About to purchase- Finance questions

[RoyBell]

Hey all, I have a downpayment on a new travel trailer and just sold my pop up last night. Thursday I will go to sign papers.

They were touting 4.99% finance rates until I got the deal. Then it jumped to 5.99%. I just purchased a car 2 months ago and my credit was 775 at that time. They pulled it Monday at the camper place and now it's 706. Big drop. I told him no way @ 6.99. He got it down to 5.99% which still seems high.

What should I expect? MSRP is $32K. Purchase price $20K I will be putting $10,000 cash down and financing $12,000 for roughly 10-12 years...whatever gives me the best rate, then I will pay down early.

I think with that kind of down payment I should be in the 3-4% range. Not sure what the deal is with my credit and the huge swing but hoping I can show the bank the rating from 2 months ago to help swing into a better rate.

Any thoughts? Either way the trailer will always be positive in equity.

Edit: I found a local credit union @ 4.24%. My score is lower than anticipated because my old car AND new car loan both show up. Old car should be off by now! The break over from Good to Excellent is 720 points. 720 is good for another .25% from the CU. Today the CU pulled it and it showed 710 (I did close some cards yesterday, maybe it helped?). So close.

[OutdoorPhotogra]

Huntindog wrote:

wing_zealot wrote:

oakbowery wrote:
A few years ago I would have been in your shoes about financing ....

What are my shoes? You know nothing about me or my shoes. You choose cash, I'm happy for you. Using my money would be a stupid decision for me when I can use other peoples money for 4.45% while mine earns 7.66%.

How you handle your finances is totally up to you.

I just have one question. How are getting a bank to pay you 7.66% in todays low interest enviroment?
I and millions of others would really like to know the secret. That kind of return involves risk. Which means that you may or may not make that money. You may actually lose money.

All investments have risk. Some is the risk of loss and some the risk of not keeping pace with inflation but you are spot on that 7+ % has risk of loss. That doesn't ,San it's a bad investment but risk must be considered.

I finally got around to shredding old bank records last weekend and found statements with 2.99% passbook savings.

And I save money by cutting my hair with a razor every other day. :B

[Huntindog]

wing_zealot wrote:

oakbowery wrote:
A few years ago I would have been in your shoes about financing ....

What are my shoes? You know nothing about me or my shoes. You choose cash, I'm happy for you. Using my money would be a stupid decision for me when I can use other peoples money for 4.45% while mine earns 7.66%.

How you handle your finances is totally up to you.

I just have one question. How are getting a bank to pay you 7.66% in todays low interest enviroment?
I and millions of others would really like to know the secret. That kind of return involves risk. Which means that you may or may not make that money. You may actually lose money.

[Vulcan_Rider]

ScottG wrote:
It's amazing how a simple question can turn so ugly on here.

It's not amazing at all.

It happens in ANY open forum where there are no rules about freely expressing your opinions......or what you THINK are facts.

Humans are a WIDELY diverse bunch.
Each individual brain works a little bit differently.

I changed my mind; it IS somewhat amazing......but not like you expressed.

[tragusa3]

I got a lower rate from my dealer than from my bank. And the dealer's loan is through MY BANK.

I purchased at $21k and got the rate only if I financed over $15k. So, I did. We held back our down payment to meet the requirement and the next month we sent $12k towards the loan. Now I have a fairly small loan that will be knocked off within the first year.

I understand the strategy of "my money makes more for me than it costs to borrow", but I've never liked playing it. Peace of mind and eliminating possibilities has value.

Roy, your habits sound a lot like mine. No cable, no cell phone, no haircuts, no restaurants...

[RoyBell]

OutdoorPhotographer wrote:
I'm one of the pay cash or close to it crowd. My personal tolerance is a mortgage and one car loan at a time that is financing 50% of the purchase price and paying off in 18 months or less.

You are putting a big chunk down and have a reserve so I understand the financing. Here's what I'll toss out at you, at early 30's you don't remember what regular interest rates are. We are in an extended period of low rates which is partially why I'm fine with loans on one vehicle. By my math, the difference in 12k at 5% for 10 years and 6% for 10 years is $6/month: $136 vs $142. If you take the full ten years which is not recomended and you said you intend to pay early, that is $720 total difference.

The fact that you only have a few payments left on your truck is valid to your analysis but irrelevant to the credit agency that is figuring your credit score. When it's paid off, you will probably get a bump up. I say if you don't have a credit union, just take the 5.99, pay it off over 5 years or less, and move on. That's not a bad rate on a TT.

Money is cheap now. Borrow while you can 🙂

I am not caught up on monthly payment, I am more caught up on the end result, which is paying an extra $800 (over 6 years) on the life of the loan. Why spend it if you can get it cheaper.

The monthly payment I don't mind so much as I cut in a lot of places so I can afford a monthly. For instance, a lot of people pay $100+ month for cable tv and internet. I have an antenna and no internet at home. I cut my own hair to save another $25/4 weeks. I buy my food cheap and prepare my meals for a week in advance vs going out.

A lot of people say they only buy in cash, then have monthly expenditures like cable tv, phone, going out, etc. It's all relative in the end. I rather have an object on loan that will be mine after a period of time, vs blowing it on stuff like cable tv or things I can do myself like hair cuts 🙂

[RoyBell]

oakbowery wrote:

RoyBell wrote:

oakbowery wrote:

wing_zealot wrote:
Financing $12K for 12 years you are never even going to get close to 5%. I think if you start checking rates online, in order to get anything close to 5% you would need to finance about $25K or more. You did well by getting 5.99% if you ask me.
Now it's time for the popcorn as you get all the "how stupid you are" from the pay cash folks.

I'm one of the "pay cash" folks as I pay cash for everything I purchase (except house). I recently bought our 2009 Cherokee 31B (37' travel trailer) for less than 10k. The thing looks almost brand new. I've had to do a few minor repairs, but nothing major.

A few years ago I would have been in your shoes about financing until my wife lost her job. At the time we were dependent on both of our incomes to pay the monthly bills. I know God put me through that so that I would personally learn a lesson. I now have the cash only motto and if I can't pay cash for it (especially for what I consider a toy) then I don't need it. Yeah it'd be nice to have a brand new camper, but for half the price or less you could get one a few years old that is practically new.

To me, a camper that I use for recreation is not worth me losing sleep over if something happened and my wife or myself lost a job again.

Would I say that anyone who finances anything is "stupid"? Of course not, I just know that I sleep better at night knowing that if something were to happen the only thing I'm worried about financially at that point is my house.

Just my 2 cents.......

Luckily I am single with a decent paying job that is secure. There is enough in reserve to cover a years worth of mortgage if something where to happen. I could had asked the GF to chip in but I rather not. If we aren't married, I don't want a purchase that would be a hassle to split up if we ever broke up.

Unfortunately, I am getting a larger camper because of her kids which isn't fair for my pocket book lol. We looked at older ones and we really only like 2-4 year old ones the most. In the quad bunk setup, the older models were really beat up, smelled funny, or they wanted almost new pricing for. A 4 year old light weight trailer with sleeping for 8 is still around the $16-19K mark. The heavier trailers are obviously less, but I only have a half ton truck.

Sounds like you've really done your homework which isn't the case with many people. I'm just the kind of person to weigh all angles before jumping into something, and it sounds like you have really thought this through to me. I agree with you on the new purchase vs a $16-$19k used trailer. That's a definite no brainer as an ac repair or other minor issue could push you over the "new" price anyway. I just found a really good deal with mine for less than half the price of a new one and it had the floor plan I wanted. I guess I just got lucky.

Good luck with your financing and hope you enjoy the new camper!

I will not make a money or mechanical decision without checking everything out first 🙂

One other factor was used warranties are not transferable. The 10 year roof warranty is pretty big. The appliances are not cheap on an RV and if they go out, then I can be out quite a bit. To me, that extra couple G is worth the peace of mind, plus lower interest rates on new vs used. Sounds like you got lucky. I got lucky when I bought my used pop-up. Great price, great floor plan, right place right time. I haven't seen another like it for sale.

[OutdoorPhotogra]

I'm one of the pay cash or close to it crowd. My personal tolerance is a mortgage and one car loan at a time that is financing 50% of the purchase price and paying off in 18 months or less.

You are putting a big chunk down and have a reserve so I understand the financing. Here's what I'll toss out at you, at early 30's you don't remember what regular interest rates are. We are in an extended period of low rates which is partially why I'm fine with loans on one vehicle. By my math, the difference in 12k at 5% for 10 years and 6% for 10 years is $6/month: $136 vs $142. If you take the full ten years which is not recomended and you said you intend to pay early, that is $720 total difference.

The fact that you only have a few payments left on your truck is valid to your analysis but irrelevant to the credit agency that is figuring your credit score. When it's paid off, you will probably get a bump up. I say if you don't have a credit union, just take the 5.99, pay it off over 5 years or less, and move on. That's not a bad rate on a TT.

[oakbowery]

RoyBell wrote:

oakbowery wrote:

wing_zealot wrote:
Financing $12K for 12 years you are never even going to get close to 5%. I think if you start checking rates online, in order to get anything close to 5% you would need to finance about $25K or more. You did well by getting 5.99% if you ask me.
Now it's time for the popcorn as you get all the "how stupid you are" from the pay cash folks.

I'm one of the "pay cash" folks as I pay cash for everything I purchase (except house). I recently bought our 2009 Cherokee 31B (37' travel trailer) for less than 10k. The thing looks almost brand new. I've had to do a few minor repairs, but nothing major.

A few years ago I would have been in your shoes about financing until my wife lost her job. At the time we were dependent on both of our incomes to pay the monthly bills. I know God put me through that so that I would personally learn a lesson. I now have the cash only motto and if I can't pay cash for it (especially for what I consider a toy) then I don't need it. Yeah it'd be nice to have a brand new camper, but for half the price or less you could get one a few years old that is practically new.

To me, a camper that I use for recreation is not worth me losing sleep over if something happened and my wife or myself lost a job again.

Would I say that anyone who finances anything is "stupid"? Of course not, I just know that I sleep better at night knowing that if something were to happen the only thing I'm worried about financially at that point is my house.

Just my 2 cents.......

Luckily I am single with a decent paying job that is secure. There is enough in reserve to cover a years worth of mortgage if something where to happen. I could had asked the GF to chip in but I rather not. If we aren't married, I don't want a purchase that would be a hassle to split up if we ever broke up.

Unfortunately, I am getting a larger camper because of her kids which isn't fair for my pocket book lol. We looked at older ones and we really only like 2-4 year old ones the most. In the quad bunk setup, the older models were really beat up, smelled funny, or they wanted almost new pricing for. A 4 year old light weight trailer with sleeping for 8 is still around the $16-19K mark. The heavier trailers are obviously less, but I only have a half ton truck.

Sounds like you've really done your homework which isn't the case with many people. I'm just the kind of person to weigh all angles before jumping into something, and it sounds like you have really thought this through to me. I agree with you on the new purchase vs a $16-$19k used trailer. That's a definite no brainer as an ac repair or other minor issue could push you over the "new" price anyway. I just found a really good deal with mine for less than half the price of a new one and it had the floor plan I wanted. I guess I just got lucky.

Good luck with your financing and hope you enjoy the new camper!

[oakbowery]

RoyBell wrote:

wing_zealot wrote:

oakbowery wrote:
A few years ago I would have been in your shoes about financing ....

What are my shoes? You know nothing about me or my shoes. You choose cash, I'm happy for you. Using my money would be a stupid decision for me when I can use other peoples money for 4.45% while mine earns 7.66%.

This.

It wasn't clear....I was referring to the OP with the "your shoes" comment. Didn't mean to offend anyone, just giving my experience with having to deal with payments as opposed to no payments. In my opinion the item your 4.45% vs 7.66% doesn't factor in is the piece of mind of not having a payment each month. I'm sure you're math is accurate, but for me personally, I like not having to worry about next months payment.

[RoyBell]

wing_zealot wrote:

oakbowery wrote:
A few years ago I would have been in your shoes about financing ....

What are my shoes? You know nothing about me or my shoes. You choose cash, I'm happy for you. Using my money would be a stupid decision for me when I can use other peoples money for 4.45% while mine earns 7.66%.

This.

[RoyBell]

ScottG wrote:
It's amazing how a simple question can turn so ugly on here.

It is amazing. I ask a simple rate question and everyone knows my life and money situation.

[RoyBell]

Vulcan Rider wrote:

RoyBell wrote:

As for the purchase of the new one. I feel I got a great deal.

I guess I quoted the wrong part.
Here is what confuses me.
Does this feeling of a "great deal" not include the interest rate too ??

And right this minute, you have open loans for a house and TWO cars and are going for another on an RV. Like it or not, that makes it appear that you are a little too free with taking out additional credit, thus the higher rate.

Great deal is on the purchase price of the new RV.

My truck has literally 2 payments left before it's done and over with.

As stated above, my credit report is still showing an open car note which is closed.

I also am not crying about the rate or my credit score like you make it seem. I am simply asking what I should expect for rates. It appears the store was high and I was able to secure a lower rate.

[wing_zealot]

oakbowery wrote:
A few years ago I would have been in your shoes about financing ....

What are my shoes? You know nothing about me or my shoes. You choose cash, I'm happy for you. Using my money would be a stupid decision for me when I can use other peoples money for 4.45% while mine earns 7.66%.

[ScottG]

It's amazing how a simple question can turn so ugly on here.

[RoyBell]

Good news and bad news.

I called the local credit union that our Local Electricians support. They can do 4.49% for 6 years and knock another .25% off for auto payment (which I do on everything). So... 4.24%.

My score through her was 710. I get another .25% savings if my score was 720+. Well, my old car loan is still shown as open which is why my score is so low. I told her it was not open and that I should be eligible for another .25% because it is incorrect and I can show them the car payoff stuff from when I got the new car. She didn't seem too receptive to that.

Either rate, .25% at that loan is only $100 difference in interest paid over the life of the loan which is minimal. I will pick up about $800 over the life of the loan in interest savings vs what the dealers bank offered me. I may refinance when the car note is off and pick up another couple dollar savings.