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What kid of term did you finance at?

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What kid of term did you finance at?

Unread postby PrivatePilot on Sat Apr 19, 2008 10:59 am

I was just discussing the matter of RV financing and repo's over at rv.net.

While at a dealership a few days ago looking at used units the salesperson did a great job at louring me from the used section of the lot to the new section. "I can get you into a brand new unit for about the same payments as that used one!" was the story.

Sure enough I was soon looking at a brand new 34' Fiver. Spectacular inside, every option (power awning, fantastic fans, Plasma TV's, hardwood flooring, the whole bit) but the price tag was nearly $50,000 after taxes.

Simply out of curiosity I asked about the financing and was surprised to hear a payment in the $250/month range. Immediately I knew that we were talking a *huge* amortization period, and sure enough, that was for a 25 year term.

Now, I asked the salesperson to show me a similar model used. We went and looked at a very similar (same make, slightly different floor-plan) that was 3 years old and the asking price was $30K "with room to move".

So, I asked the dealer - If I buy this 5er for $50K today, if I bring it back to trade it in in 3 years your going to offer me about $25K for it? (Assuming there was a profit margin on the used one he showed me).

"Well, yeah", he sheepishly admitted. But most people buy for the long term so they dont' worry too much about that.

The number of <5 year old used trailers on the lot told me otherwise.

So, in 3 years the value of the RV drops by 50%. In that three years one has probably only paid off perhaps a few thousand dollars of the initial investment plus any downpayment (Say, for theoretical purposes, $8000 total), so the value of the loan could theoretically exceed the actual value of the RV by $17,000.

Am the only one who thinks that's nuts? Depreciation on RV's is a financial black hole.

I'd love to buy brand new, but not only do I not want a second mortgage, but I don't want a second mortgage for something that's going to sink in value like a brick of cement in a lake.
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Re: What kid of term did you finance at?

Unread postby fla-gypsy on Sat Apr 19, 2008 12:35 pm

New TT was 6% for 10 years with my credit union. I felt it was very reasonable. You are correct about the depreciation eating your lunch. Even with the terms I got it is huge the first few years. I will not catch up until around the 6th or 7th year of the loan.
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Re: What kid of term did you finance at?

Unread postby The Wood Tinker on Sat Apr 19, 2008 5:51 pm

Lost a bunch on our 1st TT, bought it new for 14K and 21/2 years later it was worth 5K trade in. Sold it for 8 on my own. :shock:
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Re: What kid of term did you finance at?

Unread postby skipnchar on Sat Apr 19, 2008 8:41 pm

WOW I don't think I'd be comfortable with a 25 year note on a trailer of ANY kind. I'm betting you'd be upside down for at least the first 20 years and who keeps them that long? I suppose if you purchased at a big enough discount from MSRP it's POSSIBLE it could work out. I know when I traded my Coachmen after 3 years they gave me trade value at wholesale price on NADA and still I got within $500.00 of what I paid for it. They base NADA on MSRP of the trailer when new and if you buy far enough BELOW that it really helps at trade time. Problem is it makes it pretty hard to go back where you bought the trailer because they KNOW what you paid :D We did 10 years on our Rockwood and probably won't keep it THAT long even.
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Re: What kid of term did you finance at?

Unread postby MCBOWERS on Mon Apr 21, 2008 4:49 pm

[quote="PrivatePilot"]I was just discussing the matter of RV financing and repo's over at rv.net.

So, in 3 years the value of the RV drops by 50%. In that three years one has probably only paid off perhaps a few thousand dollars of the initial investment plus any downpayment...

Depreciation on RV's is a financial black hole.quote]


GREAT subject!!!!It's not only TT's.On another site i have been AMASED at the # of folks that introduce themselves as "newbies" ask a bunch af questions about the great 30' TT that the DW "just has to have"." and, "Oh & the salesman said my[corvair] will tow it just fine".Of course then later they have to get a better TV.One guy bought 3 TT's & 2 TV's in 18 months.

It's not so bad when u sell your own TT or TV before u upgrade, but doing a trade in has been the kiss of death to more than 1person's home equidy or 401K.[JMO]
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Re: What kid of term did you finance at?

Unread postby wintek on Mon Apr 21, 2008 4:56 pm

My Family has been a tent / pop-up camper for the last 25 years. Last year we decided we would get a TT because we wanted the amenities. Now that it’s just the wife and I we were looking at smaller light weight trailers. We decided we did not want a hybrid because we did not want to deal with tent ends any longer. We were looking at a ten year note and could not pull the trigger. Kept an eye on the trading papers and wound up buying a used hybrid and paid cash. Dropped about $1,000.00 into it to get it up to like new condition and added a couple of luxuries (Power Jack & Sat Radio)

Sometimes I wish we would have gotten the shiny new rig but not having to write a check for ten years makes for better night sleep while camping. We are actually campers and don’t spend much time inside so the smaller trailer works out well.
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Re: What kid of term did you finance at?

Unread postby Zinger on Mon Apr 21, 2008 9:45 pm

15 years with plans of an early payoff but you know how that works. :D
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Re: What kid of term did you finance at?

Unread postby Carolina Cruiser on Tue Apr 22, 2008 9:40 am

We knew where we were at when we purchased our TT. We also knew we had a plan to pay down the principal. The term was longer than we wanted but we had to make sure we did not put ourselves in a hole. The key is payung above the stated payment every chance you get and not just making the payment you were given because it is easy. I play with ammorization, and see what extra $ to the payment will save in years. A lot of times as little as $25 extra a month can save as much as five years in payments. Being in sales and being paid on commission, you have to be smart, when it comes to debt if you want to make it in the long haul. More and more I see people finance things, RVs, auts, etc for way longer than they plan to keep them and then when they try to trade they owe way to much. That just leads to more trouble. I say if you need to go 15 years just to make the min payment, you need to buy less espensive. You will be much happier down the road.
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Home Equity interest only loan

Unread postby antiqfreq on Tue Apr 22, 2008 11:03 am

I did different than everyone else here.

I got a home equity loan which is at 4.74% now, as it is a variable rate,
and it is interest only loan.
I have a low payment and can pay whatever I want towards principal each month.

We have lots of equity in our home. Plan to sell in maybe 3-5 years and it will
pay off all loans at that time.

Our last trailer (a hybrid) we paid $14K for it, kept it 4 years and sold it for $8K myself.
I just slapped that money down on the new one and did the rest on the equity loan.

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Re: What kid of term did you finance at?

Unread postby Mikey on Tue Apr 22, 2008 1:17 pm

My wife and I did it a smidgen different. We planned ahead and decided that we wanted an RV so I started squirreling away money. The following year I paid cash for the TT. Easier to do with a smaller TT, but the same thing will happen when we go larger. I'll be sure to have a substantial cash offering to reduce any borrowing that I'm required to finish with.
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Re: Home Equity interest only loan

Unread postby PrivatePilot on Tue Apr 22, 2008 6:27 pm

antiqfreq wrote:I did different than everyone else here.

I got a home equity loan which is at 4.74% now,


Good idea - many percentage points below what the dealerships are offering with direct financing, I'm sure.
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Re: What kid of term did you finance at?

Unread postby PrivatePilot on Tue Apr 22, 2008 6:30 pm

Mikey wrote:My wife and I did it a smidgen different. We planned ahead and decided that we wanted an RV so I started squirreling away money. The following year I paid cash for the TT. .


Best idea. :D

We did the same for our trip budget this year - set aside about 50% of it from savings we've put together, and the other 50% was a portion of our tax refund this year.

It'll be nice knowing that our entire trips expenses (fuel and all) will be from savings, as opposed to going deeply into debt.
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Re: What kid of term did you finance at?

Unread postby skipnchar on Tue Apr 22, 2008 6:51 pm

We decided a long time ago that we would never let ourselves go into debt for a trip. We TRY not to tap savings for it either though I must admit there have been times we "made ourselves a loan" for part of the expenses. For the most part we TRY to do all of our traveling from just our regular monthly income from Social Security and pensions. It's getting harder and harder though with fuel prices rising like a NASA rocket but we're STILL trying to maintain that method.
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Re: What kid of term did you finance at?

Unread postby CanadianRVers on Thu May 01, 2008 9:49 am

My first 5er was $27000.00. Financed over 15 years with a payment of $240.00. We traded it in this year & got $19000.00. This likely would have been $21,000.00 if not for the srtong dollar. New one is over 20 years with a pymt of 466. High dollar here made it attractive. I think I will have this one for a long time but if the Canadian dollar was to drop back to where it was a year ago my 5er would be worth more then I paid.
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Re: What kid of term did you finance at?

Unread postby lifelongcampers on Mon May 05, 2008 11:48 pm

I kind of have a Philosophy that if I can't pay for it in 3 years, I can't afford it. Of course that's just my opinion.
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Re: What kid of term did you finance at?

Unread postby JQSpree on Tue May 06, 2008 9:28 pm

Well, we probably broke all the be careful rules! I think we financed at 7.5% for 12 yrs, with a fairly small down. I think we will pay extra each month as we do our car paymts as we now have more pymts than we have had in 20 yrs. Scary when you are just retiring. Guess, we should have bought all this before that date.

Also lots of good info on here re buying used if you can find what you want. That good ol deprec definitely comes into play. We live and learn, or should before we die! Of course we bought the truck right before they started paying you to take them off the lot!
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