need to understand how finance calculation work

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 meant 12 quarter points, so 12% of the amount financed. So, if the buyer financed $80,000 the bank would cut us a check the following week for $10,000 for the finance contract. 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!

Once you have done your homework and are ready to finance. It had been my experience to do my financing with my bank. The interest is often lower and they are not going to make a risky loan.

If it is not a good gamble for the bank, it is probably not a good gamble for you. The bank is in business to make money off of your load not to sell repossessed TTs.

However you finance; make sure it is a simple interest loan with extra payments going directly to the principle.

Think, rest on it, then think again and never, never be afraid to walk away from a deal no matter how good it seems.

I have been told that if it was up to me, it would take a year and a half to have a baby. So be it, but I rarely have buyer's remorse.

You have been given much to think about. I will add do not sign anything or give them any cash until you are absolutely certain you have a deal you can live with

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.

Cash out refi or bad luck? I bought a home in Lutz, FL12 years ago and it has gone up some in price.

It would help the OP get better information and advice if he would provide the suggested cost of the new unit, what the dealer is willing to sell it for, the homework the OP has done to verify that the selling dealer is selling the unit for a price that is as good as most dealers would sell the same unit for, and the age and original price of the TT the OP paid. Most of the time the dealer will bury the negative equity into the new unit and just finance the whole deal. For some reason this dealer is not giving the OP even what he owes on the TT as a trade so in my mind this is the first red flag. Maybe this is an honest dealer and is trying to show the OP that the numbers are not in his favor. That would be refreshing to be sure.

If the OP caluclates what he paid for the TT, what he will sell it for (depreciation expressed in trade in value or private sale) and divide that by the nights camped in it, the OP might be shocked at the cost per night. Add to that the payments the OP made, the down payment given at purchase, and all the other costs associated with the TT and the numbers are not in the OP's favor for trading into a more expensive unit unless he plans to live in it full time. The OP could pay off the TT and have no payments long before the fifth is even half paid for at around $700 per month, have no negative equity, get some value out of the TT, and have a paid for RV; or....... go into big debt, big payments, and start out with negative equity. How many nights does the OP have to camp in the new fifth just to break even on a per night basis above and beyond what it costs to use the existing TT? If the OP does not like the TT and wants to off it, just think how big a hit it will be if the OP wants to off the fifth very early in the new loan. Since RV's are depreciating commodities, we never recover what we have in it. Less depreciation can occur if purchasing pre-owned and that might be a good way for the OP to try to go if seriously looking at a fifth wheel. Cutting the 'entry fee' costs by $25-30,000 on a good five year old model can help take some of the sting out of the TT's negative equity that the OP will have to eat.

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.

smkettner wrote:
My original response also included some thoughts on affordability.

It is very easy to make a fair RV deal, make the minimum payments for 60 months and be a bit upside down. This does not mean anyone got ripped off.

I guess it how one looks at things in life..

The OP "feels" they are being "ripped off" and it is "unfair" that the DEALER is not willing to cover the "shortfall" or difference in the used trade in value vs the sales price of the new unit they want to buy.

They (the OP) are RIPPING THEMSELVES OFF by DESIRING a NEW RV, not the dealer.

The dealer did not force the OP to walk in and purchase a new unit.

The dealer HAS TO MAKE some money on the deal, otherwise they WILL go out of business. The dealer simply cannot AFFORD to trade even up or basically give away a BRAND NEW and more expensive RV for an older used less expensive RV which they would have to attempt to sell and make all of their profits..

Yes, the dealer will "offer" less for a used unit and rightly so, no one is going to pay a new price for any used unit.

If the OP feels the dealer is unfair they can back out of the deal anytime before signing the papers.

The OP can attempt to sell their trailer as a private party sale.

They most likely will get about the same price as the dealer is offering and may end up waiting months or even a year to sell it at that price and unless they pay down the loan quicker they WILL have to pay the shortfall on the loan balance.

As far as I am concerned the dealer has come with in $6K difference which if the OP owes more than the unit is worth is a real decent "deal" since the OP owes more on the loan than what the RV is worth, the dealer could have easily told the OP to take a hike.

The OP has several choices..

Walk away (keep or sell as private sale)..

Take the deal and roll the difference into the new loan..

Take the deal and pay cash or get a separate loan for the difference..

If the OP really has their heart set on the new unit they WILL have to take some lumps on the deal.. The dealer simply cannot afford to pay off an upside down loan.

My original response also included some thoughts on affordability.

It is very easy to make a fair RV deal, make the minimum payments for 60 months and be a bit upside down. This does not mean anyone got ripped off.

bigdogger wrote:

Jetta03 wrote:

smkettner wrote:
That puts you $6,388 upside down.

$6388 upside down and looking to roll this into financing another 70k+ on another new unit? Your question is moot, you've already been taken advantage of.

With no other facts, why are you certain they are being ripped off? If their rig is really worth $6388 less than they owe, that is a fact that will not be changed by trading it in or keeping it. We have no idea if $70,000 for the rig they are looking at is a good deal or a bad deal. If it is a great deal (buying at say true wholesale value), then they are going to be $6388.00 upside down on the new rig after they finance in the negative equity. Most likely the deal is an average deal (paying somewhere around a fair retail price, which is what most people pay), so they might be another $4,000 or $5,000 upside down (in relation to wholes value) which isn't great, but isn't the end of the world. Personally, I would rather be $11,000 in the hole on something I want, that I like and that fits my needs rather then being $6388 upside down on something that isn't working for me.

Ah, living the American dream, taking on more and more debt. Kinda like the folks who are upside down on their mortgages and expecting the government to bail them out. Going upside down on anything you're purchasing is just such a bad idea.

bigdogger wrote:
I would rather be $11,000 in the hole on something I want, that I like and that fits my needs rather then being $6388 upside down on something that isn't working for me.

:E :h :R

The above quote IS the reason so many people have lost homes and or are so far in debt that their children will be taking on the left over burden of their debts.

I am simply amazed every time I see statements like this.. RVs ARE NOT FOREVER, eventually you WILL be replacing it.. Buy, finance, pay for one that is EASILY in reach to pay for..

I have not personally found a RV that "doesn't work for me", many things that bother you can often be reworked with a little effort or learned to like or ignore.

Adding an additional debt from a previous purchase just because the color is wrong, layout is wrong or simply the RV is no longer "in date" is a terrible waste of your buying power..

I guess I have never looked at 5ths, I didn't realize they could be going for $70K +, adding an additional $6K or more debt to that is bad management of ones income. The OP may not be even able to AFFORD the new payment schedule or the loan will need the length extended even further costing them THOUSANDS of Dollars for this "toy".

As it is a $70K loan for 15 yrs will easily cost them nearly $70K in interest or about DOUBLE the purchase price. $140K for a TRAILER of any kind is simply too much.

I would highly recommend the OP plug in the numbers into an Amortization calculator and see for themselves just how much more interest they will be paying..

AMORTIZATION CALCULATOR

I would recommend the OP to reconsider keeping what they have, put extra money towards the Principle of the loan every month and pay the loan down so at least there is zero difference. The Amortization calculator I linked above CAN help you with this.