need to understand how finance calculation work
We want to buy a fifth wheel, and we need to trade a travel trailer that has no equity. Is there a step i can follow so i dont get taken advantage of or tricked into a bad deal?
Forum Discussion
You are looking at a fifth wheel with a MSRP of 73900? Or is the MSRP say 86,599 and the "Sale" price is discounted a certain amount to $73,900?
Lets say that the MSRP is $100,000 and the dealer is trying to get rid of their last 2013 model, they discounted it by about 26% to $73,900. Then you will have very little "Wiggle Room". However if you are looking at a $77,300 MSRP, and the dealer has discounted it by $4,000, or nearly 5%, you have a lot more wiggle room, and the dealer has enough profit built into the deal that they might be willing to pay off your current trailer - in other words giving you $19,761 as a trade in value. This is because a MSRP trailer selling for $86,300 only costs the dealership about $58,000 to replace it. Perhaps the dealer has to pay someone about $1,100 to ship in the replacement trailer. If the dealer is looking at replacing the fifth wheel with a 2015 model, and making a potential $10,000 profit, they can take the $6,000 loss on the trade in, because their net profit will be more than the amount of potential loss.
The other choice for you is to keep making payments on the current trailer until it is more paid down. Say the new payment on the fifth wheel will be something like $650 per month. If you start making $650 - 750 monthly payments on the trailer, you will soon have the balance below the trade in price, say by September.
Just a thought?
Fred.
Lets say that the MSRP is $100,000 and the dealer is trying to get rid of their last 2013 model, they discounted it by about 26% to $73,900. Then you will have very little "Wiggle Room". However if you are looking at a $77,300 MSRP, and the dealer has discounted it by $4,000, or nearly 5%, you have a lot more wiggle room, and the dealer has enough profit built into the deal that they might be willing to pay off your current trailer - in other words giving you $19,761 as a trade in value. This is because a MSRP trailer selling for $86,300 only costs the dealership about $58,000 to replace it. Perhaps the dealer has to pay someone about $1,100 to ship in the replacement trailer. If the dealer is looking at replacing the fifth wheel with a 2015 model, and making a potential $10,000 profit, they can take the $6,000 loss on the trade in, because their net profit will be more than the amount of potential loss.
The other choice for you is to keep making payments on the current trailer until it is more paid down. Say the new payment on the fifth wheel will be something like $650 per month. If you start making $650 - 750 monthly payments on the trailer, you will soon have the balance below the trade in price, say by September.
Just a thought?
Fred.
