Valley Credit Union - What Happens If I Can't Afford My Camper Payment?

Buying an RV or camper opens up a world of possibilities. Maybe you bought one to travel safely during the pandemic, or explore the beauty of Oregon’s coastline on your own time. Maybe you wanted to live more adventurously or take weekend trips to Silver Falls or Crater Lake.

But now, your financial situation has changed. You’ve hit some bumps, and you’re struggling to keep up with your camper payments. What happens next?

In this post, we’ll walk through your options if you can no longer afford your RV loan. From selling to refinancing to RV debt forgiveness possibilities, we’re here to help you make a smart financial move, with a focus on what makes the most sense for Oregonians.

What Happens When You Can’t Pay Your RV Loan?

The hard truth is that if you want to keep your motorhome, you will need to find a way to continue making payments. In the next section, we’ll explore some options for doing just that.

Let Your RV Get Repossessed

If you stop making payments and default on your RV loan (i.e., fail to make the agreed-upon payment), the lender has the legal right to repossess it. The terms of how exactly that plays out will depend on the terms of your contract.

Repossession affects your credit and could lead to further financial consequences, including being held responsible for the remaining loan balance if your RV sells for less than what you owe. Avoiding repossession is usually in your best interest.

Voluntarily Surrender Your Motorhome

If you know you can’t afford your payments, voluntarily surrendering your RV is often a better alternative than repossession.

What happens when you voluntarily surrender your RV? You return it to the lender before they have to take legal action. While this is in many ways like having your RV repossessed, there are often different downstream consequences. This move may soften the financial impact and show your lender that you’re acting in good faith, which can sometimes lead to more favorable terms or reduced penalties.

Sell Your Camper or RV

If your RV still holds value, selling it may be the best way out. If you owe less than it’s worth, you can sell the RV, pay off the loan, and keep the difference. But if you’re trying to get out of an upside-down RV loan, i.e., you owe more than what your camper is worth, you’ll need to cover the difference to transfer the title.

Some Oregonians explore private sales within the state to get the best price, but just remember that you can’t sell an RV with a lien on it until the loan is paid off.

Can someone take over my RV loan payments?

You may be able to find a buyer who is willing to take over your loan payments through an official loan assumption process, but your lender must approve it. Most RV lenders require the new borrower to apply, qualify, and be approved before assuming the loan. Without formal approval, you’re still responsible for the debt even if someone else is making the payments.

How to Get Out of an Upside-Down RV Loan

To get out of an upside-down RV loan, you can:

Refinance to better terms
Sell your RV and pay the difference out-of-pocket
Negotiate a settlement or possible RV debt forgiveness

What is RV debt forgiveness?

RV debt forgiveness is when your lender agrees to forgive part of your loan balance, usually after a repossession or a settlement agreement. It’s rare and typically reserved for extreme cases, but it can happen. Keep in mind that forgiven debt may be considered taxable income.

Oregon credit unions may be more flexible than national lenders when it comes to working out hardship-based solutions, especially when you're part of the local community.

Ways to Keep Your Camper or RV

You love your RV and the lifestyle it offers you. You’ve run the numbers and think that, with a bit of reorganizing, you could afford to keep the camper. Now that you’ve made the decision, how can you make it a reality?

Short of miracles, winning the lottery, or a generous benefactor gifting you some money, you’ll need a sensible way forward. If you want to hold on to your RV and keep your loan in good standing, here are two options:

Pay Off Your RV Loan

This may sound counterintuitive if you’re already struggling with payments, but if you have other resources available, like a home equity line of credit, savings, a bridge loan, or other assets, those funds could be used to pay off your loan.

Paying off your loan would be a clean exit. If you’re able to eliminate your loan now, you’ll avoid ongoing interest and preserve your credit. You won’t have to worry about RV debt forgiveness or finding someone to take over your loan payments.

Refinance Your RV Loan

Don’t assume refinancing is off the table just because you’re having trouble making your current payments. Refinancing your RV loan, especially through a credit union, may give you access to:

Lower monthly payments
Better interest rates
Longer repayment terms
Improved overall loan terms

Can I refinance if I’m behind on RV loan payments?

In many cases, yes, especially if you refinance through a credit union. Even if you’ve missed payments, some lenders may work with you to create a new loan structure with lower monthly payments. It’s crucial to act quickly and reach out before your loan goes into default.

At Valley Credit Union, we want our community members to be able to make the most of everything the beautiful state of Oregon has to offer. If you want to discuss your options for refinancing your RV loan, feel free to reach out so you can continue exploring the open road!

Your RV Loan & Your Financial Health

While you’re contemplating your options, it’s important to take some time to understand how various courses of action might affect your financial well-being. Don’t hesitate to consult with your banker to talk through these scenarios.

Whichever path you choose, consider the long-term impact. Missing payments or defaulting on your loan can significantly damage your credit score and make it harder to borrow in the future. Meanwhile, if your RV is repossessed or surrendered, you may still owe a balance, and that balance could be turned over to collections or even result in legal action.

And don’t forget about taxes. If your RV was classified as a second home or business vehicle, different tax rules may apply. It’s worth consulting with a financial advisor or tax professional to understand the implications of your decision.

VCU, for RV Loans & Much More

At Valley Credit Union, we have a vested interest in our communities since we’re not just lenders, we’re your neighbors. We take pride and pleasure in serving Oregon’s Linn, Marion, Polk, and Yamhill counties.

As a community-based credit union, we’re ready to assist those who live and work in our area with their RV financing needs. Our dedicated and knowledgeable team is here to answer questions, advise, and help with loan applications.

Because we’re a member-operated, not-for-profit financial institution, you can count on lower interest rates, fewer fees, and a comprehensive line of products and services. Plus, our extensive online and real-world tools and services make it easy for VCU members to get their banking done.

If you’re struggling with your RV loan, we can help you explore your options, whether that involves keeping your motorhome or letting it go. Contact us today to discuss next steps.

What Happens If I Can't Afford My Camper Payment?