation for any claims or statistical information is available upon request.

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