RV loans

Personally, I think long-term RV financing has been a genius move by the RV sellers.

Without it, given the massive depreciation of RVs when you drive them off the lot, used RVs would always be preferable to new. You could buy a 5-year-old model for substantially cheaper than new, and there would likely be a huge supply of them given the people who get in to RVs and then discover they can't afford it or they don't use it as much as they thought they would.

But with long-term financing, people are upside down on their loan long enough that by the time they aren't the RV is no longer that attractive as a used buy. So they can't afford to sell it, and no one wants to buy it at payoff value since it's so close to the price of a new one.

So by allowing long-term financing dealers have shut down the used market for models new enough to compete with new.

T18skyguy wrote:

Desert Captain wrote:

T18skyguy wrote:
Anytime you make additional principle payments, make sure they are actually crediting the principle and not interest. I had a bank try and pull this trick on me. After they heard from my lawyer, they recalculated 4 years worth of mortgage payments. I sent a letter with every payment to "put this toward principle", and they ignored it.

Good point... every principle reduction I make is a stand alone check labeled "Principle Reduction" with a brief cover letter to that effect. So far so good.

:C

Captain, the reason I didn't discover it right away, is I hadn't checked the loan summary in a timely basis. If I had I would of caught it. You really have to watch them. It took them 3 months to recalculate it. When I asked why so long, they actually told me there was no math function in their computers for people who pay extra on principle. Reason being so few people do it.

Federal law......and has been since the financial reforms enacted after the early 2000's, tech bubble bursting, mini economy burp. The reforms that also included the halfassed reform of bankruptcy code. If you look closely at any financing / loan disclosure today, you'll see the statement that adding additional funds to or sending additional payments, will reduce the overall interest amounts. I myself don't trust them either, so still include the notation when doing so.

I scratch my head when I run into one of the many who finance $15K-50K RVs with 120 month or longer terms. You do not have to be Warren Buffet to know how terrible of a financial decision that is, but many do, and those long term loans are the first thing presented in most RV dealer finance offices.

You would be hard pressed to buy a new truck for $60K or $70K and find an lender that would go an 8 year term, let alone 10 or 12, but you can finance the smallest,lowest priced, bottom of the line stick and tin RV for 120 months, or maybe even 144, despite the fact that it probably will be in the landfill in 10 years.

I often ask twenty and thirty year olish guys at the local watering hole, who have just recieved long term loans for something, if they ever looked at an amortization schedule before signing into it. They typically don't know what one is lol. The dumbing down of America continues.

Desert Captain wrote:

T18skyguy wrote:
Anytime you make additional principle payments, make sure they are actually crediting the principle and not interest. I had a bank try and pull this trick on me. After they heard from my lawyer, they recalculated 4 years worth of mortgage payments. I sent a letter with every payment to "put this toward principle", and they ignored it.

Good point... every principle reduction I make is a stand alone check labeled "Principle Reduction" with a brief cover letter to that effect. So far so good.

:C

Captain, the reason I didn't discover it right away, is I hadn't checked the loan summary in a timely basis. If I had I would of caught it. You really have to watch them. It took them 3 months to recalculate it. When I asked why so long, they actually told me there was no math function in their computers for people who pay extra on principle. Reason being so few people do it.

Probably the cheapest way to finance and RV is to establish a Home Equity Line of Credit (HELOC) against equity in a stick house. Draw out the money from the HELOC and then pay cash for the RV.

The HELOC doesn't care if you're buying a used or new RV or any other thing. The interest rate on our HELOC is 2.7%. We just leave this line of credit open (no charge for keeping it open) continuously so we can draw out cash whenever we need to for large emergencies or large purchases. Any amount we owe the HELOC we can pay back at any speed above the minimum monthly payment speed.

IMHO, a HELOC is an excellent way to get cash conveniently for anything anytime with no questions asked other than "how much do you want to borrow?". It can all be done from your computer too.

T18skyguy wrote:
Anytime you make additional principle payments, make sure they are actually crediting the principle and not interest. I had a bank try and pull this trick on me. After they heard from my lawyer, they recalculated 4 years worth of mortgage payments. I sent a letter with every payment to "put this toward principle", and they ignored it.

Good point... every principle reduction I make is a stand alone check labeled "Principle Reduction" with a brief cover letter to that effect. So far so good.

:C

I recently read on a separate RV forum State Farm was offering very good rates on RVs. I do not use them, and have no info on amount / length of loan. Obviously rates will depend on credit history.

Anytime you make additional principle payments, make sure they are actually crediting the principle and not interest. I had a bank try and pull this trick on me. After they heard from my lawyer, they recalculated 4 years worth of mortgage payments. I sent a letter with every payment to "put this toward principle", and they ignored it.

Yes, an RV loan can be written off of your taxes but... the interest as a write off is only as good as your need for it. If you do not itemize then the interest on the RV is worth squat. If you do itemize you will get a break but it is not nearly as significant as most folks think.

If you are buying an RV with writing off the interest as a motivating factor you need to spend some time with a decent accountant... Reality, what a concept.

:S

Most people do. Honestly you will be surprised to find out how long they will finance a RV, and yes you can use the interest as a deduction on you taxes. It is classified as your vacation, or second home.

When we bought our 24' class C, used with 6,205 miles on it 4.5 years ago, we paid $50K (OTD} putting $18K down and financing $32K. Because we have very good credit {Fico of 834}, we got what was at the time a very good rate of 4.99 per cent on a 15 year loan - payments of $268 a month.

My plan from day one was to have it paid off in 7.5 years by making additional principle reductions at such times as it was financially convenient to do so. We are on pace to easily accomplish this goal as we now owe a little over 15K. Every time we pay down the principle it is like getting 4.99 per cent back on our money which most would agree currently is a pretty good return.

The coach is easily worth 2 to 3 times what we owe but since we have no plans to part with it things are working out quite well. We put on average, at least 12,000 miles a year and look for ward to many more.

The key to financing any RV is NEVER, EVER, put yourself in the position of being "Upside down"
by staying ahead of the inevitable depreciation and "Run Forrest run" from any salesman that advocates minimum down secured by long term financing. If you can not reasonably expect to pay it off in 10 - 15 years and assuming you will be using it alot the entire time the sad truth is you can NOT afford it.

As always... Opinions and YMMV.

:C