Motorhome financing

rk911 wrote:
why? one 4-letter word...risk. risk that the investment won't produce as planned; risk that your main income stream will be interrupted; risk that the RV will be totaled out in a wreck or fire and the insurance payout will not cover the loan balance; risk that an illness or other emergency will re-direct available income.

With the exception of your first line, how is any of this risk mitigated by paying cash?

If my main stream of income is interrupted, I have $100k extra in the bank to live off of until I get back rolling (and may or may not have to sell the rig - depending on the situation). If I bought the rig for cash, I am forced to sell it immediately to get some of that cash to live on and only get what it's worth.

If my rig is totaled and insurance doesn't cover the balance, I take the money out of investments to cover the difference, but at least I'm only taking out that gap in value, and it has been invested in the meantime. How is that somehow worse than taking the entirety of the cost out at the outset?

If an illness or injury re-directs income, like above, I have an extra $100k in savings to use to cover that for the short-term. That money would be unavailable if I had paid cash for the rig.

In my mind, the only legitimate argument one could make is that paying cash, for all intents and purposes, gives you a guaranteed return of 3.5-4% on that money (assuming a 20-30% write-off on income taxes). If you are unsure of the stock market, or invest very conservatively, a guaranteed return of 4% could look pretty good. If you take a balanced or moderately-aggressive approach, however, and expect 5-7% in returns over the next 10 years, you are better growing that money in the market and using it in the case of emergency instead of spending it ahead of time regardless of whether or not that emergency arises.