need to understand how finance calculation work

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..