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Open Roads Forum  >  Class A Motorhomes

 > Financing, what did you do and what did you learn.

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Jim@HiTek

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Posted: 03/25/12 09:44am Link  |  Print  |  Notify Moderator

Remember that the provisions of the loan are as important as the interest rate. Ask for simple interest with no early payoff penalty. You'd be surprised how many tricks they use to hide the actual, effective, rate. Some interest calculation methods are so convoluted you need two lawyers to sort them out.

On the other hand, rates are so low now, why bother worrying about the difference between 4.56% you thought you were paying & 4.65% you're actually paying?




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sowego

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Posted: 03/25/12 09:54am Link  |  Print  |  Notify Moderator

What each of us does depends entirely on monthly income and dollars in savings you are willing to spend. Many RVers are retirees who are living off Social Security &/or a pension fund or two with maybe a back up reserve 401K/investments.

Therefore you need to decide what best serves your needs &/or is doable without sending you into financial ruin.

For us...we bought ours in 2002 when our investments weren't doing so hot. Our finacial advisor suggested taking out the cash instead of taking out a loan. At the time it worked out well because our investments took a huge hit. So, we got the coach we wanted without going into debt. We live off SS and pensions so not having to borrow money made solid sense.

In today's market I'd recommend not taking out a huge loan unless the borrower is certain thier income will remain stable enough to make payments for the entire term.

Just remember that buying a motorhome or any RV isn't an investment in property that will gain value as they will all depreciate rather quickly (especially if brand new). It is a hobby that will reward with many pleasures but will cost daily (maintenance, fuel, etc.)

In some cases the interest and taxes can be deducted as a "vacation home" but I doubt it will be enough to make alot of difference.


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SolidAxleDurango

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Posted: 03/25/12 07:14pm Link  |  Print  |  Notify Moderator

Weathertodd221 wrote:

univmd wrote:

We have it through Pentagon Federal Credit Union for 3%.


you got an unsecured/vehicle loan for 3%?? What kinda principle?


Best rate Ive heard of for RVs is 3.99. Thats not pledging any assets or tieing any other asset(s) to the loan. That was for $150-$500k on a 10yr term.


A vehicle loan IS secured.... By the vehicle purchased. Any RV loan will tie the asset to the vehicle.


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rgatijnet1

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Posted: 03/26/12 04:44am Link  |  Print  |  Notify Moderator

msmith1199 wrote:

gfs1943 wrote:

Not always a good idea to pay cash, unless you have so much of it that it's just piling up everywhere and you need to get rid of some of it. When you can invest your cash for 6% and pay 4% for an RV loan, it makes more sense to finance. I put enough down that I'll never be upside down, but saved my investments. Also, to pay cash, I would have had to take money out of an IRA and pay tax on it. In addition, we are still getting the "second home" mortgage interest deduction on Federal taxes.


Where you can invest cash for 6% that doesn't carry a huge risk?


Look at all of the options.......If you pay cash, you definitely have lost all ability to earn any money with that same cash in any type of investment, even the safe, guaranteed ones. Your cash is now "invested" in an asset that will be depreciating at double digits each year.
With all loans you can purchase insurance to pay off the loan balance completely in the event you are permanently disabled, or die.
Everyone's situation is different and for a few hundred bucks you can get some sound financial advice from a financial planing expert, which is always a good idea before taking on any major expense.

RobertL0

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Posted: 03/25/12 06:01pm Link  |  Print  |  Notify Moderator

Bank of America seems to have good rates..

sowego wrote:

What each of us does depends entirely on monthly income and dollars in savings you are willing to spend. Many RVers are retirees who are living off Social Security &/or a pension fund or two with maybe a back up reserve 401K/investments.



Disneyfix

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Posted: 03/26/12 03:50am Link  |  Print  |  Notify Moderator

Thanks all! Still learning a bunch.
What effect does financing have on price, if any?

JetAonly

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Posted: 03/26/12 06:37am Link  |  Print  |  Notify Moderator

sowego wrote:


Just remember that buying a motorhome or any RV isn't an investment in property that will gain value as they will all depreciate rather quickly (especially if brand new). It is a hobby that will reward with many pleasures but will cost daily (maintenance, fuel, etc.)

In some cases the interest and taxes can be deducted as a "vacation home" but I doubt it will be enough to make alot of difference.


I no longer consider my home to be an appreciating asset. While it is comfortable it is not gaining value. My older MH has depreciated to a nearly stable value. You could easily generate 5k to 10k on the interest of a MH home loan. If you can afford that cash flow then you could use the deduction. While borrowing money is not my first choice, it is what it is. The wife and I value our RV time together. The value of time together outweighs the cost of a loan. IMHO. YMMV.


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rgatijnet1

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Posted: 03/26/12 10:00am Link  |  Print  |  Notify Moderator

msmith1199 wrote:

rgatijnet1 wrote:

msmith1199 wrote:

gfs1943 wrote:

Not always a good idea to pay cash, unless you have so much of it that it's just piling up everywhere and you need to get rid of some of it. When you can invest your cash for 6% and pay 4% for an RV loan, it makes more sense to finance. I put enough down that I'll never be upside down, but saved my investments. Also, to pay cash, I would have had to take money out of an IRA and pay tax on it. In addition, we are still getting the "second home" mortgage interest deduction on Federal taxes.


Where you can invest cash for 6% that doesn't carry a huge risk?


Look at all of the options.......If you pay cash, you definitely have lost all ability to earn any money with that same cash in any type of investment, even the safe, guaranteed ones. Your cash is now "invested" in an asset that will be depreciating at double digits each year.
With all loans you can purchase insurance to pay off the loan balance completely in the event you are permanently disabled, or die.
Everyone's situation is different and for a few hundred bucks you can get some sound financial advice from a financial planing expert, which is always a good idea before taking on any major expense.


And you can buy life insurance and disabiliy insurance too without having to get an RV loan.


Sure you can but I have never heard of anyone being required to take a physical exam while getting loan insurance. I guess it all depends on your health and how much you want to pay. Loan insurance is pretty cheap since it is a diminishing amount to cover the loan only.

Weathertodd221

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Posted: 03/26/12 07:54am Link  |  Print  |  Notify Moderator

SolidAxleDurango wrote:

Weathertodd221 wrote:

univmd wrote:

We have it through Pentagon Federal Credit Union for 3%.


you got an unsecured/vehicle loan for 3%?? What kinda principle?


Best rate Ive heard of for RVs is 3.99. Thats not pledging any assets or tieing any other asset(s) to the loan. That was for $150-$500k on a 10yr term.


A vehicle loan IS secured.... By the vehicle purchased. Any RV loan will tie the asset to the vehicle.


reread my post. Its secured how? MSRP is always negotiable and actually not the ACV. Plus with depreciation, it will be worth far less than the loan amount inside of a year.
Banks arent stupid... tis why many require significant down payments or assets to qualify an applicant.
Same thing applies with boats.

rvrepairnut

bc

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Posted: 03/26/12 10:25am Link  |  Print  |  Notify Moderator

Rgatnet1??? you said:
Sure you can but I have never heard of anyone being required to take a physical exam while getting loan insurance. I guess it all depends on your health and how much you want to pay. Loan insurance is pretty cheap since it is a diminishing amount to cover the loan only.

Many many lending institutions will ask about previous medcal history and based on that May very well ask you to get a physical before selling you insurance
happens all the time where i come from

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