How can I get out of my rv loan fast and easy

By Izzy M Reviewed by Nooreen B Edited by Sarah R
Modified on February 13, 2024
how can i get out of my rv loan

A recreational vehicle (RV) is an excellent investment for people that love to travel in comfort. However, drivers may struggle to pay RV loans if they have unaffordable loan terms. You may ask yourself, “How can I get out of my RV loan?” Learn what options are available when you can’t afford RV loan payments. 

What Is an RV Loan? 

An RV loan is a secured installment loan that helps consumers afford the purchase of a recreational vehicle. You can obtain RV loans at a bank, credit union, or dealership. Borrowers can pay off RV loans over several months or years. However, the average repayment length is 72 months for new vehicles. The cost of monthly payments depends on the repayment length, loan amount, and interest rate. 

When a person applies for an RV loan, the lender will conduct a credit check to determine the loan terms. An excellent credit score can help a consumer obtain a low-interest rate, high loan amount, and a longer loan term. But bad credit scores can negatively affect borrowing. RV loan applicants with poor credit may get subpar loan terms, making the repayment process a hassle. 

Lenders use the RV as collateral during the repayment process. If a borrower falls behind on payments and defaults on the RV loan, the lender can repossess the RV. RV financing can help consumers get on the road quickly, but secured loans are always risky. 

Can Borrowers Get Out of RV Loans?

Owning an RV is exciting because you can travel spontaneously, however, it can cost a lot out of pocket. Not only do you have to pay off the RV purchase, but you also have to pay insurance agencies, registration fees, excessive gas costs, and more.

If you made an RV purchase but are struggling to make monthly payments, you may want to get out of the camper loan. The great news is that there are plenty of options available for consumers that cannot afford recreational vehicles due to high loan payments. 

Transfer Ownership of the RV

If you cannot afford your RV payments and prefer to give up ownership of your motor home, you can transfer ownership. However, your ability to transfer an RV loan to another person depends on your loan contract. 

Even if your lender allows you to transfer ownership of the RV, the buyer must meet the qualification requirements. The new RV owner must have a decent credit score and a reliable source of income. Once the RV buyer receives approval from the lender, you can modify the RV title at your local Department of Motor Vehicles. After the title transfer is complete, the new owner will be responsible for the remaining loan balance. 

Refinance the RV Loan

You can refinance the loan if your monthly RV payment is inconveniencing your life. Refinancing means replacing your existing loan with another that has different loan terms. Better interest rates and extended repayment lengths can make paying off the loan more manageable. 

The refinance process is similar to applying for a new loan since you must submit an application and undergo a credit check. If you prefer, you can refinance with a different type of loan and a completely new lender. For example, you may find loans for bad credit online that offer sufficient money and lower interest rates. You could even refinance with an unsecured loan that allows you to protect your RV purchase.

There is no limit on how many times you can refinance a car. You can try applying for second refinancing if your first one’s terms do not work with your current financial situation. As long as you get approval, you can refinance as much as you need until you obtain a loan offer that works for you. But remember that too many loan inquiries will decrease your credit score and look bad on a credit report.

Voluntarily Surrender the RV

When a consumer defaults on a loan, they fail to upkeep the payment agreement. If you cannot afford the cost of the entire loan, you can voluntarily surrender the vehicle to the lender. A voluntary surrender will significantly impact your credit score, but the damage is lower than an involuntary repossession. 

Having a vehicle repossessed is a costly process for the borrower. The lender may issue recovery and towing fees, which can cost hundreds of dollars! Giving up your RV may be the best solution if you cannot obtain alternative financing options. 

What Happens to My Credit if I Get Out of an RV or Car Loan?

Financial options are available if you don’t have enough money to continue paying off your financed motor home or travel trailer. But no matter your choice, your credit score will likely take a hit. 

Your credit score has already decreased if you have missed any RV loan payments. A borrower’s payment history is one of the most crucial factors for credit score calculation. Missed or late payments will lower your score and remain on your credit report for seven years from the delinquency date. 

Repossessed and surrendered assets will also stay on your credit report for seven years. However, the impact of a voluntary surrender is less damaging than a repossession. Financial institutions may be more willing to work with a borrower that took the initiative and worked with the lender. 

How to Quickly Pay off an RV Loan

Once your finances are stabilized, you can focus on paying off that RV loan quickly! Paying off a loan before the maturity date can help you save on interest fees. Most vehicle loans end up costing thousands of dollars in interest. You can use that money for other expenses! 

However, checking your loan contract before making early payments is essential as some lenders charge prepayment penalty fees. Paying off loans early means the lender makes less money, which some lenders counteract by charging prepayment penalty fees. But if your lender allows early payments, you can focus on increasing your payment amount to become debt free quicker!

Make Bi-Weekly Payments 

Most borrowers pay RV loans monthly, but if you can, start making payments biweekly! Making more payments will help you speed up the repayment schedule. Suppose your repayment length is twelve months. If you make biweekly payments of the same amount, your repayment length will shorten by six months! You will end up saving yourself six months’ worth of interest fees.  

Round Up Monthly Payments

Pay more than the monthly payment amount if you have extra money to spare. Increasing the amount you pay to the lender will shorten your loan and help you save money. Pay as much as you are able! For example, if your RV loan is $185 monthly, try rounding it up to $200. 

Increase Your Income

Increasing your income is the best way to pay off your debt quicker. When you have more money to spare, you can make larger debt payments to shorten your repayment schedule. You can increase your monthly income by taking up a side job. There are plenty of work opportunities for various interests and schedules. If you have a vehicle, you can make takeout deliveries. If you love animals, you can try walking dogs or house sitting. 

The Bottom Line

If you are the owner of an RV you can no longer afford, there are a few ways to get out of the RV loan. You can sell your asset, surrender the vehicle, or refinance your loan. Refinancing allows you to keep your RV and get more manageable loan terms! 

Borrowers can refinance their debt with secured or unsecured loans. Using an unsecured loan to refinance your RV loan may result in higher interest rates. Still, you can protect your asset from repossession while you pay off the debt. If you want a lower interest rate that keeps more money in your pocket, refinance with a secured loan. 

Many finance options are available, such as loans based on income, not credit. Consider your options carefully and take time to compare lenders. Ensure you know how much you want to pay each month and how long you want to make payments before finalizing a loan agreement. 

If you need more info, like the best place to get an rv loan, the CreditNinja Dojo has you covered!

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