Owning an RV can open a world of opportunities for adventure and exploration. With a home on wheels, you can pack up and head to your next destination any time you like.
For many people, one small set back to owning an RV is the hefty price tag, which is in the tens of thousands, even hundreds of thousands of dollars.
Fortunately, there are solutions to this financial problem. And along them, but rarely considered, is a rent to own RV. As you’ll learn below, this financing is more ideal for people struggling with their credit or who have no credit history, but it could be a route to RV ownership for anyone.
If you have strong credit history, a good credit score and healthy income, other financing choices like a loan may be a better option.
What to Know about a Rent to Own RV
Just as the name implies, a rent to own RV is one in which you pay a monthly rent as a tenant, and a portion of that rent goes toward the overall cost of the RV. Your regular monthly payments build up until you have enough to own the RV outright. That is, if you choose to buy it at that time, because typically you’re not obligated.
You work out the terms of the rent to own RV up front, and then sign a contract that lays out the price you agree to pay to purchase it.
The contract also includes what your monthly payments will be, and how much of those payments will be applied toward the overall cost of the RV. Finally, it includes the point at which you’d make a decision whether to actually buy the RV or not.
As a word of warning, if you choose not to buy with rent to own contracts, you lose all the money you had been paying toward the cost through your rent payments. Instead the payments are treated exactly like rent. So, the RV owner or RV company would keep that money.
Rent to own RVs are usually a good option for people with lower credit scores or a poor credit history. That’s because they have lower credit requirements because the rent to own contract is very low risk for the seller. The seller legally owns the RV until a time when it can be paid for in full, so there is not much downside for this type of financing.
Typically, major companies that sell new RVs don’t offer a rent to own policy, but there are some companies that offer rent to own policies. The rent to own RV is more common with used vehicles or campers, where the owner and potential buyer draft a custom contract together. It is less common with new RVs.
Buy Vs Rent An RV
If you want to travel frequently in an RV, you might be torn between renting an RV when you need it, or just buying out outright.
Of course, the major factor here to consider is costs.
To help narrow in on the differences in costs, it helps to make a detailed list of the cost expectations for both renting and buying an RV. First, establish a timeframe in which you expect to be using the RV – whether it’s a few months or a few years.
With the cost of renting, your estimate should include the daily or weekly average rental fee multiplied by the number of days you expect to use the RV.
With the cost of buying, your estimate should include the full price of an RV that fits your lifestyle and budget, even if you plan to go with a rent to own contract. Then calculate both the costs of renting and buying over, say, five years. Each person will have a different conclusion as to whether renting or buying is best for them, depending on their own situation.
Aside from costs, you may want to ask yourself if you have the time and the facilities for owning an RV. While they don’t require daily work, they do require regular maintenance like oil changes. Like with homes, it’s not ideal to let an RV just sit for extended periods of time. They need to be driven fairly regularly so that their motor stays healthy.
How Much Does an RV Cost?
The average cost of a new RV ranges from as low as $10,000 to as high as $500,000 and up. A basic mobile home is about $1,000, but that can vary as well. How much an RV costs depends on a variety of factors like the model and features. Of course, used RVs cost less than new RVs, although you might face more maintenance costs with them.
Here are 10 examples of specific RVs from common brands, along with their current listed price as of 2020:
- Mercedes-Benz Weekender Getaway van: Starts at $27,995
- Thor Four Winds 23U: Starts at $55,249
- Winnebago Class B Solis: Starts at $101,717
- RoadTrek Ram ProMaster 3500 2021 Play: Starts at $104,986
- RoadTrek Ram ProMaster 3500 2021 Chase: Starts at $142,660
- Classic mode by Storyteller Overland: Starts at $149,748
- RoadTrek Ram ProMaster 3500 2021 Zion Slumber: Starts at $153,986
- Winnebago Class B Revel: Starts at $174,906
- Winnebago Class B Boldt: Starts at $201,050
- Airstream Atlas 2021: Starts at $239,261
Of course, with a rent to own RV, prices will be lower.
That’s because you will probably be leasing a used RV, which are cheaper than these examples of new models. Prices vary widely according to the age of the vehicle as well as the condition.
RV Cost of Ownership
Before you dive into buying an RV or a rent to own RV, you do need to factor in the cost of ownership, which includes a few key expenses beyond the initial price tag.
Here are some common expenses to consider when you face the RV cost of ownership:
As a large vehicle, an RV consumes a lot of gas. Roughly estimate your mileage and multiply it by the cost of gas in your area to get a sense of what gas will cost you.
If your RV gets 15 MPG, you travel 15,000 annually and the cost of gas near you is $2.30 per gallon, then your annual fuel costs would be $2,300 (15,000 / 15 *2.3). You can use an online calculator like GasBuddy to help you calculate gas costs.
You’ll need a place to keep your RV. Many people rent campsite in a park with other RV owners. Those fees can range from $10 to $100, depending on the area and facilities offered.
Just like with your car, you’ll have to budget for regular maintenance like oil repairs, cleaning and plumbing issues. These costs can average $120 per month, according to LendingTree.com.
You’ll be required to insure your RV, whether you have a towable RV or a motorhome. Insurance costs vary by company and type of RV you have, as well as your risk factor. In general, it costs $500 to $700 to insure an RV.
5.) Loan Interest
If you take out a loan to pay for your RV, you’ll want to be aware of how much the interest will cost you over time. For example, if you have a $55,000 loan with a 6% interest rate on a 6-year loan, you’ll end up paying more than $10,000 in interest. Use an online calculator to help you figure out what you’d pay in interest on your loan.
If you’re not driving your RV all the time, you’ll need a place to keep it. Storage costs can average $50 to $300 per month.
How Much Does It Cost to Rent an RV?
The costs to rent an RV ranges in the ballpark of $100 to $200 per day, but that varies widely according to both the model of RV you want to rent and the area where you are renting from. Larger motorhome RVs are more expensive than smaller towable trailers.
One popular platform to find a rental in your area is rvshare.com. You can search availability, size and price in your location.
If you’re planning a longer trip, you can often save money on the daily cost of an RV by renting in larger time blocks, say for the week or for the month.
Other Ways to Finance an RV
Aside from a rent to own RV, you can find many other ways to finance the cost of an RV, some being better than others.
Here are a few ways to finance a mobile home:
1. Personal Loan
A personal loan, which allows you to repay a loan with monthly payments over a set time, is a common way to pay for large expenses like an RV motorhome or trailer. The better your credit score, the more likely you are to get a good interest rate. Lower interest rates save you more money, so shop around for the best loan.
2. Credit Card
Paying for an RV with a credit card is definitely not ideal. Consider it toxic to your finances. With this option, you would be putting yourself into debt, which can have a negative impact on your credit history – not to mention it can easily cost much more. If you carry that debt from month to month, you’ll be charged interest rates that can make the total cost of your RV much more expensive than you’d planned. In very rare cases, it may make sense to put the cost of an RV on a credit card if you gain rewards that can provide you a return. But this strategy is risky. You must payoff the full amount within a month or you’d incur hefty interest charges. Another downside is that the cost of an RV is often much more than what credit cards offer through a credit line.
If you have enough money in savings, paying for an RV in cash is an ideal way to buy. This way, you avoid getting hit with interest charges or other fees. Be sure you have enough in savings to cover emergency expenses or another other purchases you’re planning before you deplete your savings. (Read also: A $1,000 Emergency Savings – Is it Enough?)
4. 401(k) Savings
Financial advisors would not recommend that you tap into your 401(k) retirement account to pay for an RV. If you do choose to withdraw funds early, factor in the early withdrawal penalty fees. And have a plan for ensuring your long-term retirement goals stay on track.
RV or Hotels?
If you’ve got the travel bug, you may be wondering whether you should rent to own an RV or just stay in hotels. After all, the daily cost of an RV is about on par with the average cost of a hotel room.
This is a decision that has several pros and cons on each side – and not all of them are costs.
For one, more people are turning to RV travel amid the coronavirus pandemic. They view it as a way to travel without the risks involved with staying in a hotel with other people. RV deliveries were up
To compare costs, first estimate how often you will want to either use the RV or stay in a hotel room.
What is the Difference Between an RV and a Mobile Home?
An RV is designed for avid travelers, whereas a mobile home is designed to stay in one place. The kind of RVs that you drive as a whole unit instead of towing behind a vehicle are often referred to as motorhomes.
RVs are generally smaller and are meant to provide you a living space while you move around. Mobile homes, which are usually larger than RVs, are considered “mobile” because the materials to make them are easily transported to a site. But the mobile home is meant to stay put.
A mobile home’s main advantage over a traditional home is that it can be constructed quickly and is typically more affordable.
Is a Rent to Own RV the Same as a Rent to Buy RV?
The terms sound similar, and some people use them interchangeably. But a rent to own RV is not the same as a rent to buy RV.
The main difference is that with a rent to buy contract, you get the amount you’ve paid in rent credited toward the purchase of any vehicle from the company, which is usually a used RV dealer. You may rent one vehicle from a company, then choose to apply your rent credits toward the purchase of a different vehicle.
In contrast, the rent to own leases are intended to sell the exact vehicle that is being rented, not a different one.
The Bottom Line
A rent to own RV is an ideal way to try to achieve the goal of owning an RV without the expensive upfront cost.
With this method, you can pay little by little and work the payments into your budget instead of paying a lump sum all at one. However, depending on your financial situation, it’s worth looking into other financing options as well, including loans designed for RVs and personal loans.