Living in an RV is not that easy because you have to consider a lot of things, especially the financial aspects of the lifestyle. There is more to the fancy photos and videos that you see on Instagram. In reality, your budget will dictate how comfortable your RV life is when you go full time. For such reasons, you should be acquainted with the financial aspect of living full time in an RV. So before you even decide to live in an RV, learn the probable monthly spendings you will be dealing with to maintain the RVs tiptop condition, including maintenance costs and insurance costs.
How Much Is The Expected Costs of Full-time RV Living? You should expect monthly spending of around $1000 to $3000 for the monthly maintenance of your RV. A brand new RV may cost you $30,000 to $350,000, depending on the brand and added features.
You must know the necessary expenses of living on an RV full time beforehand, including the costs of maintaining the RV. It would be disastrous if you realize the lifestyle’s financial aspects when you are already living on an RV. Like every endeavor, always plan things ahead. Let us go over the full breakdown of your possible expenses to prepare your budget plan.
RVs Are Expensive! Taking An RV Loan Is A Good Option If Done Right
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Well, RVs are quite expensive and can range from the humble price of $10,000 to the extravagant price of $350,000. Some can even go up to $500,000 due to the added features and material modifications. However, you could reasonably expect a modest retail price of $120,000 for a brand new RV across multiple well-known brands. The price ranges also depend on what type the RV is, such as trailer types, fifth wheels, and of course, the motorhomes.
The travel trailers and fifth wheels are the RV types that tend to be more affordable than the motorhomes. Travel trailers and camper trailers will cost $10,000 to $20,000 on average, though some may exceed such price. Fifth wheels are around $40,000, while the motorhomes range from $30,000 up to $350,000. Motorhomes are understandably more expensive because they are, after all, a trailer and a car built into one.
RV prices are also affected by other factors such as brandings, brand new models, and even extra features. Now that we have established RVs’ priceyness, we need to consider the best way for you to buy your van based on your financial capacities. You can basically either buy your RV in full cash or take out an RV loan.
Buy Your RVs On Full Cash
Your first option is to buy your RV in full cash. Buying your desired RV in lump sum cash can present advantages and disadvantages. In general, this option is better for people who have extra savings like people who opted for early retirement to enjoy the van life community.
Advantages of Buying your RV in Lump Sum
The main advantage of buying your RV in a lump sum is not having an obligation to pay monthly amortization on an RV loan. Simply put, since you bought the RV in full cash, you won’t have to worry about monthly payments anymore. You are also not in danger of losing possession over the RV because of some monthly defaulted payments.
Buying the RV in full cash allows you to allot more budget on other important monthly spendings, both living and maintenance costs. Your monthly income could be funneled into maintaining the condition of the RV, probably by having frequent paint jobs or perhaps investing in better tires. Your credit score or rating could also benefit from you buying in full cash. Peace of mind is a luxury nowadays, especially when bills pile up!
Disadvantages of Buying your RV in Lump Sum
The obvious drawback to this option is that you are going to spend a lot of money, all at once! Not everybody has the financial capacity to buy an RV in full cash. It would appear that this option will not be available to people who do not have extra savings.
Recommended Budget-Friendly RVs
For travel trailers, Jayco Jay Flight SLX Travel Trailers are among the highly recommended budgetary options by members of the RV community. You can buy it for less than $10,000. It boasts a wide array of floor plans to choose from, 17 to be exact! It has pleated window shades, a black diamond-plate sidewall skirt, and a 13,000-BTU roof-mounted air conditioner.
For Class A Motorhomes, Thor Motor Coach Axis RUV 25.4 leads the pack to budget-friendliness. With an MSRP of $111,300, you can have a solid 27-feet long RV powered by a 6.8-liter Ford Triton V-10 motor. You could also find better deals online, with some even going as low as $70,000. This RV comes with a built-in generator and TV satellite!
For Class B Motorhomes, The Roadtrek Simplicity is a viable budget-friendly option for people who like to camp on small RVs or van-sized campers. This RV boasts a 3.6-liter engine on a Ram Cargomaster Chassis 3500 platform. Although designed to suit the needs of two people, this budget-friendly RV can sleep up to three people. Despite having an MSRP of $83,677, you can definitely save a lot of money if you avail some of the sweeter deals online for as low as $60,000, more or less!
For Class C Motorhomes, you cannot go wrong with the 2018 Winnebago Spirit 22R with its listed price of $87,588. This RV can sleep up to five people with its over-cab bunk, rear full-sized bunk, and sleep dinette. With its built-in full kitchen and bathroom, along with heated drains, this RV can perfectly do well on any kind of weather.
Things That Make The Budget-friendly RV Worth It
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Let’s start with the brand reputation of some RVs. Some RVs can be confidently said to be good budget options because of the reputation of its brand. For instance, Winnebago is a brand that is almost synonymous with the word RV. So despite the low listed price of some Winnebago RVs, you can be confident that what your buying is of good quality.
The age of the RV, including the age of the specific model, also should be considered when buying an RV. Newer models and brand new RVs tend to be naturally pricey when compared to older RVs and older RV models. Availability of spare parts, RV layout, and bonus features (like GPS and TVs) further increase RVs’ listed price.
Going For An RV Loan
Another way of acquiring an RV is by taking out an RV loan. This method involves borrowing from a lender, usually a bank, for the specific purpose of purchasing an RV for your usage. If done right, stretching out your expenses on monthly payments can allow you to save up money in the long run.
Advantages of Taking Out an RV Loan
By taking out an RV loan, you don’t spend as much money all at once when compared to buying via full cash. You can stretch the expenses into monthly payments, albeit the payments last for years. Regardless, if you strictly follow effective monthly budgeting, this method allows you to save money in the long run because most RV loans bear simple interest. Simple interest means only the principal amount incurs interest, compared to a compounded interest where both the principal and the accumulated interest incur more interest.
You could also maximize your savings if you opt for financing your RV loan. Because you do not spend so much money all at once, you can use your remaining savings for other investments. This means you are not missing out on some financial opportunities just because you bought an RV!
Disadvantages of Taking Out An RV Loan
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The main drawback in taking out an RV loan, or any other kind of loan for that matter, is the risk of being delinquent on monthly payments. Some RV loans may have accelerated clauses that will make the whole amount due and demandable upon default in monthly payments. So if you are not a diligent person, it would be best to avoid this route and just straight up save money to buy the RV in full cash.
A delinquent monthly payment could also end up with the RV being repossessed by the company lender or perhaps attached by the bank for public auction. This is the worst-case scenario for you, just like ending up chest-deep in debts. RV loans can also be difficult to obtain if you have a bad reputation or low credit rating.
The Current Interest Rates By The Prominent Banks
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As of May 2020, lender banks’ interest rates range from a modest rate of 4% to 12% annually, or even higher! It actually depends on the lender bank’s charged rate, along with your credit rating. A person with a high credit score will most likely receive better loan terms from lender banks, such as lower interest rates. Prominent banks include Lightstream, Navy Federal Credit Union, US Bank, USAA, and SunTrust Bank.
Guide To Having An RV Loan
Since taking out an RV loan appears to be an excellent option for most people with limited financial capabilities, which is most of us, there are few things you need to remember. These tips can serve as your guide when taking out an RV loan. RV loans can bury you in debt if you are not diligent enough.
Plan your budget first
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Let’s start by having a planned budget for your RV. An RV could range from $10,000 to $500,000, depending on how high-end the RV design is. In general, smaller RVs like Class B Motorhomes and Small-sized Trailers tend to be cheaper than bigger RVs. After acknowledging and deciding on the price of your desired RV, you should consider the lender bank’s repayment terms, such as the duration of the loan.
You also need to consider how much money you have for each month. For instance, if you have a monthly income of around $4,000 or more, you could probably afford a monthly RV loan payment of $1000. If you earn less than $4,000, try to negotiate your RV loan terms for lower monthly payments. You should always consider your monthly financial capacities because your monthly RV loan payments should be prioritized over any other monthly bill.
Prepare For The Down Payment
Now that you have your planned budget after considering the loan terms being offered, it is time for you to prepare your down payment. Most RV loans will set up a fixed minimum down payment during the negotiation stages. If possible, go for a bigger down payment because it will most likely result in smaller monthly payments. Also, the bigger the down payment, the lower the interest rate being charged by lenders.
Most RV lenders will require a 10% down payment, while some require 20%. If possible and financially feasible, go for a 30% down payment even when they require a lower down payment. This cuts not only your monthly payments to a lower amount but also shortens the loan period. As for interest rates, go for lenders that charge around 4% to 20% interest annually.
Your Credit Score Is Important
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Know that your Credit Score is important in securing a pretty good RV loan. The higher your credit score is, the better the loan terms you get to avail. This is because RV loan lenders tend to trust people with better credit scores than those with low ones. Loans are, after all, a question on trust and integrity!
The target credit score is 700 or higher. While most differ in the metric of how credit scores are measured, you can guarantee yourself that credit ratings calculated by Equifax, Transunion, and Experian tend to be given great weight. So before negotiating yourself into an RV loan, try to check beforehand your credit score.
Research On The Types of Loan
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You should know that there are two types of RV loan, to wit: secured RV loan and unsecured RV loan. Secured RV loans are loans that are secured by vehicles. Thus, upon default, the vehicle that serves as security will be sold at a public auction to answer for the loan’s value. Unsecured RV loans are basically personal loans that are not secured by any personal or real property.
Secured loans tend to have lower interest rates because they are already protected with the security vehicle’s value. Even with people who have low credit scores, secured RV loans tend to have better loan terms. As for unsecured RV loans, you would need high credit scores to have advantageous loan terms. This is understandable since the lender is not protected in case you default in payments and ultimately bailout.
Try and Negotiate on Different Lenders
The last thing to consider is negotiating with different lenders. Do not fix yourself on one lender because there will always be better loan terms from other lenders. Research and compare the loan terms offered by different lenders.
You could also try to negotiate an RV loan with companies that sell RVs and even with RV dealers. Always try to negotiate to have better loan terms, lower interest rates, and higher cash surrender values. Sometimes you just have to lower your pride by a little bit!
Full Breakdown Of Monthly RV Costs
This breakdown shall only be limited to monthly costs relating to RV maintenance. Simply put, the expenses mentioned here refers to the monthly costs of having an RV. This list shall exclude living expenses such as food and laundry.
Monthly Amortization On RV Loan – $500 to $1000
The top priority in this list should be the monthly payments to RV loans if you took one. This expense must be prioritized because defaulting on these installments could result in your RV being repossessed. You do not want to suddenly lose your RV after all the investments you made on it. Of course, if you paid your RV in full cash, then you could skip this part.
However, if you did take an RV loan, you will probably be spending $500 to $1000 per month on these payments. That range is usual for RV loans with a 15% down payment and 10-15 years in loan duration. Always prepare at least a month ahead for your next monthly installment to minimize the risks of being in default.
Gasoline Expenses – $300 to $500
Gasoline expenses fall under maintenance expenses because an RV that does not get refueled regularly will likely deteriorate faster. Avoid running your tanks dry. Always allot at least $300 to $500 per month for gas expenses if you travel frequently. If you travel rarely and are more on camping in campgrounds for months, at least allot $100 per month for emergency drives.
Gas prices rarely fluctuate, and even when they do, the increase or decrease is not that much. Regardless, always make a habit in gassing up during low oil prices. You never know when the next oil price hike occurs, especially with the decline in gasoline supply.
Health and RV Insurance – $100 to $250
Insurance expenses are commonly overlooked, although accidents are not an impossibility on the road. Secure both your personal health insurance and your RV insurance beforehand. You will probably spend around $100 to $250 per person per month for health insurance premiums and $46 to $80 per month for RV insurance.
RV Maintenance and Repair Expenses – $100
As for repair expenses, at least allot $100 per month for the maintenance of your RV. This may include oil changing, car wash, tire cleaning. You could also allot or invest in basic RV tools that may come in handy during an emergency. Also, save up another $100 per month for emergency spendings such as tire blowouts and battery replacements.
Paint Expenses – $10 to $20
Paint can actually help your RV last longer because it protects the outside walls from getting rust. Aside from shielding the RV from the harmful sun, paint can also serve as the first layer of protection from scratches and dents caused by rocks, pebbles, and even raindrops. Even though you are not expected to repaint your RV monthly, it would still be better to set aside some for your eventual twice a year repainting.
Resealing Expenses- $1200 to $1500 For Every Resealing
Your RV roofs need frequent resealing, especially the older RVs. It would be best to reseal your vents and RV roof once every five years to avoid water leakages. Even though this spending is not monthly, you should reserve some of your monthly income for your eventual resealing due to the high costs of resealing roofs and vents.
Utilities Expenses – $65 to $300
Utility expenses may range from $65 to $300 per month. This may include water tank refilling, propane refilling, and monthly RV dumping fees. Refilling 20 lbs tanks will cost $20 per month on average. Propane refilling is much cheaper at $5 per month, while RV dump fees will cost around $30 per month.
RV Detailing Costs
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Your RV should at least be cleaned once a year. That is why there should be a few bucks set aside every month in preparation for the yearly detailing of the RV. Washing and waxing your RV could cost you around $150 to $200, if professionally done. As for interior cleaning, especially in the cabinetry and garage nooks and crevices, it would cost you around $50 to $150.
All in all, the average cost of having your RV detailed would be around $250- $300 per year. If broken down into months, that is about $25 per month. Nobody wants to ride on a dirty or messy RV.
Trivia: Budget Tips To Control Monthly Spendings
Here are some budget tips to help you control your monthly spendings. This will allow you to avoid overshooting in expenses, especially ones that could have been reduced. Furthermore, aside from allowing you to save money, you also avoid incurring debts due to unnecessary expenses. Lastly, control your spendings so you won’t compromise your RV.
If You Are In USA, Stay On The West Coast
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Many members in both the RV and Van Life community have noticed that expenses run higher when traveling on the USA’s east coast. This is largely because campgrounds are numerous and cheaper on the west coast. After all, the west coast has more off-road tourism than the east coast. Boondocking, which is basically camping for free, is more prominent and common on the west coast too.
Campgrounds on the west coast are also cheaper when compared to those that are on the east coast. A campground on the west coast could possibly charge you only $350 per month. On the other hand, campgrounds on the east coast tend to charge up to $1500 per month in most cases.
Plan Your Travel Route
To avoid spending too much on gas expenses, plan your travel route ahead of time. This will allow you to pick the nearest and shortest route to your destination. Speaking of destination, planning ahead allows you to locate cheaper or better-suited campgrounds for you. Some campgrounds even give discounts on long term stays!
You’re On An RV, Cook Your Own Food!
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Hey, you’re in an RV, so cook your own meals. Do not make a habit out of eating at restaurants and fast-food chains. Not only are you eating unhealthily, but you are also spending money you could have otherwise saved. Reduce restaurant visits to once a week or once every two weeks.
Instead, budget your groceries to just cook at your RV. Go for items that do not easily go stale such as canned goods and packed pasta. Emergency snacks could also stave off some hungry stomachs.
Keep Track Of Your Expenses
Always keep track of your expenses! If possible, make a list of your daily and monthly expenses, on a google sheet or excel is possible. Tracking your expenses allows you to be conscious of how much you really are spending. Set a monthly expense threshold, and exceeding such threshold warrants budget realignment.
Your extra money should be reserved for sudden expenses like emergency supplies and medicine. Tracking your expenses also allows you to notice trends such as increasing expenses on restaurants. A few dollars for extra savings will also really come in handy in certain situations.
Conclusion
To conclude, living costs such as food and water are not just your only monthly spendings when living full time in an RV. In fact, securing yourself an RV is already a financial hurdle to overcome. Even when you already have your RV, do not spare expenses with maintenance and repair because if issues are left unchecked, they become real problems. Regardless, know that owning and living on an RV is not all roses and petals. Monthly expenses in maintaining it require a lot of mental fortitude.
