Trying to finance a Travel Trailer under 10k for 144 mths.

rvhippo wrote:
You will be upside down on the loan for nearly the entire period. You will not be getting out without taking on more debt. The only trailers I've seen that last 144 months are stored indoors and are meticulously maintained. Maybe if you have indoor storage and spend thousands on maintenance you will finally be able to get out of the loan at break even after a decade or so.

If this thing will be stored outside and you don't maintain the seals and caulking (get up on the roof every 6-12 months, clean it, caulk it or pay someone $500 to do it), it will be destroyed by the elements well before you've finished paying for the loan.

Also, figure out how much you're going to actually use it. Renting is usually cheaper if you use it for less than 3 months per year. Maintenance, insurance and storage costs are above and beyond the monthly payment to the bank. The average person uses their RV for 30 days per year.

A 144 month loan on a large boat or diesel-pusher motorhome is financially do-able because they have such long service lives and maintenance / insurance / storage is such a small percentage of their total cost. A 144 month loan on a travel trailer is digging a financial pit you'll regret for 11 out of 12 years (you may enjoy the first year until you realize the total costs involved). Travel trailers don't last very long without meticulous maintenance which costs either lots of money or lots of time (or both).

The only exception I can think of is if you live in a desert climate. Trailers last longer where it's dry and doesn't rain.

If cost is an issue, just rent if you're going to use it for less than 3 months per year. You'll come out way ahead financially. Most people with jobs and family can't spend 90 days camping because they are too busy. If you have nothing better to do with the money, then buy. If you're going to be inside of it for more than 3 months per year, buy.

Your assuming a large deposit isn't put down and that only minimum payments are being made. And the little interest paid, at least in our case, is a tax deduction. We're paying less than 2.99% on our RV loan with credit union bonus points factored in that allow the rate to be lowered in steps every 10 mos. Compare that to our investments where we're earning 8%+ the past 2 years.

You do have to be careful and not get sweet talked into bad upside down debt. But there is also smart ways to use financing in some situations. And not all credit unions are equal. Our's values long term membership (we're at 16 years) so they are very flexible on terms and rates. Excellent credit and long term stable employment is also a factor.


As far as the post about caring for your TT--everyone needs to be re-sealing, waxing or polishing, covering or properly storing, whether you have a loan or not. Our last RV, a 4+ year old HTT that we used a lot, looked like new when we sold it our self (crazy if you trade it but that's another post). Our 2012 Bullet looks better than new with several valuable mods while sitting in a very nice storage building on a concrete floor at a very reasonable fee until the snow is gone.

I strongly suggest that you read the post by RVhippo and keep rereading it until it becomes a mantra. Simply put, nobody needs an rv, they are a want. If you WANT one and NEED to stretch the payments out for twelve years, because you cannot handle an extra $70-90/month for a reasonable length loan, you cannot afford one. Doesn't matter if it's a $75K Class A, or a low end travel trailer. You don't need it, and you can't afford it. While shopping for a used Gas powered class A, I met many decent folks with really nice rigs that I would of loved to own. The issue is that they were WAY upside down on their loans, and praying that somebody would come along and offer them enough money to dig themselves out of the hole that they created. This becomes a downward spiral as the rig continues to depreciate rapidly, and they are still behind the curve, failing to get to the tipping point as they continue to make payments.

Obviously, the details of a low cost trailer are a little less gruesome, but it's not hard to see a scenario when your situation changes, you NEED to get rid of the thing, and many years from now, STILL owe thousands more than any rational buyer would ever think of giving you.

rvhippo wrote:
You will be upside down on the loan for nearly the entire period.

Hate to say it but in this case you need to consider not buying that trailer. I don't mean to be facetious, but if you cannot afford the 9000 up front on an item that depreciates as badly as a TT, then you REALLY cannot afford to finance it and pay 50% more in interest over the term of the loan.

There are so many ways to get out camping won't clobber your long term financial situation, you should consider something else.

12 years for a toy? I wouldn't be able to sleep at night.

Any trying to be funny comments will be replied to with swiftness!...

:R

Terryallan wrote:
Just let the dealer do it. We financed our first TT for 12 years, and paid it off in 7. Did this one for 12 as well. Just because you finance it for 12 does not mean you have to take that long. It just means that if you need to, you can make a lower payment sometimes. Like If you get laid off or something big comes up.

This is easy way to get into a trailer without putting yourself into a bind. As long as you pay it off early you are paying simple interest and will only cost you for the time you use their money.

The costs to a financial institution are too high to take on such a small loan for such a long time. Things like document preparation, posting payments, compliance costs, collections, statements, credit review and on and on all cost money, and those costs are virtually the same on a Million Dollar loan as they are on your proposed $9,000 loan. The loan terms you are looking for would make it nearly impossible for the lending institution to make a profit at any reasonable interest rate. And on top of that, they realize that a cheap trailer isn't going to be worth anything 10 years from now, so they will never have an equity situation should the loan go bad.

You will be upside down on the loan for nearly the entire period. You will not be getting out without taking on more debt. The only trailers I've seen that last 144 months are stored indoors and are meticulously maintained. Maybe if you have indoor storage and spend thousands on maintenance you will finally be able to get out of the loan at break even after a decade or so.

If this thing will be stored outside and you don't maintain the seals and caulking (get up on the roof every 6-12 months, clean it, caulk it or pay someone $500 to do it), it will be destroyed by the elements well before you've finished paying for the loan.

Also, figure out how much you're going to actually use it. Renting is usually cheaper if you use it for less than 3 months per year. Maintenance, insurance and storage costs are above and beyond the monthly payment to the bank. The average person uses their RV for 30 days per year.

A 144 month loan on a large boat or diesel-pusher motorhome is financially do-able because they have such long service lives and maintenance / insurance / storage is such a small percentage of their total cost. A 144 month loan on a travel trailer is digging a financial pit you'll regret for 11 out of 12 years (you may enjoy the first year until you realize the total costs involved). Travel trailers don't last very long without meticulous maintenance which costs either lots of money or lots of time (or both).

The only exception I can think of is if you live in a desert climate. Trailers last longer where it's dry and doesn't rain.

If cost is an issue, just rent if you're going to use it for less than 3 months per year. You'll come out way ahead financially. Most people with jobs and family can't spend 90 days camping because they are too busy. If you have nothing better to do with the money, then buy. If you're going to be inside of it for more than 3 months per year, buy.

There are too many variables on a question like this. Each case is so different. Think we're all going on assumptions and what-ifs and it's probably not going to be much help in the OP question. Probably best of the OP talk to his own dealer/bank/credit union to get a true answer. Good luck with your purchase....stressful and frustrating to get all the loose ends tied up.

Sometimes the longer loan length requires a larger amount.