Everything You Need To Know About Getting a Title Loan for Your RV

Written by: Susan Melony

Finding yourself strapped for cash when an emergency expense comes up can be a worrying experience. While everybody should have some type of emergency savings, only 50% of Americans have over $500 in a rainy day fund. Title loans can be an excellent option for covering these expenses while you wait for cash to hit your bank account.

What is an RV Title Loan?

Few people recognize the term title loan at first glance, as it’s one of the lesser known forms of debt. A title loan is a short-term loan for a small sum of money that has a repayment period within 30-days for most cases. It is a secured loan, meaning that RV owners will be required to trade the title to their RV in return for the requested funds, with the title being transferred back once repayment is complete. 

Therefore, the answer to the question of can I get a title loan on a RV is entirely dependent on whether or not a person owns the title to that RV. If they do, then they are certainly eligible to take out a title loan and receive funds in exchange for transferring the title of the vehicle to the lender. 

Pros of a Title Loan

  • Quick and easy access to cash
  • Smaller repayment period is perfect for people who don’t have access to the cash right now
  • Few application requirements

Cons of a Title Loan

  • Borrowers need to offer up collateral that they risk losing
  • Loan amounts are smaller and only a portion of the value of your RV or collateral
  • Higher interest rates than almost all other loan types

What Can an RV Title Loan Be Used For?

RV title loan lenders do not typically stipulate what the loan needs to be used for. In most cases, a borrower can use the funds for whatever they please. Considering the fact that title loans are smaller sums of money, usually a couple hundred to a couple thousand, they are best for those who need funds for expenses such as:

  • Smaller medical expenses
  • Down payment on another purchase
  • Home remodeling expenses
  • Debt consolidation 
  • Minor wedding expenses

How Does the RV Title Loan Process Work?

Applying for a title loan is a quick and easy process considering the limited application requirements that are needed on behalf of the borrower. Below are the six common steps involved in the process of acquiring a title loan:

  1. A borrower determines the amount of money they need to take out for their emergency expense
  2. A borrower contacts lenders, online or in-person, to receive prequalification offers if applicable
  3. The borrower evaluates the different offers from lenders to determine which interest rate and borrowing amount meets their needs best
  4. The borrower selects a lender and exchanges the title to their RV or other form of collateral in exchange for funds
  5. The borrower begins saving to make the repayment on the title loan, or repayments if they are on an installment plan
  6. The lender returns the title to the borrower after payments are complete

Be aware that if you fail to repay your loan, the lender has a legal right to maintain ownership over your collateral.

How to Decide if a Title Loan is Right for You

Figuring out the type of loan that is best for you to borrow can be difficult. Title loans are an excellent choice, but they aren’t right for everyone. Take the following factors into consideration when determining whether a title loan is the best choice for you.

Consider how much money you need

As mentioned, title loans are small loans for typically only a couple hundred dollars and occasionally for a couple thousand. If you need money for larger expenses such as major medical expenses or for a full wedding, then a title loan may not be able to provide you with the funds you need. However, if your emergency expense is for a smaller amount, then a title loan can be a great choice. 

See if title loan repayments work into your budget

Before taking on any form of debt, you need to evaluate whether or not you can fit repayment costs into your budget. If your title loan repayment is a lump sum, factor the total cost of the loan plus any interest or fees into your budget. However, if your loan is on an installment plan, factor each monthly payment into your budget. 

Examine the interest rate you are being offered

Title loans naturally come with a higher interest rate than you may be expecting. It’s important to consider this rate and determine if it’s something you can afford before signing the contract and transferring the title of your RV to the lender. 

Calculate your risk tolerance

Naturally, you are at risk to lose your RV if you cannot meet the payments required for the title loan. If this potential loss meets your risk appetite for taking on debt, then a title loan can be a potential choice. However, if you are even on the fence about this possibility, then waiting until you are more financially secure could be the better choice. 

Alternatives to Title Loans

Taking out a title loan may not be the right choice for you given your personal circumstances which is understandable. Fortunately, there are four primary alternatives to title loans that a borrower can consider:

  • Personal loan: Personal loans are multi-year, though still short-term, loans with interest rates ranging from 6%-36%. Loan amounts vary from $1,000-$100,000, making it a good option for those in need of more funds.
  • Borrowing from friends and family: If you don’t want the risk that comes with title loans, borrowing from friends or family who are willing to lend to you could be a good choice. Be sure to pay them back to avoid ruining relationships.
  • Credit cards: In some cases, credit card payments may be cheaper than a title loan payment due to a lower interest payment. 
  • Peer to peer loans: Peer to peer loans remove the middleman from borrowing and occur directly between two parties. They can sometimes offer more negotiable interest terms than title loans.

Cover much needed expenses with the help of financial assistance

Financial assistance may be needed for anybody and choosing a title loan for smaller emergency expenses can be a great strategy. Be sure you can meet the financial repayment obligation before applying for a title loan to avoid damaging your credit score and history. 

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