Motorhome financing

valhalla360 wrote:

way2roll wrote:


Love this answer. I was taught never to risk your own money. Borrowing with the interest deduction despite still paying some interest will still allow your money to earn more via investments and thus a net in your wallet. Paying cash means you are pulling your own money, putting it at risk and losing the money you would have gained in those investments. it's a lose lose. And I'm risk inhibitive, meaning if the bottom fell out and a worst case scenario happened ( a million things), the bank loses the money on the RV - not you - and you still have your cash but may suffer some temporary credit worthiness loss. Plan for the best but be prepared for the worst.
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Unless you are planning to go bankrupt and not pay off the loan...you aren't using someone elses money.

If you invest $100k and it loses $50k, you are still out $50k whether you used "your own" money or "someone else's" money. With someone else's money, you still have a $100k loan you have to pay off.

Reality is using leverage allows you to make bigger mistakes.

So you would rather lose the $50k up front out of your own cash than amortize it and continue to let your money work for you to offset the loss?

Oh dear, you don't need to go bankrupt to not pay off a loan. In the event of severe financial hardship, like a severe illness, a major disruption in your normal cash flow etc, not having money to fall back on - that you would have had if you hadn't blown it on an RV - would leave you in a dire situation. Sure now you have an RV but you also don't have any cash. Mind you the RV depreciates at the same rate whether you pay cash or not. So as stated before, now you are cash poor with a depreciating asset that you would have to liquidate at a loss in an attempt not file bankruptcy. If you invest 100k and lose 50k sounds almost like paying for an RV in cash and suffering depreciation over 10 years. Aside from that you need to fire your financial advisor. And you'd still be left with 50k instead of no cash and a depreciating RV.

Obviously there are different approaches to this and to each his own. But I know I would much rather have cash on hand as a windfall and invested to produce income, than no cash just to buy a luxury item like an RV that depreciates far worse than any investment would. When a bank lends money it's theirs until paid off securitized by the item lent for, They own the risk. Sure the onus is on you to pay if off and I would never abdicate defaulting a loan. But in times of severe hardship I know I would much rather have my cash to fall back on and a loan I could choose not to pay than no windfall (never mind the fact that you could use your windfall money to pay the loan to avoid default). And I have totally omitted that the net of loan interest to what the average portfolio earns - even conservatively- is in your favor.

To each his own.