RV Financing

Try Alliant Credit Union out of Chicago.

skipro3 wrote:
A 401K loan is borrowing your own money and paying it back to yourself with interest to your own account. Loans are for either 5 years for personal property purchases, or 15 years for anything dealing with a house; purchase, upgrades, etc.

You don't 'qualify' for a loan of your own money and you don't hurt your credit rating if you 'default' either.

You can sell this RV any time you wish. No bank holds title to it, it's all in your name. Take the cash and either pay back to your account, or just stop paying your 401K loan and pay the early withdraw penalty. 10% I think so with your 'loan'of $35,000, you cough up $3,500 and you are done making payments, can sell it outright if you wish, and take the money from the sale to fund your 401K or if you do it within 30 days, roll over to an IRA without ANY tax / early withdraw penalty.

While this is true, you also lose the interest on the money you withdrew...Our 401k loan interest is at 3.5%. You lose money for every interest point above that 3.5% that your 401k could of been earning.

Here's an interesting article and excerpt from an article about the hazards of a 401(k) loan:

If you do not repay your 401k loan back to your retirement plan, there are huge penalties involved. Non-payments are considered early 401k withdrawals, and as such they are subject to a 10% if you have not reached the age of 59 1/2 years-old. You will have to report the withdrawal as ordinary income on your tax return and not as investment income. If you are in the 28% tax bracket, this means you will pay 38% to the Federal Government and then state taxes which can be approximately 10% (depending on your state). Your loan could end up costing you almost 50% in taxes and penalties.

Full Article:

401(K) Loans

FaithS wrote:
Ok, this is a little different situation, but wondering if anyone has ever tried to do this. We currently own a Montana 5th wheel, and we financed it through my 401k. We still owe $35,000 on the loan. The problem is that it was only for 5 years, so the monthly payments are killing us right now due to some changes that we didn't plan for. I'm wondering if anyone has either a) refinanced a 401k loan on an RV with a bank or someone else, to lengthen the term, or b) bought a new RV, traded in the current RV and some how had the finance co pay off the 401k loan so the full loan amount could be with them. I was going to call some banks and Good Sam financing today, but forgot it's Presidents day, so everyone is closed! TIA

I just gotta point out again;
You own the RV. You own the loan. You do not have anyone on the RV's title but you. If you sell it or trade it in, you get the cash. It's up to you to keep the loan payments back to your account of course, usually through payroll deduction, but you will get the cash from the sale of the RV and can pay off the early withdraw from your account.

Remember; your 401K doesn't care that you used the money to buy an RV, a hot tub, a trip or anything else. There is no lien on the RV as there is no record of what you used the money for.

That's a better way to think of the way you financed this; an early withdraw that has a penalty if you don't meet the terms of refunding your account.

A 401K loan is borrowing your own money and paying it back to yourself with interest to your own account. Loans are for either 5 years for personal property purchases, or 15 years for anything dealing with a house; purchase, upgrades, etc.

You don't 'qualify' for a loan of your own money and you don't hurt your credit rating if you 'default' either.

You can sell this RV any time you wish. No bank holds title to it, it's all in your name. Take the cash and either pay back to your account, or just stop paying your 401K loan and pay the early withdraw penalty. 10% I think so with your 'loan'of $35,000, you cough up $3,500 and you are done making payments, can sell it outright if you wish, and take the money from the sale to fund your 401K or if you do it within 30 days, roll over to an IRA without ANY tax / early withdraw penalty.

I see three options.

1. continue payments agreed to and pay the loan off
2. refinance at your local credit union or bank
3. sell the RV, pay off the loan, and then buy what you can afford

You made one bad decision, DO NOT make another bad decision by buying another RV and rolling the balance. You cannot solve a debt problem by digging a deeper hole.

Agree with others, repay the 401(k). A refi should really be no different than doing a refi on conventional loan to conventional loan, except you are paying yourself back, putting that money back in your 401(k) and not having to worry about "what ifs".

You brought up the possibility of buying a new trailer, if that's something you would consider, rather than trading it in (and you'd probably not get what you need to out of it), consider selling the trailer privately, paying off the 401(k), and then buying whatever you want, with a conventional loan...not another 401(k) loan.

Re-pay the 401.

For CU financing for full timers, go over to Escapees forums.
Enter "Credit Union" in search box.
There's a CU that the full-timers there seem to like & have good results with.
(Also - there may be more than one)

.

kohai wrote:

FaithS wrote:
Ok, this is a little different situation, but wondering if anyone has ever tried to do this. We currently own a Montana 5th wheel, and we financed it through my 401k. We still owe $35,000 on the loan. The problem is that it was only for 5 years, so the monthly payments are killing us right now due to some changes that we didn't plan for. I'm wondering if anyone has either a) refinanced a 401k loan on an RV with a bank or someone else, to lengthen the term, or b) bought a new RV, traded in the current RV and some how had the finance co pay off the 401k loan so the full loan amount could be with them. I was going to call some banks and Good Sam financing today, but forgot it's Presidents day, so everyone is closed! TIA

I agree that it is best not to borrow from your 401k. If you have the money in decent mutual funds, you miss a lot of growth by tying up your 401k money. There are other reasons not to either. RVs are tricky things to borrow money for because they go down in value and the payment terms are sometimes so long.

Quoting this website:

https://www.mutualfundstore.com/time-value-of-money-calculator

Your investment of $35,000 earning a rate of 7.00% annually for 5 years would grow to $49,617, before taxes. This assumes that you do not withdraw investment earnings or make any additional contributions.

The future value of your investment over different time periods would be as follows:
Year Future Value Without
Additional Contributions
1 $37,530
2 $40,243
3 $43,152
4 $46,272
5 $49,617

You hit the nail on the head, Kohai! Using your 401k to finance an rv is such a bad idea. Yeah, you "pay yourself interest", kinda, but you lose so much in the process.

I would do whatever if takes to either refinance or dump the rv and replenish your 401k.

FaithS wrote:
Ok, this is a little different situation, but wondering if anyone has ever tried to do this. We currently own a Montana 5th wheel, and we financed it through my 401k. We still owe $35,000 on the loan. The problem is that it was only for 5 years, so the monthly payments are killing us right now due to some changes that we didn't plan for. I'm wondering if anyone has either a) refinanced a 401k loan on an RV with a bank or someone else, to lengthen the term, or b) bought a new RV, traded in the current RV and some how had the finance co pay off the 401k loan so the full loan amount could be with them. I was going to call some banks and Good Sam financing today, but forgot it's Presidents day, so everyone is closed! TIA

I agree that it is best not to borrow from your 401k. If you have the money in decent mutual funds, you miss a lot of growth by tying up your 401k money. There are other reasons not to either. RVs are tricky things to borrow money for because they go down in value and the payment terms are sometimes so long.

Quoting this website:

https://www.mutualfundstore.com/time-value-of-money-calculator

Your investment of $35,000 earning a rate of 7.00% annually for 5 years would grow to $49,617, before taxes. This assumes that you do not withdraw investment earnings or make any additional contributions.

The future value of your investment over different time periods would be as follows:
Year Future Value Without
Additional Contributions
1 $37,530
2 $40,243
3 $43,152
4 $46,272
5 $49,617