We were ready to plunk down cash as we always have in the past on purchases.
Normally we pay cash for all vehicles including RV's. Only thing we have ever financed was our house which is now paid for.
However, when we bought our trailer last year I analyzed the rates.
I am getting 5.5%+ tax free dividend yield on the money I would have used to pay for the trailer.
The bank gave me an HELCO loan rate of 2.9% which after federal and state tax deduction rates is an effective interest rate of 2.3%.
so took the bank up on the offer, Kinda like getting 3% cash back on a credit card. kept the investments and investment income coming in and did a HELCO. Will have it paid of in another year.
* This post was
edited 04/13/12 10:06pm by ktmrfs *
2011 Keystone Outback 295RE
2004 14' bikehauler with full living quarters
2004.5 Silverado 4x4 CC/SB Duramax/Allison
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'...
This guys story makes a really good point. Never buy based on the payment...buy based on the price. Like car buying there are really 3 deals....two for many. #1-The price of the RV #2 - if you have a trade in then the price you are getting for the trade in, and then #3 the financing. Never let them confuse you buy talking about monthly payments because that just combines the deals. Also they can end up charging top dollar and just stretch a loan out for a greater number of years and lower a monthly payment while increasing your actual overall cost substantially.
A really smart idea is to go in being preapproved for financing with your Credit Union/Bank...then after you've made the deals on the price of the RV and trade in you can then tell them you are preapproved at X% rate but if they can beat it then you will finance through them.
TT: 2013 Jayco Eagle 314
Truck: 2006 GMC 2500HD Duramax
Duck Gun: Benelli Super Black Eagle II
Paid cash for the last two and furnaced the one I have now.I just as soon pay interest than pay it in tax's.I do not have a lot of right off and it helped me plus we have a RV we both like and enjoy so much more than what we had.We are in our late six`s so this will be our last one most likely.With a few mod`s it was all we both wanted in a RV. Less than a year old and 125 days camping so far this year.The payment less than 200 a month not bad for something we both like.We did have a three year old trade in that was trouble from day one but had good trade in value.
I prefer to buy new with warranty but I won't finance taxes and "extras" I likewise won't get things "Thrown In" because you're really paying for it. The only exception there is once I've got my rock bottom price in the region ( I believe a day's drive is good enough) and I get the local dealer to match it or come close I may accept "free" installation on purchased parts but that's about it.
Rates are good and I would rather make a payment than dream about camping for fixing someone else's problem but I do agree with the statement don't take a loan because you can get one.
Current Rig: 2011 Salem 29QBDS Towed with a 2011 Chevrolet Silverado 1500.
08 Jayco 30BHS, 02 Dutchmen 30FK, 77 Coachmen Leprechaun MMH
06 Ford F-350 Diesel 4x4,02 Dodge Ram 1500 4x4,01 Dodge Ram 1500 4x4, 94 Chevrolet Silverado 4x4
I think one of the negative things about financing an RV is the subtle pull of the bigger and better unit. It's incredibly easy to get sucked in to a unit that is higher priced than you probably should go. $25,000 sounds like a lot of money, but $180/month for the next 15 years sounds a lot more palatable. But are you going to keep that unit for 15 years? If not, you're going to lose your shirt the first time you trade it.
We are not wealthy people, but we were able to put together about $9000 for our first TT. Since $9000 was what we had, that was our maximum cap. Since that first TT, we have bought & sold and are now in our 5th unit. It took us awhile to get into the exact right unit but I think we're done now. We have never financed any of the trailers and we have always bought used, except for the first one. Our most recent purchase was a 25ft Dutchmen we got for about $8000--exactly what we had in our "RV Savings" account.
I have talked to way to many people who have gotten into a great unit with all the bells & whistles, only to find out that they don't like to camp, their spouse and kids don't like to camp, they don't have the time to devote to camping, or it wasn't what they thought it was going to be. And then they're saddled with this note month after month for a rig they are barely using. I would advise that if you do decide to finance, that you really take a good hard look at the whole purchase. Don't buy any more RV than you can afford.
"Those who dwell...among the beauties and mysteries of the earth are never alone or weary of life."--Rachel Carson, environmentalist, 1956
2009 Ford F250 XL
2006 Dutchmen 25F
Me & DH in non-parenting mode!
I've never borrowed money in my life. (I'm 48) Now, I can understand borrowing for a house. Or, a business venture. Maybe even a car if you need it for work purposes. But for me, since I only camp on the weekends within 150 miles of my home I wouldn't want to finance a toy. For some people, especially the ones that full time camp, it may be different. For me, I can buy a used RV and as long as it structurally sound I have the time to fix up a few things. But, you have to add that into the initial buying price.
My warning about finance: Make *sure* you never end upside down on the rig. This way, if a disaster happens and you have to sell the trailer, you can take it to a consignment lot, unload it and walk off. I see way too many people stuck with rigs that they are trying to sell for much higher than they are worth due to the fact that they have still a huge principle on the item. Best way to gauge value is to take the worst case NADA retail, and 90% of that, and that should be what the loan balance is always under.