need to understand how finance calculation work

smkettner wrote:

lj2654 wrote:
Well many of us are upside down on home mortgages because of the bank and mortgage companies greediness a few years ago. I have lived in my home for 12 years and am still upside down and will never have equity in it.

18 more years... longer if you refi longer and bigger, shorter if you send an extra $100 or more each month. I suggest sending extra money even if it is just $10 to start.

X2!

It is NEVER too late to pay extra against the principle.

Use the Amortization calculator that I posted a link to, plug in your numbers then plug in $10, $20, $50, $100 extra towards the principle and recalculate.

Paying extra on the principle is a great way of REDUCING your negative equity not to mention reducing the amount of years remaining until you pay it off.

One note.. If you do decide to pay extra, you MUST INDICATE how the extra funds are to be applied. The bank AUTOMATICALLY ASSUMES it is a extra REGULAR P&I payment which is not the same effect as paying directly towards the PRINCIPLE OWED.

I thought I was nuts for paying $14k out the door for my 2002 TT... Put $8k down and paid $111/month for 5 years (I ended up paying it off early).. I was still making payments on my 97 F150 of $275/month at the time too.. (paid it off early too).

Then I owned both of them for the last 7+ years.. :)

Still have the 2002 TT and just bought a new 2013 F150.. Now I'm paying $400/month for it for the next 6 years.... :(

But, it's a hell of a nice truck compared to the 97.. :)

If you can afford to take a loan out for a $70k rig, I guess you can do that...

Eat the loss on the $19k RV you have now and move up..

As has been said, the dealer is not ripping you off... He's only offering you what he can sell it for and still make a profit... He's offering you the price for the 5th wheel that will also still make him a profit.. What's wrong with that? If you must have that $70k 5th wheel, it's not the dealers fault you don't like your $19k rig anymore??

Do what you need or want to do and deal with it or sell it all and do something else.. ;)

Good luck!

Mitch

Gdetrailer,

Excellent advice. :)

As you pointed out discipline is the key to financial solvency. My truck is 12 years old and has 200,000 miles on it. When it was originally paid off eight years ago, my DW kept making the payments to our “truck” account. Some, but not all when to routine repairs.

When we went to purchase our TT we knew what size truck we would need and we had the eight years of truck account savings to offset the cost.:B

Now I have a grandson drooling over Grandpa's old truck ;)

Life may not always treat you kind but a disciplined approach helps smooth out the bumps, especally when you get a few years on you and do not bounce as well.

Stop and think. Not only are you going to be taking on a HUGE debt buying this new RV-Don't forget that everything is going to cost more going from a TT to a Fiver. Do you have a big enough truck to pull it?? Insurance?? Fuel?? Storage??
Your very best bet is pay off what you have, or sell it outright and ERASE that debt. Then you can start to think about something else.

Don't be so quick to assume the dealer is trying to rip the OP off. They are not in the business to pay off people's mistakes. I've never heard of a story of someone being forced at gunpoint to buy an RV.

There is a LOT going on here and IMHO you need to talk to either your own banker or if you have an accountant, even better. This is a lot of money to be maneuvering around and dealers are experts at juggling numbers to the point that you either believe they're almost giving you the trailer or you're so confused that you just sign and figure it out later....too late then. Get some financial advice from an impartial person before you jump.

lj2654 wrote:
Well many of us are upside down on home mortgages because of the bank and mortgage companies greediness a few years ago. I have lived in my home for 12 years and am still upside down and will never have equity in it.

18 more years... longer if you refi longer and bigger, shorter if you send an extra $100 or more each month. I suggest sending extra money even if it is just $10 to start.

DougConnie4ever wrote:
I owe 19761, and the sale price of the coach 73900. They are paying 13375 for the TT. what is the best way to handle this?

Put the pen back on the table, stand up, put your hands in your pocket, say thank you for your time, and walk out the door.

Keep what you have, pay for it and then consider buying something else.

If you make this deal you are digging yourself into a deeper hole than you are currently in. Keep on digging and the hole only gets deeper. You are currently in a $7,000 hole, if you sign those papers you will be in a $17,000 to $27,000 hole immediately.

alkar wrote:

Dick_B wrote:
Compare how many RV's you have bought/sold in your lifetime vs the dealer. What chance do you have to beat them (or even tie them) at THEIR game?

And your advice is? Give up and don't ever buy another trailer? Roll over and take whatever financial beating they administer?

Dealers have many advantages, including access to all the numbers. They actually know what they have to get to make the sale. Others have already made many good points. I'll add a note on financing. I worked for a boat manufacturer and the marine business is quite similar to the RV business. We made a LOT of money on financing. The market is much tighter now, but we used to get paid 1% of the amount financed for every quarter point between our "buy rate" and where we financed the buyer. For example, if our buy rate was 6% on a particular buyer! and we financed him at 8.99%, the difference would be 3% - that's 12% of the amount financed, so if the buyer financed $80,000 the back would cut us a check the following week for $10,000 on the financing alone. Oddly, a lot of buyers thought we'd cut a better deal for cash. For obvious reasons, we cut better deals if we thought the person was financing through us.

RVs are not an "investment", they're a lifestyle we pay for. Every purchase is a matter of balancing cost against benefit. It's possible to buy a used RV, use it, and sell it for a profit -- I lucked into that once on a used camper -- but most of us are just trying to get maximum joy/comfort/benefit at minimum cost. And life doesn't last forever -- so I agree with those who recognize some acceptable "upside down" cost to get what they want while they can enjoy it.

I routinely hear people crow about beating the dealer down $15,000 on a $90,000 MSRP. Dealer cost on such an RV is probably to be between $55,000 and $60,000. Given the fact that your new RV is "used" the day you leave the lot with it, the dealer wouldn't buy it back for even $55,000. (Why would he when he can just get other new one for the same price? Remember, an identical new one would usually come with favorable manufacturer supported flooring/financing, while most dealers have to use their own money/credit to buy and carry "used" inventory, so I'd plan on the used rig being worth about $45,000 to the dealer -- or $70,000 or more on consignment.)Using this math and a $75,000 purchase price on a $90,000 MSRP, and assuming the buyer has no other trade/debt, he's starting out at LEAST $25,000 "upside down" in the new trailer. That's no different from buying the new trailer more "right" at $65,000 and including $10.000 in unrecovered debt from a trade that's worth $10,000 less than what's owed on it. It all settles out the same way: in the end it's a question of how much "negative equity" you have in your RV. It's similar for those who pay cash -- because they know they're probably going to sell for much less than they paid.

The important thing is to decide your acceptable risk/cost for the benefit you'll get and stick with that balance so you're not anxious about it. Best of luck!

Good advice.

I want to clarify that I myself do not think the OP (or anyone else) should "give up" on a RV. But when faced with having a outstanding very large upside down loan on a RV they SHOULD step back from the deal if they do not feel comfortable rolling that outstanding loan balance into the next loan.

They should regroup and look at waiting a bit longer and pay down some of the negative equity by making additional monthly payments to the Principle owed.

After all by rolling that negative balance into the next loan they most likely will be paying a higher payment and keeping the same payoff time or keeping the payment the same and taking out a longer loan. Both options will ultimately cost the OP considerably more interest in the end..

lj2654 wrote:
Well many of us are upside down on home mortgages because of the bank and mortgage companies greediness a few years ago. I have lived in my home for 12 years and am still upside down and will never have equity in it.

If you financed more than your home is worth how is that the fault of anyone other than yourself? If prices fell, that is not the fault of a bank or lending institution, much more likely the buyers got caught up in a buying frenzy thinking home values will climb forever and failed to realize that home values can move down as well as up. That is their own fault. I have yet to see any example where a lender held a gun to the borrower's head.

lj2654 wrote:
Well many of us are upside down on home mortgages because of the bank and mortgage companies greediness a few years ago. I have lived in my home for 12 years and am still upside down and will never have equity in it.

Sorry to hear that.

You however should consider yourself lucky to still have your home, I personally know a few people that lost their homes after the variable rates (which allowed them to afford the house) went through the roof.

Not ALL the blame is the greediness of the bank, the home buyers had a hand in that too by buying homes which were more expensive than they should have bought.

It is very easy to get sucked into a deal which is on the bubble of not being to make the payments..

When I bought my home I intentionally looked at homes which only ONE our two incomes could afford. Yes, that meant I was not getting the big fancy lakeside home with a flat yard..

Instead I got a SMALL home 50ft from the center line of a busy road. Additionally I did not get my flat yard, no, instead I have better than 1 (out of 1.7 Acre) acre of extremely steep hillside. So steep I cannot mow it..

But the upside was that I was able to buy the home on a 15yr mortgage and paid it off in 11yrs. Been mortgage free for at least 20 years!

Since it has been paid off, I built a new living room on the side of the house(paid for with cash saved that would have gone into the mortgage payment) AND a three and a half stall garage (also paid cash saved from not paying a mortgage).

We are far from being rich people in fact both of our incomes just barely keeps us just above the poverty level..

By buying smart and paying off debt early we CAN afford to do things like camping. We don't get a lot of time to camp so we even buy very old TTs (for cash) and fix them up to suit us just so we don't have a monthly payment on something that gets used a few weeks out of the year..

Not many would care to go my route, instead, instant gratification rules and they don't care what it costs to have it now... Pay me now or pay me later.