Is it possible to finance a $23K trailer for 180 months?

Your plans are a huge financial mistake.

lane hog wrote:
The only RV's I've ever seen with a 15 year note is a motorhome, and they also offer 20 year notes on the bigger units. Bad idea given how quickly depreciation hits and how long you'll be underwater.

If you retain the down payment you are never underwater. You just pony up at the end instead of the beginning. Virtually any RV loan can be accelerated at any time.

Of course if the person barely has two nickles to rub together it can present an issue.

The only RV's I've ever seen with a 15 year note are motorhomes, and they also offer 20 year notes on the bigger units. Bad idea given how quickly depreciation hits and how long you'll be underwater.

FWIW, we have personal reasons for wanting a longer termed loan. None of it has to do with affordability, cash flow, bad credit, lack of a down payment, etc... The idea was to time the loan so that it'd be paid off right around the time our mortgage is paid + the time frame at which our youngest would be heading off on his own.

Looks like we'll need to readjust our thinking. Thanks for all the help.

wapiticountry wrote:
Small loans are likely to viewed more as a nuisance than an opportunity. It costs the lender the same amount of money to process a $20,000 loan as it does a $200,000 one. Therefore the actual costs of $20,000 loans are ten times higher than $200,000 ones from the lender's point of view. If I was underwriting an RV loan, I would be very concerned that someone wanted to get a 15 year loan on such a low balance. It would raise a red flag that the borrower had cash flow issues.

Not really.

Take into consideration that banks use the property that you are buying as collateral. Collateral assures the bank that if you default on the loan that they WILL take ownership of the property and resale it to get the loan paid.

Homes on average gain value over time provided you do upkeep.

RVs even with up keep lose value over time, banks are less interested in a asset which loses value..

They are taking chances with RVs and the longer the note, the better chance that if you default they are stuck with a unwanted RV that they will have a difficult time reselling and most likely result in loss of banks money..

Short loan terms under 12yrs on depreciating assets banks will not bat an eye at.

Less down is probably better with a small loan. Ask the dealer what he can do. Although since April lenders are getting skittish about long loans and want higher interest. See if the dealer can get close to your 8yr rate. Google "RV Loans" for a few leads if this is a private sale.

Gdetrailer wrote:
Why?

You do realize that $23K trailer in one year will be worth $11K on it's best day?

In 5 yrs maybe $6K

In 8 yrs maybe $3K

and if in the case of severe water damage absolutely nothing in a hurry.

It is a depreciating asset, loses value the second you sign the paper work.

8.49% interest for 12yrs on an asset which loses value every second you own it and is highway robbery.

So, a loan of 23K for 12 yrs at 8.49% means your "purchase" price once you get done paying the loan off is $36,747!!!

Interest paid is $13,747 which is one heck of a lot of interest and cost for a RV worth pretty much zero at the end of the 12yrs.

The payment is $255.18 per month for 12 yrs.

For 8 yrs the same loan and same interest you only pay $8,766 for a grand total cost of $31,766 and the loan payment would be $330.90..

I would highly recommend you play with an amortization calculator to see how loan length and interest rate affects how much interest you pay and what your payments will be..

AMORTIZATION CALCULATOR

That 8.49% interest is way too high, I would recommend you talk to your own local banks, sometimes you can also get slightly better interest rates when purchasing through the RV dealer.

According to US NEWS a credit score of 600 or higher should get you an average of 4.83% which is nearly half of what you are talking about!

Shop around.

There are no auto or truck loans written with 12 year terms. So that average rate would not apply to the terms quoted on a twelve year RV loan. Furthermore, RVs, boats and other luxury items often carry a higher rate than Autos or homes. After all, should someone get into financial straits, what are they most likely to stop paying on? Shelter and transportation? Not likely. Toys like boats and RVs? Probably

Small loans are likely to viewed more as a nuisance than an opportunity. It costs the lender the same amount of money to process a $20,000 loan as it does a $200,000 one. Therefore the actual costs of $20,000 loans are ten times higher than $200,000 ones from the lender's point of view. If I was underwriting an RV loan, I would be very concerned that someone wanted to get a 15 year loan on such a low balance. It would raise a red flag that the borrower had cash flow issues.

Why?

You do realize that $23K trailer in one year will be worth $11K on it's best day?

In 5 yrs maybe $6K

In 8 yrs maybe $3K

and if in the case of severe water damage absolutely nothing in a hurry.

It is a depreciating asset, loses value the second you sign the paper work.

8.49% interest for 12yrs on an asset which loses value every second you own it and is highway robbery.

So, a loan of 23K for 12 yrs at 8.49% means your "purchase" price once you get done paying the loan off is $36,747!!!

Interest paid is $13,747 which is one heck of a lot of interest and cost for a RV worth pretty much zero at the end of the 12yrs.

The payment is $255.18 per month for 12 yrs.

For 8 yrs the same loan and same interest you only pay $8,766 for a grand total cost of $31,766 and the loan payment would be $330.90..

I would highly recommend you play with an amortization calculator to see how loan length and interest rate affects how much interest you pay and what your payments will be..

AMORTIZATION CALCULATOR

That 8.49% interest is way too high, I would recommend you talk to your own local banks, sometimes you can also get slightly better interest rates when purchasing through the RV dealer.

According to US NEWS a credit score of 600 or higher should get you an average of 4.83% which is nearly half of what you are talking about!

Shop around, lower interest rate WILL drop your payments considerably.

Additionally, put as LARGE of amount of cash down you can comfortably afford in order to reduce the amount you need to borrow, that WILL make for a considerably lower monthly payment..

Never fall for those what do you want the payment to be sales come ons, they bury you in interest debt by making the loan term longer!

If you're a member of Costco check them out.