Amazing RV Loans

[SilverRhino]

I was totally shocked when I read an add in the Camping World Late Summer catalog. In the center of the catalog they had a page advertising their Summer RV Clearance.

In the add they had:
1) "towable travel trailers from $299/month....based on 10% down @ 6.99% APR for 180 months"
2) "towable fifth wheels from $459/month based on 20% down @ 4.99% APR for 240 months"

To me, these loan time frames give being "upside down" a completely new definition. Having to pay on an RV for 20 years would not be for me......Guess that's why we had a pop up camper while the kids where growing up!

 

[pegmikef]

. . . agreed and are these supposed to be good interest rates? It is backwards, usually the interest goes down for shorter terms, not up. If I can't pay for it, I don't buy it!

 

[GOTTOYS]

Yikes!! Won't hardly be a frame left by the time this is paid off....I can't believe people would really fall for this..No way they would ever have any equity...Don

 

[pegmikef]

So a lower end fifth wheel (from $459/month) would actually cost in excess of $110,000 plus the twenty percent down. Gee, I wonder what something like a loaded Landmark would cost.

Wow,I just ran the numbers out of curiosity and at the 4.99 percent interest rate with a payment of 459.00 per month for twenty years, the amount financed would be about $69,600 and the total of the payments would be $110,146.00 and the interest paid over the twenty year period would be a whopping $40,546.00!

. . . and they are advertising this as a good deal?

 

[NWILSON]

For the sake of argument......If I can make 10% or more on money I'm borrowing for 5% I think I'll carry the note.
Personally I prefer to use something like a Home Equity line for larger purchases so the interest is deductible. Yes, I know I don't save any money but the money goes to the bank instead of the IRS (which I would be paying regardless). This way the actual cost of the interest works out being about 25% lower.

 

[travlingman]

For the sake of argument......If I can make 10% or more on money I'm borrowing for 5% I think I'll carry the note.
Personally I prefer to use something like a Home Equity line for larger purchases so the interest is deductible. Yes, I know I don't save any money but the money goes to the bank instead of the IRS (which I would be paying regardless). This way the actual cost of the interest works out being about 25% lower.

Me too. Have been quoted 4.2 % for 20 years. Credit union will then beat any loan I bring in by 1 point, so will be 3.2% for 20. Easy to make more off that by investing the money and then I have tax deduction on interest paid on loan since I will claim as 2nd home.

 

[kakampers]

Me too. Have been quoted 4.2 % for 20 years. Credit union will then beat any loan I bring in by 1 point, so will be 3.2% for 20. Easy to make more off that by investing the money and then I have tax deduction on interest paid on loan since I will claim as 2nd home.

For us it's a first home, and it's easy to eliminate much of the interest by paying extra toward principal, greatly reducing the total paid and shortening the length of the loan. Also makes it nice to have the option of a lower minimum payment when things are tight...IMHO.

 

[Ray LeTourneau]

Yikes!! Won't hardly be a frame left by the time this is paid off....I can't believe people would really fall for this..No way they would ever have any equity...Don

I remember when I was young and not too savvy. We lived from payday to payday and if we could figure out a way to squeeze in another payment, we would buy it. There are quite a few young folks today doing the same thing. I think that's who those type loans would appeal to.

 

[SilverRhino]

I remember when I was young and not too savvy. We lived from payday to payday and if we could figure out a way to squeeze in another payment, we would buy it. There are quite a few young folks today doing the same thing. I think that's who those type loans would appeal to.

You are probably correct in the market they are trying to reach......IMHO.....if you have to make this kind of loan to purchase a $86K fifth wheel.....You should probably be on Craigs List looking for a used pop up until you are financially sound enough to consider a larger RV.....Seems people today have forgotten the difference between need and want!

Our children have heard this for years.....fortunately they listened and are doing well. I'll put my soap box away now.

 

[kakampers]

Just because someone chooses to finance in the long term does not necessarily make them financially "unsound". Some of us choose to use our resources differently...what's right for you isn't necessarily right for us.

BTW, our son paid attention to us too...he has owned his own home since he was 23 and we owned two homes at the same time before deciding to fulltime...to each his own.

 

[JeremyN]

I don't want to disagree with everyone on this, but I don't feel that this is that bad of a deal...................If you manage your money correctly. I know plenty of people around my area that have taken the 15 year loan when they bought their trailer, and they are very satisfied with their decision. The 15 year loan does one thing, it keeps your payment per month low. For a lot of people, that allows you to make extra payment toward your principal every month. But if something comes up, you know you only have to make the lower payment amount because of your loan. Also, I know many friends of mine that have bought trailers, make one lump sum payment every year on their loan. This large payment is usually made after tax season. When people who are aggressive payers in their taxes all year, get those two large checks from the State and Federal government in March/April, some of them put that lump sum on their trailer. Or is you are fortunate enough to get a bonus at your job, you can use that money for the lump sum as well. If you buy a $15,000 to $20,000 trailer and pay extra every month, and then put thousands of dollars on the loan every tax season or bonus season, you will have that trailer paid off in no time. Now, if you buy a $60,000 or $70,000 trailer, that might be a little different. But every young couple that I know, has started with the $15,000 to $16,000 trailers. Just my opinion.........

 

[Lynn1130]

I did not read this as financing in the long term as much as financing in the long term at high interest rates. Considering that an RV is a vehicle that depreciates, relating buying a house and buying a vehicle are not in the same ballpark. And even with the real estate market as it is my house will recover, my vehicle will not (unless it is a 65 Mustang). Just an observation.

 

[JohnDar]

Some of these loan offers are as silly as credit card offers. Such a deal to take their card with the low low 14% rate. Gee, maybe I should cancel my 4.9 and 9.9% cards and take them up on their offers.

 

[ParkIt]

In our situation it was a better choice to pay half cash and finance the remainder, the three years of tax credits made a huge impact come tax time which will also include next year.
And then there is the part where I would make 3 payments at once, designating which was principal and which was interest. At the end of 9 months I had paid the interest on the loan leaving principal left, those are payments I'm now just paying monthly as usual. Good thing the finance company doesn't mind though I checked to be certain there was no pre-pay penalty before signing the loan docs.

The other reason for financing is we didn't have anything on payments aside from the mortgage for 7 years so our credit score was dropping like a rock, getting the unit on a payment system after 6 months it floated back to the top. That part is totally backwards to me...

 

[iawoody2]

Ok, here is my take on this. Our house has been paid for 11yrs and we owe nothing. We discussed with our portfolio manage about taking money out and paying cash versus a loan at 3.75. If we take it out we pay taxes on it and we currently make about 10% . So this was a no brainer.

 

[pegmikef]

You are fortunate making 10 percent on your portfolio and that is a pretty low interest rate. When I bought mine, my last year average was about 8 percent (my ira is about 9), but I don't have to pay any tax and the best rate I could find for financing was around five percent, ergo, I just paid for it because I didn't like of having to make payments (and under the current administration who knows what the future of our investiments will be).

 

[iawoody2]

We just got our Sundance about 3 weeks ago and that was the interest rate we got. As far as our investment s Jay has been doing a fantastic job of making us money for along time now. tahat was one reason I was able toretire at 51, now 66.e