2020 has been a wild year. You needed a vacation, but you can’t really fly anywhere or take a cruise. The obvious solution seemed to be to get that RV you’ve been eyeing for a while and venture out.

But now you’ve hit some bumps and your open road has turned into a rocky road — you’re no longer able to make your camper loan payments. What now? Keep reading, as we lay out the various scenarios and your options.

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 pay for it. We’ll explore some of your alternatives for continuing payments in the next section.

Ultimately, though, if owning an RV is beyond your means, you’ll have to give it up. There are a few ways this can happen.

Let Your RV Get Repossessed

This might not be what you want to hear, but it’s a definite possibility. If you default on your loan (i.e., fail to make the agreed-upon payment), the lender has the legal right to move forward with the repossession process. The details of how (e.g., time, place, etc.), exactly, this plays out depend upon the terms of your contract.

Voluntarily Surrender Your Motorhome

If you know you can’t make your loan payments, you can preemptively return your RV to the lender. While this is in many ways like having your RV repossessed, there are often different downstream consequences. Your lender may look favorably upon your proactivity and show of taking responsibility, which could lead to less severe fallout. It’s also sometimes a little less expensive to surrender your RV than have it repossessed.

Sell Your Travel Trailer

This could be a good option, especially if you have equity in the vehicle. If you can sell the motorhome for more than the amount of the outstanding loan, you’ll even get to pocket some money. If you’re upside down in your RV loan (i.e., owe more than the camper’s worth), it gets a little more complicated. Also, you can’t sell an RV with a lien against it. The law requires that you pay off your loan before selling the RV; otherwise, you won’t be able to transfer its title.

How To Pay for Your RV

You love your RV and the lifestyle it offers you. You’ve run the numbers and think that, with a bit of rejiggering, 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. Here are a couple of possible routes you can take:

Pay Off Your RV Loan

At first blush, this might sound counterintuitive since the whole point is that you can’t afford your camper loan anymore. After all, how’re you to pay off an entire loan if you can’t pay one portion of it?

The idea here is to find money elsewhere that you can then apply towards your RV loan. This money may come from a home equity line, a bridge loan, selling some other assets, redirecting funds earmarked for other purposes, etc. Once you’ve found the funds, you simply pay off the balance of the loan.

Refinance Your RV Loan

Many people don’t realize this is a viable choice for them. There’s a myth that just because you can’t afford your current loan payments that you’d never qualify for a new (refinanced) loan. Despite your difficulties with your existing loan, it’s quite possible that you can still refinance and park yourself in a more financially sustainable spot.

By refinancing your loan, it may be possible to lower your interest rates, lower your monthly payments, change the duration of the loan, or adjust other terms of the contract so that it’s better for you. This is particularly true if you refinance your RV loan with a credit union, which is eager to help its members succeed financially as well as achieve life goals.

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.

Defaulting on a loan can negatively impact your credit rating for many years. It can cause your credit score to drop significantly, which, in turn, can make it more difficult for you to borrow in the future. You’re also subject to collections efforts and to being sued for breach of contract.

Additionally, you may have tax issues to consider. For example, if you classified your RV as a second home, it will impact how you can sell or refinance it.

VCU, for RV Loans & Much More

More than just a bank, Valley Credit Union has a vested interest in our communities. 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.

On the Road Again, Affordably

If you’re having trouble making your RV loan payments, you have options. The key is to determine which path — keeping your motorhome or letting it go — is best suited to your current and likely future position.

If you want to continue being a road warrior, Valley Credit Union can help. We can work with you to refinance your RV loan so that it is manageable.

In fact, right now we’re running a special promotion for RV-enthusiast members just like you. VCU will beat the current interest rate and/or lower the payments on any of your vehicle or RV loans not presently financed through Valley. If we can’t, and you’ve been a member for at least 90 days, we’ll give you $500 cash.

About the Author

 Justin Roberts, Vice President of Lending

Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.