I dunno about generally, but I do know that with interest rates these days, if you have the cash, you are crazy to finance anything. The interest you can get on your investments is almost non-existant; the rates lenders want to trust you with their money are still high enough that paying cash is a better investment than, well, an investment.
If you can afford to pay cash do it. The TT will depreciate. If/when you decide to get out of camping or move up you'll lose less money. Just like with any loan the first few years of a loan goes primarily to interest vs. the principle.
John (USN Ret) & Debbie
'96 Monaco Windsor 36' DP 8.3 Cummins for relaxin'
1019 HP Dragster for thrillin'
10-12 years loans on TT's are common with rates at or below 6% and depending on your particular circumstances the interest may qualify as tax deductible as a second home(consult your tax expert). Only you can determine what is the best method for you. Many of us could not enjoy these things if a cash sale was necessary to partake. Financing rarely is a "good" deal, but sometimes it beats the alternative (not participating).
If you are going to full time it then I could see using more financing however if this is purely a toy for you then I'd say don't buy it unless you can pay for the entire thing now or within a very short time like less than a year. So pretty much don't finance something that is very expensive just because it's cool to have. I have the funds to pay for just about any RV but it would wreck my financial plan...so for me finding a used 13k TT worked out. I'll probably have it for 2-5 years and then save and upgrade to a bigger/nicer but still used TT/5th Wheel.
SO to me there are 3 schools of thought. The first one is what most people do...or the normal thing which is finance the hell out of it. Most people live paycheck to paycheck and have very little wealth built up.
The second way is to pay cash and never use debt....this is the uncommon thing now a days. We live in a microwave society now...people want it and want it now so saving up with cash is hard for people to do...buying that older one instead of the shinny one takes discipline.
The 3rd way is to use the concept of leverage. The Dave Ramsey type is to go with option two and pay only cash. Leverage would mean that you have the money to pay for it but if you can invest it and get 7% but borrow and pay 4% then you are better off financially to borrow...and considering the interest in an RV is tax deductible it makes even more sense. However this concept also assumes you are willing to risk putting your money into something that can get that higher return and sometimes those returns don't always materialize.
I think options 2 or 3 here are the way to go assuming you are buying something completely within your means. I think option 1 would be ok too if you can pay if off very quickly.
You'll have a lot of fans of option #1 say why wait...you can't get back time...you'll lose those memories forever if you don't buy NOW!! I disagree...the overall amount of fun you have RV isnt going to double if you spend twice as much. I'm certain that you'll have fun regardless if you spend $5k, $50k, or $500k...but the higher you go might end up coming at a cost to your financial plan and that camping fun will soon be overshadowed by financial stress.
I'm a financial planner and as such I'm required to be very frugal
There is a lot more to be said on this topic but hopefully you can see the point I'm making overall. It's never a good idea to go into debt just because someone will loan you money.
* This post was
edited 04/14/12 08:11am by an administrator/moderator *
TT: 2013 Jayco Eagle 314
Truck: 2006 GMC 2500HD Duramax
Duck Gun: Benelli Super Black Eagle II
On this subject, we are new into the market, just starting to see what is out there as far as constuction materials, models, dry weight, extras and the like. We are open to either new/used, so our options are out there. If buying new, would the deals be better if paying cash vs financing?
The only vehicle I've bought new has been an RV (twice now actually). I prefer new RV's with warranties due to the number of problems that can crop-up on a travel trailer. I also like something in top condition that I can take very good care of. We financed a portion of our 2nd/recent Keystone Bullet purchase due to the incredibly low rates our credit union had (2.99% for up to 15 years).
We'll pay off our loan within 5 years while dropping our loan rate a .25% point every 10 months due to reward points we receive for our banking business with our credit union. I'm betting the money I chose to leave in our investment savings account will earn more than 2-3% in compounded interest depending on what the economy does. Definitely finance (or refinance) through a credit union. Mention an advertized rate by Wings Financial Credit Union of 2.99% for RV purchases and refinances and a good credit union should match the rate.
Before I'd take an RV loan out I'd make sure I had matching funds in an accessible savings account somewhere in case of an emergency. And the depreciation definitely has to be factored into any purchase deal. If your buying new plan on keeping the camper 8-10 years. But, that being said, none of us should be buying travel trailers as money investments. The fun and memories for our family can't be given a dollar figure, not to mention the stress relief I get from my job.
2012 Keystone Bullet 281BHS
2004 Toyota Sequoia
ProPride 3P - what a hitch!
When I bought mine, I had enough for about 50% down. I financed the rest thru my CU on a 5 year note. Worked out to around $100/month. When I could, I paid more each month. I was still paying off the loan on my truck at the time too.
I was able to then pay off both loans (about $6,000 total) after 3 years due to a small inheritance we received. I still have the same trailer and same truck and it's been nice not having payments on them for the last 6 years!
As to paying cash works for a better deal, that depends on if you are financing thru the dealer or not IMO... Since I financed thru a CU, I essentially paid the dealer cash. When we first started talking $$, they started off thinking I was going to finance thru them and used my own statement of 'how much are looking to spend per month' an hour earlier to come up with that exact figure!
I laughed and said, "but we haven't even discussed what the price of the rig is?".
"Oh, we don't have to bother with that... We came in at your expected monthly cost, so what's the big deal??".
I laughed again and said "no thanks, I already have my financing lined up. I'm just looking for the final price".
We walked out and over my shoulder I said "I'll give you a call later with an offer once I think about it some more..".
I called them back the next day with a low ball offer. I already had a figure in my head of what I wanted the rig for and they countered within that figure, so that's when we made the deal.
I was happy. They still made money on the deal and I saved $50/month from their original 'offer'...
*Anything I post is for entertainment purposes only and what usually works for me.. Your Mileage May Vary..