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Building a campervan and experiencing the freedom of van life is a dream for many people. However, financing a van build is no small investment, as most outfitters charge upwards of $70,000. With that in mind, one of the key questions to ask yourself before you begin the planning process is how you’ll pay for the project. Have you saved enough cash to fund the build, or do you need to explore financing options?
This post will guide you on how to finance van conversions and highlight the available financing options. We will also suggest a few helpful tips on how to make borrowing more affordable. Here at 27North Inc. we could also help you acquire financing, so don't hesitate to ask for assistance.
First, What’s the Biggest Expense of Converting a Van
The type of van you pick is going to be the biggest up-front cost to van life. The asking price of a van will depend on the brand/model you choose and whether you buy new or used. For older used options, you may only need to part with a couple thousand dollars, while shiny new models from high-end brands such as Mercedes Sprinters, Dodge Pro Master, and Ford Transits will set you back by over $35,000.
The next biggest expense to bear in mind is the cost of professional customization. You’ll need to work with professional van outfitters to turn the empty shell into a comfortable home on wheels. The cost of building the interior and the labor will depend on the features you want, the complexity of the project, and the company you pick. Basic conversions cost upwards of 20,000, while high-end projects can clock above $100,000.
Funding Your Campervan Conversion
The cheapest way to fund a van build is with cash. That means saving up or selling an asset, such as your car or home, if you no longer plan on using it. But if you don’t have the cash, your best option is to explore campervan financing options.
A good place to start is at the dealership. Ask the dealer you bought your van from about financing options. If you already own a van, approach a professional conversion company. Many of them offer financing options. However, keep in mind that many lenders don’t finance DIY van builds, while others may decline to finance old vans, high mileage campers, or models that are traditionally used for work
Below, we take a deeper look into ways to finance your van build.
Van Conversion Financing Options
If paying for the custom conversion in cash isn’t possible, here are the funding options you should explore.
Custom Van Loans
Many top van outfitters offer financing options. They know that most aspiring Van lifers need some financial help, so they provide their own plan or partner with a competitive financing option. There are many loan packages to pick from, so you need to do your due diligence before picking one.
If you’re buying a new Mercedes Sprinter from a Mercedes dealership and having it customized at an approved conversion company, you could lump the outfitting cost into the initial loan for the van. Alternatively, you could also use a company like Hearth, which we will touch on later in the post.
Bank Personal Loan
If you have good credit and can qualify for a sizeable loan, then a personal loan might be the best way to pay for the project. The best part is personal loans don't require collateral, so you won't have to worry about losing the van if you're unable to repay.
Although the rates can be pretty high depending on the lender you pick, there are almost no restrictions on how you decide to use the funds.
Credit Union Loan
When it comes to van build projects, a credit union is more likely to fund you than large name brand banks. They offer the same kinds of products and services as offered by a traditional bank, except they are local and smaller institutions.
Credit unions are a good option for borrowers with fair or bad credit because they may have softer requirements. They are more willing to listen to unusual loan requests, such as funding a custom conversion camper.
RV Loans
An RV loan helps you finance a purchase of a new or used recreational vehicle that you can’t afford to purchase outright. These kinds of loans have many restrictions, including a minimum loan amount. These loans may cover all or part of the van itself, the outfitting, or both.
Depending on the lender, you can borrow as low as $5,000 and repay over a few years, or as high as 100,000 and repay over 10 to 15 years. Most financing terms generally range between 10 to 20 years.
Home Equity Loan
Many people only use home equity to finance home repair projects. But did you know you can cash into the equity you’ve built to fund a custom van build? If you’re a homeowner and want to leverage it as an asset, this is an easy route to get a sizeable sum for the project.
To learn your options and how it works, speak to a finance expert. The amount you can borrow depends on your lender and your creditworthiness. Typically, you can leverage between 80% and 100% of your equity.
Financing a Conversion Project with Hearth
At 27North Inc., one of our customer’s favorite ways to find financing for campervan builds is through Hearth. This platform provides a free calculator that helps you to quickly estimate how much your monthly payment will be. And it doesn’t affect your credit score.
If everything looks good, you can fill in additional information to get pre-qualified in two minutes. From there, the platform links you up with varying financing options that are tailored to your needs. Hearth also offers helpful tips to match you to the right lender, improving your chances of getting a better deal.
After carefully comparing your options and choosing a suitable package, the loan is approved in 1 to 5 days, and you can now fund the conversion. You will then make fixed monthly payments directly to the lender. Crucially, all their lenders have no early repayment fees.
How to Make Financing a Van More Affordable
If you want to keep the van financing costs low, here’s what you can do:
Provide a Larger Down Payment - Making a larger down payment will ultimately minimize your monthly payments and can reduce your interest rate and the overall cost of the loan. So, the sooner you start saving for the down payment, the better.
Improve Your Credit Score - Your interest is in large part determined by your credit score. So, to qualify for the best deals, make sure your credit rating is in good shape.
Decrease Your Debt-to-Income Ratio - For lenders, debt-to-income ratio is a key indicator of whether you're a good prospect for a loan. Ideally, you want to maximize your income and minimize the amount of money you use to service debts.
Compare Quotes - Before you settle for a financing option, talk to other lenders and see what they offer. Chances are you’ll get a better deal when you shop around.
Negotiate - Even after unearthing the best possible deal, don’t shy away from haggling. Negotiating could help you reduce the price considerably.
Downsize - Another way to borrow less and pay less is to downsize your expectations. Reconsider some of the custom van features you want and prioritize only what's really important for you.
Now, to repay the loan on time or even earlier, it’s nice to find a source of side income. One great option to make extra money is renting your van out to others when you aren’t using it. Renting your camper for a night could earn you upwards of $200 per night. You could also rent out your home or apartment when you’re traveling for extended periods. To further maximize your earnings, apply for remote jobs and start working on the road.
Financing a Van Conversions is Possible
Turning a van into a comfortable mobile abode often requires a big budget. Thankfully, you don’t have to pay for a camper built outright. There are plenty of financing options that can help you realize your dream of living and traveling in a van. Before you pick any deal, make sure you do plenty of research, compare different options, and consult with professionals and experienced van lifers.
For any of your camper van customization needs, feel free to talk to 27North Inc. We have the team, skills, experience, and tools needed to outfit any camper, whether you’re looking for Ford Transit, Pro Master, or Sprinter van conversions. Even better, we could help you secure financing.