How to finance a camper van conversion

Financing a camper van is two questions, not one. Whether a lender will treat your vehicle as an RV or as a cargo van, and whether the build is documented well enough for anyone to lend against it. Those two answers move the term from 5 years to 15 and the monthly payment by hundreds of dollars, which matters more to what you pay than the sticker does.

What you are actually asking a lender to finance

A camper van is two purchases stapled together, and a lender does not see them the same way. The chassis is a mass-produced commercial vehicle with a VIN, an auction history and a book value. The conversion is a one-off assembly of joinery, wiring and plumbing that somebody bolted inside it, and until it is documented it has no value to an underwriter at all.

Both halves are large. Mercedes publishes the Sprinter Cargo Van from $48,990 to $75,830 depending on wheelbase, roof height and drivetrain. A lender sizes the loan against the finished vehicle, so the other number to settle first is what the conversion itself costs, which runs $18,695 to $600,000 across American shops.

The chassis half is easy because it is a commodity. Ford lists the Transit in the same configurations for a plumbing company and a camper buyer, and a repossession auction prices it the same way for both. The conversion half is the one that decides which loan you can get, because a lender that cannot price a thing will not lend against it.

Four ways to borrow, and what each will lend against

Four products cover almost every camper van purchase in the country. They differ less on rate than on what they will accept as collateral, and collateral is what decides whether you are approved at all.

The RV loan

The best terms in the category and the hardest to qualify for. An RV loan runs long because the lender believes the collateral will still be worth something in year 12, and it will only believe that if the vehicle is identifiable as a recreational vehicle rather than as a cargo van with furniture in it.

That belief rests entirely on paperwork. An invoice from a named business showing the chassis and the conversion as separate lines, a build sheet listing the fixed systems, and where the shop has it, a certification number. None of that describes the quality of the van. All of it describes whether the van can be classified, and classification is what underwriting runs on.

The auto loan on the chassis

An auto loan lends against the van and ignores everything inside it. On a new Sprinter that is $48,990 to $75,830 of collateral, and the $60,000 of cabinetry, lithium and plumbing you added counts for nothing in the calculation.

It is still the right product in one very common case. You buy the chassis now, drive it while you wait for a build slot, and pay the shop in stages from cash as the work happens. The financed asset is a cargo van, which every lender in America already knows how to price, and nobody ever has to have an opinion about your conversion.

Unsecured money, and the house

A personal loan finances the conversion when there is nothing to secure it against, which is the position every self-builder is in. It carries the shortest term and the highest rate of the four routes, and the amount available is usually well below the cost of a full build, so it works as the second half of a plan rather than the whole of one.

Home equity is the quiet option and the one to think hardest about. The rate is lower than anything else here and the term is long. It also moves a depreciating vehicle onto the security of an appreciating house, so a van that goes wrong stops being a van problem and becomes a housing one.

Shops advertise financing on their own sites, and that is an introduction rather than a product. The shop passes your application to a lender it has a relationship with, and the terms that come back belong to the lender. Use it for the speed, then price the same application at a bank you approached yourself before you sign either one.

What makes a build financeable

The cheap route is the hard one to borrow against. A $20,000 self-build is close to the least financeable vehicle in this category, and a $105,000 conversion from a certified shop is close to the easiest. That is the opposite of what a first-time buyer expects, and it is the single most useful thing to know before you choose a builder.

Three things do almost all of the work.

• An itemised invoice from a named business, showing the chassis and the conversion as separate lines. This is the document that turns a van into an RV on paper, and a shop that has financed customers before will produce it without being asked.
• An inspection record. DM Vans and Storyteller Overland are RVIA certified, which means their builds are inspected against the industry's electrical, propane and egress standards rather than self-attested. Certification is not an approval, but it answers a question the underwriter would otherwise have to guess at.
• Age. The RV product we verified covers new or used vehicles less than 5 years old, and that clock runs on the chassis year rather than on the date the conversion was finished.

Sorted by documentation rather than by price, the American builders worth comparing are the ones that publish a fixed number and issue a real invoice, and they are not all at the top of the market. Ready.Set.Van publishes packages from $65,000 to $95,000. DM Vans publishes $97,000 to $105,000 with RVIA certification behind it. Contravans runs $45,000 to $130,000 and prices modular work openly. A shop that will not commit a number to paper before the build starts will not have one to hand a lender afterwards either.

What one lender actually publishes

The shape of an RV loan is easiest to read on a lender's own page. First Citizens Bank publishes its RV loan terms in full: a $2,500 minimum, terms of 5 to 15 years, a 20 percent down payment, a minimum credit score of 670, and rates it advertises as low as 6.85 percent APR, with a worked example at 6.80 percent fixed plus a $100 origination fee.

Two details on that page matter more than the rate does. The product covers new or used RVs less than 5 years old, which quietly removes a large share of the used conversion market. And nowhere does the page state whether a converted cargo van or a Class B motorhome qualifies, which is the first thing a camper van buyer needs to know.

So ask, in writing, and ask about a specific vehicle rather than about the category. A converted cargo van, this chassis year, this shop, this invoice. A loan officer will answer that question and will usually answer it quickly. The same officer cannot answer a general question about camper vans, because the underwriting rules are written against vehicle classifications and not against how people use a van.

What the payment actually looks like

Rates are abstract and payments are not. These are three real American builds with the chassis included, financed at the 6.85 percent First Citizens advertises, after the 20 percent down payment the same page requires.

Those are calculations at a published rate rather than quotes. Tax, title and registration sit outside them, and several states charge sales tax on the finished value rather than on the chassis alone, which adds $4,738 to the top row and $12,078 to the bottom row at 7 percent.

Specification moves the payment more than the rate does, which is worth knowing before you spend three weeks shopping lenders. A full percentage point on the middle row is about $50 a month. Another $20,000 of build is about $185. The features that do that moving are the plumbed ones, and adding a wet bath and an indoor shower is the single change most likely to carry a quote from one bracket into the next.

The down payment

20 percent of a camper van is a real number. On the middle row above it is $24,508, and it is due before the vehicle exists, in an industry where most shops take 25 to 50 percent up front and stage the rest through the build. The deposit and the down payment are not the same money, and a buyer who has budgeted for one and not the other finds out at the worst possible moment.

Two things soften it. A trade-in counts, and on a van bought new 3 years ago that is frequently most of the deposit on its own. A chassis you already own counts too, because a lender writing against the finished vehicle is comparing total value with total borrowing and does not care which half of the van you paid for first. Buying the van, then borrowing against the completed build, is the most common way American buyers reach 20 percent without writing a cheque for it.

What moves the rate you are offered

Four inputs do most of the work, and only two of them are about you.

• The vehicle's age, which is a gate rather than a slider. Inside the limit you get quoted. Outside it you get declined, and no down payment fixes that.
• The loan to value, which is why a bigger down payment moves the rate and not only the balance. 20 percent is the published floor at First Citizens, and going above it is the cheapest rate reduction available to most buyers.
• The term. A 15 year loan is priced above a 10 year loan on the same collateral, so the longer term costs twice: once in the rate and again in the extra years of it. Shorten the middle row of the table above to 5 years at the same 6.85 percent and the payment is about $1,934 a month, which is what an auto loan's shorter term does to the same money before its rate is even discussed.
• Your credit file and your debt to income ratio, which an underwriter reads first and which most buyers have already fixed as far as they can by the time they apply.

What does not move it is how good the van is. Underwriting is written against vehicle classifications and collateral values, so a beautiful one-off with no invoice is a worse risk on paper than a plain package build with a certification number on the door frame. That is not a judgment about craftsmanship. It is a judgment about what happens if the bank has to sell the thing.

Financing a used conversion

The used market is where financing gets genuinely difficult, and it is also where a great deal of the value in this category sits. A used conversion runs 20 to 30 percent below the equivalent new build, and the same discount that makes it attractive to you makes it harder to underwrite.

Age is the first gate and documents are the second. A van from a named shop with its original itemised invoice and a service history clears both. The same van with no folder does not, whatever it looks like in the photographs. The inspection you would run before buying a used conversion privately produces most of the evidence a lender wants anyway, so the two jobs are one job.

Then there is the appraisal, which is where a used application quietly dies. A lender lends against what the van is worth to somebody else, not against what the seller paid, and the conversion depreciates faster than the chassis underneath it. A $90,000 conversion on a $60,000 Sprinter is not a $150,000 asset 3 years later, and an appraiser with no comparable sale to look at will discount the conversion far harder than the chassis.

One more thing kills used deals late, and it has nothing to do with the van. A lender will not fund a private purchase until it can see a clear title with no lien recorded against it, and a seller still carrying their own loan has to be paid off through the transaction rather than around it. Ask who is holding the title on the first phone call, because that answer decides whether the sale takes a week or a month.

Which is why the shop's name matters more on the used market than on the new one. The Vansmith sells at $120,000 to $220,000 and Vanspeed at $115,000 to $175,000, and a working secondary market at a stated price point gives an appraiser something to point at. Outside Van produces over 100 Sprinters a year with a 3-year warranty behind them, which does the same job from a different direction. A one-off with no comparable has no valuation, and no valuation means no loan.

What a self-built van can borrow against

Mostly nothing, and that is worth hearing before you spend a year of weekends in a driveway. A self-built van has no invoice, no inspection record and no third-party valuation, so an RV lender has nothing to underwrite. The products left are an auto loan against the chassis, an unsecured personal loan for the parts, or your own savings.

That is not an argument against building one. One documented Transit self-build came to $20,150 in parts, which is less money than the down payment on the middle row of the table above. It is an argument for getting the borrowing done in the right order, because the chassis is financeable and the conversion is not.

Three moves make the difference. Finance the chassis on an auto loan before you start, while it is still an ordinary cargo van with an ordinary value. Retitle the finished vehicle as a motorhome where your state allows it, which changes the insurance more than it changes the financing but starts the paper trail. And keep every receipt in one folder, because an undocumented build sells at a discount to a documented one even when no lender ever opens it.

The hybrid route sidesteps most of this. Blue Ridge Adventure Vehicles takes work from $5,000 and Contravans will fit electrical, storage or a heater to a van you have already started. Paying a shop for the systems and doing the joinery yourself produces an invoice from a named business for the expensive half, which is the half a lender and an insurer both want to see.

Before you apply

Six weeks of preparation moves your rate further than a fortnight of shopping does, because nearly everything an underwriter looks at is already fixed by the time the form reaches them.

And run the number that decides whether the van works, which is not the payment on its own. The loan sits on top of everything else a van costs each month, and a payment that clears an approval on paper can still be the wrong payment once fuel, insurance, campsites and a maintenance fund are in the same column.

The shops that finance easily are the ones that have done it a hundred times. They know the invoice format, they have the VIN and the delivery date ready, and they send the pack over without being asked twice. One phone call tells you which kind of shop you are dealing with, and it is the cheapest piece of research in the whole purchase.