Rv loan rates!

[mkasner]

Anyone looked at RV loan rates lately! For 800+ credit scores 8% or more! Even through local credit union. Who is buying these over priced RVs with these rates?

[restlessways]

nickthehunter wrote:
To answer the question, I can write off 100% of the interest on a second home. However, that doesn't put me over the top for exceeding the standard deduction. So financing to write off the interest gains does absolutely nothing for me. That overall is probably a bad strategy. At most, if you paid $1,000 in interest in a year, it would net save you $370 in taxes (37% or less depending on Taxable Income).

But keeping my money invested and using other peoples money while only paying them 4.49% in interest is a winner. The money I kept invested is right now worth almost 70% more over the last 8 years, and that is even after it went down over 36% last year.

Now to head off the naysayers, the money is invested in a Roth IRA, total market index fund (VTSMX). I've had the fund for about 20 years, nothing fancy, moderate to above average risk. If I was going to pay cash for the RV, this is the fund the money would have come out of.

Sure, during the biggest everything bubble in the history of mankind. Even a monkey couldn't go wrong with what the FED was doing by artificially repressing interest rates and juicing asset prices. But those days are gone. Your plan won't work for anybody moving forward. In fact it will financially destroy them. Eveybody's a financial genius when the FED is printing.

[restlessways]

Bedlam wrote:
I have never financed discretionary purchases. It takes me a while to save up, but I do not have the overhead of loans slowing my saving. Paying off our home was the real factor in being able to pre save for purchases rather than financing them into the future at a higher cost.

There are those who pay interest, and those who collect it. I like to be the latter. I haven't paid any interest for over 15 years, and don't anticipate doing it again.

[restlessways]

Grit dog wrote:
^Which hopefully starts narrowing the competition and lowering the prices here real soon!

Hopefully in time to score a good deal on another camper for this summer…
Gonna be tough going on prices though until the unemployment rate rises.

You're not going to see any good deals on campers this year. There is still way too much money out there. $10 trillion in monetary and fiscal stimulus doesn't disappear overnight. Probably be another 18 months before we even start seeing widespread distressed sales of toys. There isn't even a sign of a recession yet. The people who are losing jobs right now can find another one immediately.

[mkasner]

JimK-NY wrote:

valhalla360 wrote:
Operating on leverage works great until it doesn't...then it multiplies the losses. The ones talking about being savey, always gloss over this part and it would never happen to them...until it does.

The trick is to get ahead of the game. Once you have no loan payments, it's easy to save up for big ticket items.

You are certainly correct. It is possible to lose money when investing leveraged money. At the current borrowing rates and current investment returns that is highly likely.

Sadly very few people have any financial knowledge. I find it appalling that our schools do not teach anything regarding household finances. It is no surprise since the teachers are not educated in that regard. When I took out car loans and a mortgage, the rates were low and historical analysis predicted my 60:40 conservative portfolio would double my money with less than a 2% risk of falling short. Note that is falling short, not losing anything but a very small fraction of what I borrowed. That type of information is readily available with free online calculators.

Years ago I even bought a $40K truck totally with credit cards. It took a couple of cards and calls to up my borrowing limits. We paid our daughter's $30K tuition with credit cards. We paid off the cards immediately and had points for trips to Hawaii and to visit relatives on the other side of the country. As someone else pointed out, even taking a high cost RV loan can make sense it you get substantial incentives and there is no pre-payment penalty.

This is probably the wrong place to discuss financial matters including financing an RV, but if you blindly avoid all debt and pay off debts as soon as possible, it might be a good idea to gain some financial knowledge.

I think this type of forum is a great place to talk about finances. I don't think anyone is here to gloat about paying for cash because they have the means to do so and I think it's an important indicator of the health of the RV and banking industry to talk about rates, lending and cost related RV deals.

[HawkTX]

nickthehunter wrote:
To answer the question, I can write off 100% of the interest on a second home. However, that doesn't put me over the top for exceeding the standard deduction. So financing to write off the interest gains does absolutely nothing for me. That overall is probably a bad strategy. At most, if you paid $1,000 in interest in a year, it would net save you $370 in taxes (37% or less depending on Taxable Income).

But keeping my money invested and using other peoples money while only paying them 4.49% in interest is a winner. The money I kept invested is right now worth almost 70% more over the last 8 years, and that is even after it went down over 36% last year.

Now to head off the naysayers, the money is invested in a Roth IRA, total market index fund (VTSMX). I've had the fund for about 20 years, nothing fancy, moderate to above average risk. If I was going to pay cash for the RV, this is the fund the money would have come out of.

Great info! Thanks for your post.

[nickthehunter]

To answer the question, I can write off 100% of the interest on a second home. However, that doesn't put me over the top for exceeding the standard deduction. So financing to write off the interest gains does absolutely nothing for me. That overall is probably a bad strategy. At most, if you paid $1,000 in interest in a year, it would net save you $370 in taxes (37% or less depending on Taxable Income).

But keeping my money invested and using other peoples money while only paying them 4.49% in interest is a winner. The money I kept invested is right now worth almost 70% more over the last 8 years, and that is even after it went down over 36% last year.

Now to head off the naysayers, the money is invested in a Roth IRA, total market index fund (VTSMX). I've had the fund for about 20 years, nothing fancy, moderate to above average risk. If I was going to pay cash for the RV, this is the fund the money would have come out of.

[HawkTX]

I've never financed an RV, but maybe some of these people that are financing their RV's might have it in their mind that they can write the interest off if they claim it on their taxes. With that said, it raises a new topic of how much of the interest they can truly write-off and if cost justifies financing it in the first place?

[nickthehunter]

valhalla360 wrote:
Operating on leverage works great until it doesn't...then it multiplies the losses. The ones talking about being savey, always gloss over this part and it would never happen to them...until it does.

The trick is to get ahead of the game. Once you have no loan payments, it's easy to save up for big ticket items.

Even when the market goes down, I still have the money to pay it off; and still get to keep the difference on what I already made.
I have a 15 year RV loan at just over 4% that I've had for about 8 years. I'm way ahead of the game at this time. Today, I can pay it off any day I want, and still keep a pretty nice sum of money.
What it boils down to is: What works for you, doesn't necessarily work for everyone else. There is not only one right answer.

[JimK-NY]

valhalla360 wrote:
Operating on leverage works great until it doesn't...then it multiplies the losses. The ones talking about being savey, always gloss over this part and it would never happen to them...until it does.

The trick is to get ahead of the game. Once you have no loan payments, it's easy to save up for big ticket items.

You are certainly correct. It is possible to lose money when investing leveraged money. At the current borrowing rates and current investment returns that is highly likely.

Sadly very few people have any financial knowledge. I find it appalling that our schools do not teach anything regarding household finances. It is no surprise since the teachers are not educated in that regard. When I took out car loans and a mortgage, the rates were low and historical analysis predicted my 60:40 conservative portfolio would double my money with less than a 2% risk of falling short. Note that is falling short, not losing anything but a very small fraction of what I borrowed. That type of information is readily available with free online calculators.

Years ago I even bought a $40K truck totally with credit cards. It took a couple of cards and calls to up my borrowing limits. We paid our daughter's $30K tuition with credit cards. We paid off the cards immediately and had points for trips to Hawaii and to visit relatives on the other side of the country. As someone else pointed out, even taking a high cost RV loan can make sense it you get substantial incentives and there is no pre-payment penalty.

This is probably the wrong place to discuss financial matters including financing an RV, but if you blindly avoid all debt and pay off debts as soon as possible, it might be a good idea to gain some financial knowledge.

[Grit_dog]

3 tons wrote:
The correct answer varies per individual, retirement window and one’s age - each strategy will be somewhat situational and different…Fortunately, my ‘cobbled together’ strategies (over a time…) ended up working out, and I’ve been enjoying emancipation now for 10 years…However, post trowing in the towel, humility is a component - this is why I’m often reminded that “I’m a success in spite of my reckless self”!!

3 tons

Thumbs up!

[valhalla360]

Operating on leverage works great until it doesn't...then it multiplies the losses. The ones talking about being savey, always gloss over this part and it would never happen to them...until it does.

The trick is to get ahead of the game. Once you have no loan payments, it's easy to save up for big ticket items.

[3_tons]

The correct answer varies per individual, retirement window and one’s age - each strategy will be somewhat situational and different…Fortunately, my ‘cobbled together’ strategies (over a time…) ended up working out, and I’ve been enjoying emancipation now for 10 years…However, post trowing in the towel, humility is a component - this is why I’m often reminded that “I’m a success in spite of my reckless self”!!

3 tons

[jimh406]

I think it depends on your level of investment expertise. I make a lot more money on the money invested vs what I lose financing. I can make more money in the stock market over time than even rates back to the 90s. I'll also take the tax deduction. YMMV.

On the other hand, I avoid buying new vehicles which is the opposite of some of you who pay cash. After years of trading in pretty good vehicles/boats/RVs, etc, I came to realize that other people probably are too. So, I buy used and let them take the depreciation.

It does take some research, but there is nothing to guarantee that a new vehicle/RV will stay together past the warranty. Also, if you've been listening/reading, you'll know that most RV/vehicle problems are usually discovered in the first year or two. If you feel lucky, go for it. I will go used from now on. You guys can take the depreciation and hope for luck that you bought a good one ... pay off your houses.

Do what you are comfortable with ...

[OkieGene]

It's not just RV loan rates.

The "cost" of money has shot up.

IIRC the Fed was below 1% but is now up to about 4% or so. I'm probably not accurate on those exact numbers but what is correct is the basic underlying rate has jump up a huge amount, percentage wise.

[ferndaleflyer]

I haven’t financed anything since my first home. I paid that off in 1966—that’s right, 1966.