TT financing for an 04 model??

Nickthehunter writes “Coleman - people say lots of things, that doesn't make their opinion right. Just because you can pay cash doesn't mean you should. If I can earn 8% on my investments and get a loan for 4.5% which way should I go? Last year I earned almost 15% on my investments, my loan was still only 4.5%.”

I don’t think anyone was stating that you MUST use “cash”, granted I tend use “cash” for small purchases for larger purchases like NEW autos I use a loan but add additional payments the PRINCIPLE BORROWED. This lowers my overall length of loan AND how much interest I pay for that loan.

I also am not suggesting that buying "toys" is a bad thing either but there NEEDS to a a responsible fiscal balance between the two.

I payoff early then put the money which WOULD have been going to the loan for the full term into a savings account. This gives me the “cash” or down payment I use for the NEXT purchase..

How this works is say my auto payment is $400/month and I paid the loan off two years early (5yr loan). I set aside $400 EACH MONTH (I DO NOT SPEND THIS) as if I was still sending a payment to the bank. After 24 months I now have $9,600 which can be used as a down payment for another vehicle. Each year I don’t buy a new vehicle that saved money CONTINUES to build until I need to purchase the next vehicle and in some cases this money can be used for making emergency repairs to my vehicles.

I HAVE to do this, my commute is 100 miles DAILY, I easily put 20,000 miles on a vehicle every year just for my job, then add in any other driving and I am in need of replacing a vehicle every 5-6 years just due to wear out of the vehicle.

For USED autos, I cannot justify used due to needing reliable transportation.

RVs, I step away from those unless I can pay cash for, this basically means I would be buying a rather low priced USED RV (this can be SOME of the cash which I set aside from NOT PAYING LOAN INTEREST). I cannot justify buying a new RV since we only get a couple of weeks per year that we are able to use it.

The idea is using credit to YOUR advantage.

One of the many problems with Home Equity loans is the payback schedule is often a very long, long time, this is done to give you a very low payment (often the Home Equity loans use a 30 year payback schedule). It is also how MANY people have gotten over their heads.

Additionally the OP STATED that a Home Equity loan was out of the question BUT folks INSIST to PUSH Home Equity loans.

In the following examples I will show you that there IS NO ADVANTAGE to a Home Equity loan..

For comparison sake I will use $10K borrowed for all examples.

5yr 4.5% Payment (P&I)=$186.43/month, interest paid is $1,185.89

10yr 4.5% Payment (P&I)=$103.64/month, interest paid is $2,436.61

15yr4.5% Payment (P&I)=$76.50/month, interest paid is $3,769.88

30yr 4.5% Payment (P&I)=$50.67/month, interest paid is $8,240.67! :E

Now lets take a higher interest rate and see what happens..

5 yr 8% Payment (P&I)=$202.76/month, interest paid is $2,165.84

Notice that 8% for a SHORTER 5yr term is LESS interest paid than 4.5% at a 10yr term!

Now lets see what happens if you add an additional payment to the PRINCIPLE (IE the outstanding balance owed)

5yr 8% Payment(P&I)=202.76 + $50 extra towards principle, interest paid is $1,647.65 NOTE: Early payoff

5yr 8% Payment(P&I)=202.76 + $75 extra towards principle, interest paid is $1,473.22 NOTE: Early payoff

5yr 8% Payment(P&I)=202.76 + $130 extra towards principle, interest paid is $1,196.89 NOTE: Early payoff (34 Months!)

So, by taking out a higher interest rate loan and adding extra payment to the principle borrowed you ultimately pay less interest effectively lowering your interest rate. THIS is smarter than borrowing low interest long term via Home Equity loan.

Folks, there are plenty of Amortization calculators available on the ‘net. Find one that gives you the option at add additional payments then play with the numbers.

The link below is one that gives you the option for extra payments..

Amortization Calc with options

Sorry to the OP for derailing this thread :S

I don't totally agree that financing "toys" is a bad thing. We financed our '07 ROO at a good rate and also financed our brand spankin' Rocky at a much better rate. We don't go to movies, we don't eat out a pricey restaurants and we surely don't buy designer clothes....easy to tell by looking. Our payments have been right at $200 per month. Assuming we were movie buffs, we'd be in for $50+ every trip and more for the dinner out. So for us, $200 is a reasonable amount. We NEVER, NEVER, NEVER touch our home equity. It is so close to being paid off and we wondered if we'd ever get to that point. One benefit on financing the trailer is that as long as it meets certain criteria, you can deduct the interest....which you can't do on movie and dinner. Granted, it's not a huge amount, but better us than them. We could have pulled the cash out of our investments, but we're making more interest on those than what we're paying for Rocky, so that doesn't make sense. And, if the sky falls, we still have that money in our investments - and REALLY safe ones - and we could sell Rocky if push came to shove. I think it depends on the individuals own circumstances and finances. If buying a TT pushes you right to the edge, it's not a good idea. If you can manage this with responsibility and it gives your family both entertainment and time together, I am of the thought that financing is not necessarily a bad thing.

FWIW, when I was shopping for financing for the ROO, our credit union wanted a ridiculously high rate and a very short term. They offered great financing for our cars, but trailers were a whole different thing. We ended up letting RVW handle it both times and were pleased. Have you been with your bank for a long time??? Might be able to get either a signature loan or a decent financing package. Just guessing, but I'd think you're probably looking at the $8000 figure + or -. If your ducks are in a row, a signature loan is not out of the question and you could still deduct the interest. Requirements are that it have sleeping, cooking and bathroom facilities, which you have. Hoping this works out for you.

Gdetrailer wrote:

For the OP, many people here are going to disagree with my position on this matter. If you have a home paid for and or have Equity in a home, DO NOT use it for a loan, PERIOD.

I have seen MANY people close to me that HAVE LOST their home, cars, and other items due to Mortgages/loans which they ended up defaulting on (they ultimately could not afford all the loans).

A RV is a depreciating asset and is a terrible way to "invest" your homes equity in. Home equity loans should be used for things that IMPROVE the equity in your home.

X2
Too many people have lost too many homes by tying up the equity with loans for luxury items. I wouldn't put my home at risk for a TT.

burntrubr wrote:
Thanks for all the replys. My credit is steady at around 700, so I should be able to get a loan of some sort with a halfway decent rate. I will be making a bunch of calls today to try and finalize this deal. Again, home equity loans are not an option for me at this point. Maybe in a year or so. I really like the floor plan, its a 04 Cedar Creek 37LBHS...perfect for me.

I do not have an issue with financing a RV but I am not a fan of the home equity path even if you have that option available. I would not want to tie up my home for a luxury. Getting a loan is not as hard as some think. You just need good credit, decent down payment, and an acceptable income to debt ratios.

Thanks for all the replys. My credit is steady at around 700, so I should be able to get a loan of some sort with a halfway decent rate. I will be making a bunch of calls today to try and finalize this deal. Again, home equity loans are not an option for me at this point. Maybe in a year or so. I really like the floor plan, its a 04 Cedar Creek 37LBHS...perfect for me.

I completely agree. "IF" you were making more off of your money VS cost of borrowing than definitely finance. But I bet if the tides changed you would use the cash and pay out the loan. Correct?

In this case the OP was likely looking at well over 12 percent for a loan on a used trailer. They would be upside down forever and if their financing is tight I would recommend not do it.

BTW, 15percent is amazing. In Canada we can't use interest paid as a tax deduction and making "15 percent or even 8 percent" is unheard of so it generally isn't smart to finance toys.

Good point!

Coleman - people say lots of things, that doesn't make their opinion right. Just because you can pay cash doesn't mean you should. If I can earn 8% on my investments and get a loan for 4.5% which way should I go? Last year I earned almost 15% on my investments, my loan was still only 4.5%.

We bought an '05 over two years ago and went through a local bank. They would only do 90% of the value and good thing for us, the asking was slighty lower than acutal value. We ended up with a 4 year loan for a lot higher percent rate than a new TV, with the same term length and well over twice the cost. We took the higher interest rate knowing we would have it paid off sooner. The TT was paid off in just over a year and a half, sold it 5 months later and paid off the TV and purchased the new TT with a heck of a low interest rate.

Start talking to credit unions. Had to do some research, but I was able to get a loan from a local CU to buy a super clean 2005 a couple months ago. They supposedly would loan up to 110% of NADA even on used units. Many other CUs would only loan 80% of NADA or would not loan on units over 5-6 years old.

I want to say my interest rate is 3.75% for a 5 year loan.

Jon