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Open Roads Forum  >  Travel Trailers  >  General Q&A

 > Sound like a good deal?

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ZINGERLITE

Union Lake

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Posted: 09/24/19 08:54am Link  |  Quote  |  Print  |  Notify Moderator

badsix wrote:

I'm no finance guru. but in my younger years if I had to finance something I would get the payments low. then make double or triple payments when ever I could. the if hard times came around I could still make the low payment. I was usually able to pay the thing off quite quickly and save on the interest.
Jay D.


This has been my philosophy. Its either that or go without.

thomasmnile

Lake Mary, FL

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Posted: 09/24/19 10:44am Link  |  Quote  |  Print  |  Notify Moderator

In my experience a retail bank (especially the major banking chains) don't give a better interest rate than a car or RV dealer. Credit unions may be able to offer lower interest rate but that comes with larger down payment requirements and shorter loan terms than dealer financing can offer.

Much we don't know about the OP's situation financially though he did acknowledge some significant factors about income and employment. The dealer offer on the RV he was offered might be the best he can get. Since it's a simple interest loan offer, he can always accelerate the payments if he can afford to and pay the loan early without penalty. Our last RV purchase was financed for 15 years, we paid it off in 7.

badsix

north bend or.

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Posted: 09/25/19 10:27am Link  |  Quote  |  Print  |  Notify Moderator

NO WAY would I EVER give someone 1000.00 non refundable until I knew EXACTLY what I was getting for it.
Jay D.

colliehauler

Mc Pherson KS USA

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Posted: 09/25/19 10:49am Link  |  Quote  |  Print  |  Notify Moderator

I would say to try your banker or credit union. If you have done business with them for a period of time they should be able to beat that interest rate. If they can't what have you lost. Like others have said dealer prep fee is bogus, doesn't mater as long as the bottom line is acceptable. I would shop online for the trailer for the best price. Even if you don't purchase from that dealer it can give you a bargaining chip to deal with your local dealer.

thomasmnile

Lake Mary, FL

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Posted: 09/25/19 11:04am Link  |  Quote  |  Print  |  Notify Moderator

The dealer prep is surely a profit pad, but I've really been astounded at some of the anecdotes posted about no prep dealer prep at delivery. We bought our TT from an RV One dealership. On delivery day, we were taken to a 'delivery pad' where the trailer was set up, all utilities and sewer connected, even the fridge was chilled and AC up and running. We were shown every detail, the operation of everything demonstrated. The trailer was thoroughly cleaned inside and out. Time spent with us was 5 hours, another 45 minutes going over the WDH after the truck was hooked up and the hitch adjusted to the the trailer. Very thorough and well done.

siamese

anywhere

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Posted: 09/25/19 03:12pm Link  |  Quote  |  Print  |  Notify Moderator

144 months?!?!? Are you nuts? You are going to sooooo upside down on that trailer. Is it a good deal? No!

Gdetrailer

PA

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Posted: 09/25/19 04:19pm Link  |  Quote  |  Print  |  Notify Moderator

thomasmnile wrote:

In my experience a retail bank (especially the major banking chains) don't give a better interest rate than a car or RV dealer. Credit unions may be able to offer lower interest rate but that comes with larger down payment requirements and shorter loan terms than dealer financing can offer.

Much we don't know about the OP's situation financially though he did acknowledge some significant factors about income and employment. The dealer offer on the RV he was offered might be the best he can get. Since it's a simple interest loan offer, he can always accelerate the payments if he can afford to and pay the loan early without penalty. Our last RV purchase was financed for 15 years, we paid it off in 7.


Longer loan terms tend to have HIGHER INTEREST RATES, especially more so with HIGHER RISK LOANS like a RV. It is something to take into consideration especially with a RV which in 5-6 yrs has nearly zero resale value when compared to what it was valued at the time of purchase. Not to mention a 15yr loan you ARE paying the majority of interest back on the loan in the first 2/3rds of the term.

Paying off early can save money provided you consistently pay extra towards the PRINCIPLE BORROWED every month.

Best bet as always is to take THE SHORTEST LOAN TERMS you can afford easily THEN add extra payments towards the PRINCIPLE (you MUST SPECIFY this otherwise they apply the extra to BOTH P & I).

Bought a house on a 15 yr mortgage, payed extra towards the Principle every month, paid off in 11 yrs saving a considerable amount in interest.

All of our vehicles we take a 5 yr loan and pay it off in about 2 yrs..

We also do not go for top feature/gadget load high dollar stuff either, we buy well below our means in order to keep from needing long loan terms. That is where mortgage amortization calculators are your friends.

Very wise use of credit..

RV dealers like auto dealers and even realtors love folks who have no real knowledge about loans or finances which is why they tend to find a sweet spot in your payment comfort levels.. Then they will simply extend the length of your loan to work out the payments to your liking..

Favorite line is "what payment amount do you want"..

OP, Sorry for derailing the thread..

thomasmnile

Lake Mary, FL

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Posted: 09/25/19 04:32pm Link  |  Quote  |  Print  |  Notify Moderator

Last TT we purchased, no local bank, credit union or even State Farm Bank could top the interest rate on dealer loan which was funded through Bank of America Specialty Vehicles, which is not connected to the retail bank lending operation. Took the 15 year financing option because strangely enough it was 50 basis points lower than a shorter term of 7 years which is what we asked for. No matter, we paid it off in 7 years making 2-3 payments a month.

Huntindog

Phoenix AZ

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Posted: 09/26/19 03:02am Link  |  Quote  |  Print  |  Notify Moderator

Quote:

Best bet as always is to take THE SHORTEST LOAN TERMS you can afford easily THEN add extra payments towards the PRINCIPLE (you MUST SPECIFY this otherwise they apply the extra to BOTH P & I).

This is a common misconception that has a basis in fact.

Generally (maybe always now) interest on a loan is calculated daily.

So if you make a payment every two weeks, you will pay interest on each payment..... But that interest is based on the outstanding balance, and days since the last payment. So even though you will be paying interest each time, it will be LESS than it would have been. IOW, it makes no difference in the total interest paid.

Where the basis in fact originates is on a home loan with an escrow account for taxes and insurance. In this case, your extra payment can end up in the escrow account, where it will not reduce the loan at all.... This is when you need to specify where the extra money is to go.



Huntindog
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Gdetrailer

PA

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Posted: 09/26/19 05:03pm Link  |  Quote  |  Print  |  Notify Moderator

Huntindog wrote:

#1 This is a common misconception that has a basis in fact.

#2 Generally (maybe always now) interest on a loan is calculated daily.

#3 So if you make a payment every two weeks, you will pay interest on each payment.....

#4 But that interest is based on the outstanding balance, and days since the last payment.

#5 So even though you will be paying interest each time, it will be LESS than it would have been.

#6 IOW, it makes no difference in the total interest paid.

#7 Where the basis in fact originates is on a home loan with an escrow account for taxes and insurance. In this case, your extra payment can end up in the escrow account, where it will not reduce the loan at all.... This is when you need to specify where the extra money is to go.


#1 No, not a "misconception" on my part.

#2 Loan interest IS NOT and NEVER has been and NEVER WILL BE "calculated daily" period.

We are not talking about your standard "bank accounts" like checking or savings where the bank requires a minimum average balance or they charge you or in the case of savings not pay interest.

Interest on a loan is calculated ONCE PER PAYMENT PERIOD, not daily. You payment period could be twice a month or once a month, banks have no reason to recalculate daily.

#3 [emoticon] Don't understand as to why anyone would want to pay every two weeks if their loan term is ONCE A MONTH which is typical AND standard payment schedule.. MUCH better to simply INCLUDE an extra amount TOWARDS THE PRINCIPLE ONLY (AND YES YOU MUST SPECIFY PRINCIPLE FOR ANY LOAN). You just making things even more muddy..

#4 Yes, your interest owed IS calculated from the "outstanding balance", but it is done ONCE PER PAYMENT TERM.

You CAN however REQUEST a loan payoff amount at ANYTIME and that is where they will recalculate the interest owed prorated from the last payment.

#5 While you COULD do this, WHY would you pay P&I when you can specify HOW that extra money can be applied! Think about this for a moment.. If your loan payment is $200 and $100 of that is only being applied to the PRINCIPLE that means your balance is decreasing in half which means you end up paying in MORE INTEREST..

Think about how much faster the loan balance gets reduced if you pay $400 AND SPECIFY the $200 EXTRA is to go towards the loan balance!

Banks by default treats any extra funds as an advance towards your NEXT scheduled payment and applies it as such.

Yes, you will pay your loan down faster but not as fast as specifying how to apply the extra funds.

#6, IT DOES make a HUGE difference on how extra funds are applied, folks are just to lazy to think or do anything about it..

#7, We are not talking about "home loans" however the SAME CONCEPT OF SPECIFYING HOW THE EXTRA FUNDS ARE APPLIED WORKS ON ANY OPEN ENDED LOANS INCLUDING AUTO/RV/PERSONAL LOANS.

By the way, ZERO % loans are always CLOSED ENDED LOANS, if you pay them off early you save NOTHING, the interest is already baked in because they often take away the factory "incentives" which would have lowered the price of your purchase (FINE PRINT FOLKS, READ IT BEFORE SIGNING!)..

Found a Amortization calculator which includes optional extra payment (they call it "prepayment") which you can specify the amount extra and what effect it has on your loan term and how much interest over the loans life..

You can check it out HERE

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