Are RV Loans Assumable? Here’s What You Should Know

RV ownership offers freedom and adventure, leading many to consider purchasing these recreational vehicles. Financing an RV often involves securing a loan, similar to financing a car or a home. A common question for potential buyers and sellers concerns the assumability of these loans. Understanding whether an existing RV loan can be transferred to a new owner impacts how transactions are structured.

What Makes a Loan Assumable

An assumable loan allows a new borrower to take over the existing loan’s terms, including the interest rate, remaining balance, and repayment period, from the original borrower.
The primary factor determining a loan’s assumability is the presence or absence of a “due-on-sale” clause, also known as an alienation clause. This provision grants the lender the right to demand full repayment of the outstanding loan balance if the collateralized property is sold.
Lenders include due-on-sale clauses to protect their investment. Most conventional loans contain these clauses, making them generally non-assumable. However, certain government-backed loans, such as those from the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and U.S. Department of Agriculture (USDA), are often designed with assumability in mind, provided specific criteria are met.
When a loan is assumable, the lender requires the new borrower to undergo a credit and financial evaluation. Lender approval is essential to formalize the transfer and release the original borrower from liability.

Assumability of RV Loans

RV loans are generally not assumable in most transactions, primarily due to the widespread inclusion of due-on-sale clauses in lending agreements. These clauses require the current loan to be paid off when the RV is sold. RV loans are typically conventional loans, structured to prevent assumption.
The rapid depreciation rate of recreational vehicles also contributes to lenders’ reluctance to allow loan assumptions. An RV can lose significant value quickly, making lenders wary of transferring the loan without a fresh assessment of risk. Lenders prefer to evaluate each new borrower’s creditworthiness from scratch, ensuring they meet current underwriting standards and minimizing exposure to potential default.
Administrative complexities further deter lenders from offering assumable RV loans. Processing an assumption involves a new application, credit checks, and legal documentation. While rare exceptions might exist, these instances are uncommon. Attempting an informal “take over payments” arrangement without lender approval carries financial risks for both the buyer and seller, as the original borrower remains liable for the debt.

Steps for Assuming an RV Loan

In the rare circumstance that an RV loan is assumable, the process involves direct engagement with the original lender. The first step for a potential buyer is to contact the current lender to confirm if the loan is assumable and to understand their requirements.
Once assumability is confirmed, the prospective buyer must submit a formal loan assumption application to the original lender. This application is comprehensive, requiring detailed financial information. A credit check will also be performed to assess the new borrower’s creditworthiness and ensure they meet qualification standards.
Upon approval, both the original borrower and the new borrower will sign an assumption agreement, formally transferring the loan obligation. This agreement details the loan balance, interest rate, and payment schedule, confirming the new borrower’s responsibilities. Closing costs are typically paid by the new borrower. Obtaining a release of liability for the original borrower from the lender is important, ensuring they are no longer financially responsible for the loan.

Options When RV Loans Are Not Assumable

Since most RV loans are not assumable, buyers and sellers must consider alternative financing and sales strategies. For buyers, the most common approach is to secure a new RV-specific loan through banks, credit unions, or specialized RV lenders. These loans typically require a down payment and have terms extending from 10 to 20 years. Another option for buyers is to obtain a personal loan, which offers flexibility but may come with higher interest rates and shorter repayment periods. Purchasing the RV with cash is also a straightforward alternative.
For sellers with an outstanding RV loan, the primary method is to sell the RV and use the proceeds to pay off the existing loan balance. This ensures the lien on the title is released, allowing for a clear transfer of ownership. If the sale price is less than the remaining loan balance, the seller will need to cover the difference. Sellers can explore selling the RV through a dealership, which often handles the loan payoff, or through a private sale, where the seller manages the payoff directly.
A less advisable option is for the seller to carry the note, also known as owner financing, where the buyer makes payments directly to the seller, who then continues to pay the original lender. This arrangement is risky for both parties; the seller remains liable for the original loan if the buyer defaults, and the buyer does not hold legal title until the original loan is satisfied. Such private financing without formal lender approval can lead to complications, making it a discouraged practice.