RV Financing
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 loa...
Forum Discussion
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.
