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Open Roads Forum  >  Beginning RVing

 > 20 year loan for RV?

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way2roll

Wilmington NC

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Posted: 03/25/20 09:59am Link  |  Quote  |  Print  |  Notify Moderator

Most people do not have the cash to buy houses, cars, Rv's, etc hence why lenders exist. Banks are in the business of making money, but they aren't loan sharks. The rates at which you can borrow money is pretty low. Do some people over leverage their debt? You bet. But some people use loans wisely to acquire what they want/need. In the example I stated before, if I have $100k, I can use that to purchase a Class A Rv in cash. I am left with a depreciating asset and $100k less in my reserves. Or I invest that money at a modest 10% return on investment and borrow the money for the RV at 5%. Now I still have my cash, I have my RV, and I am earning a net of 5% on my money. Granted not everyone does this, but it does illustrate that in this scenario, it's smarter for me to leverage the bank's money rather than my own.

Each person's financial decisions are their own and each person has reasons for why they do what they do. I am not sure most people consider their RV's toys. I know any of the Class A's I've owned were certainly not toys. The OP asked if 20 year loans exist, and yet there are a few on here that can't help themselves but to chime in that to finance an RV is stupid, and then further to reduce anyone's Rv to a toy. It's condescending, narrow minded and not real helpful. in fact the advice could be costly. It's certainly not mainstream. If RV loans didn't exist, neither would the RV industry - and the thousands of people that build them would not have jobs, and neither would the thousands of people in that supply chain. Without lenders the only people that would have RV's are the ones that could build them themselves, or pay to have one built.

If you feel better paying cash, great. If someone else doesn't, that's ok too.

ppine

Northern Nevada

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Posted: 03/25/20 10:13am Link  |  Quote  |  Print  |  Notify Moderator

People need to learn the difference between investment spending and consumptive spending. There is nothing wrong with borrowing money to invest and make more than the cost of the loan. Borrowing money to buy a depreciating asset that is non-essential is as dumb as it gets, especially with a 20 year term. I would be reluctant to borrow money to buy an RV even it was a full-time residence. I would use the proceeds from my house to buy one for cash.

If you are trying to retire, you want to pay off your house mortgage, and not take on any additional debt.

bid_time

Michigan

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Posted: 03/25/20 10:30am Link  |  Quote  |  Print  |  Notify Moderator

way2roll wrote:

Not sure why the interest question even comes into play. You can deduct the mortgage interest as a second home. Personally I'd rather use the banks money, amortize the debt, take the interest deduction and have my cash work for me. Recent events aside - I can earn a conservative 8-10% in the market or a 401 and net 5% or more difference over what I financed. I don't consider RV's as toys especially the Class A's I've owned, but you guys paying cash for your "toys" might do well to take an economics class. Paying cash for a depreciating asset is far worse than keeping your cash and putting it to work, using the bank's money, get the interest deduction and earn profit on the cash you still have. I get tired of the same 4 crusty mattress stuffers and your condescending remarks about not only who does what with their money, but reducing peoples love for Rv's to toys and advocating that financing is stupid. You are the ones who are missing the boat and could actually net money by financing. But go ahead, spend your cash on a depreciating asset. Get out of the 30's and start understanding how financing can actually be to your benefit. You have less cash and a depreciating asset. I have all my cash, plus net profit from the market by having that cash, and the RV. But I guess I'm a fool. Been in the banking industry for 25 years, not about to take financial advice from someone who pays cash for a depreciating asset. I think that falls under the list of "what not to do".
We need a "LIKE" button.





Fizz

Ottawa, Canada

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Posted: 03/25/20 10:41am Link  |  Quote  |  Print  |  Notify Moderator

Both sides present a good argument but it's times like this that will truly test the ones deeply in dept living pay to pay with no cushion.

way2roll

Wilmington NC

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Posted: 03/25/20 10:57am Link  |  Quote  |  Print  |  Notify Moderator

Fizz wrote:

Both sides present a good argument but it's times like this that will truly test the ones deeply in dept living pay to pay with no cushion.


That's a good point. In a worst case scenario, if I paid cash for my RV, I'd be without that windfall. But if I borrowed the money and kept my cash, and if I lost my job, I'd have that windfall.

I personally know a lot of people who have already lost their jobs due to this pandemic.

I would never advocate for defaulting a loan, but you can bet that personally if I was left with the decision of using my windfall to pay any loan or feeding my family, I think we would all make similar decisions. Most banks are being proactive and suspending collection efforts until this is over.

If you blew your cash on an rv, that RV isn't going to feed you.

It also hasn't escaped me that having an RV in times like these could be a real benefit in a lot of ways. We've used our MH for hurricane evacuations, power outages etc. IE - not a toy.

ppine

Northern Nevada

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Posted: 03/25/20 12:39pm Link  |  Quote  |  Print  |  Notify Moderator

Hey bid time. How is your stock portfolio doing?
Financing an Rv for 20 years is a bad idea no matter how you try to rationalize it.
Now is the wrong time to make any major purchase.

* This post was edited 03/25/20 05:39pm by ppine *

valhalla360

No paticular place.

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Posted: 03/25/20 08:54pm Link  |  Quote  |  Print  |  Notify Moderator

way2roll wrote:

Not sure why the interest question even comes into play. You can deduct the mortgage interest as a second home. Personally I'd rather use the banks money, amortize the debt, take the interest deduction and have my cash work for me. Recent events aside - I can earn a conservative 8-10% in the market or a 401 and net 5% or more difference over what I financed. I don't consider RV's as toys especially the Class A's I've owned, but you guys paying cash for your "toys" might do well to take an economics class. Paying cash for a depreciating asset is far worse than keeping your cash and putting it to work, using the bank's money, get the interest deduction and earn profit on the cash you still have. I get tired of the same 4 crusty mattress stuffers and your condescending remarks about not only who does what with their money, but reducing peoples love for Rv's to toys and advocating that financing is stupid. You are the ones who are missing the boat and could actually net money by financing. But go ahead, spend your cash on a depreciating asset. Get out of the 30's and start understanding how financing can actually be to your benefit. You have less cash and a depreciating asset. I have all my cash, plus net profit from the market by having that cash, and the RV. But I guess I'm a fool. Been in the banking industry for 25 years, not about to take financial advice from someone who pays cash for a depreciating asset. I think that falls under the list of "what not to do".


So you pay $1000 in interest to get $250 off your tax bill?

Buying on margin works great when the market is red hot. When it takes a dump, it's really painful.


Tammy & Mike
Ford F250 V10
2008 Copper Canyon 5er
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Full Time spliting time between boat and 5er


bid_time

Michigan

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Posted: 03/26/20 07:56am Link  |  Quote  |  Print  |  Notify Moderator

ppine wrote:

Hey bid time. How is your stock portfolio doing?
Financing an Rv for 20 years is a bad idea no matter how you try to rationalize it.
Now is the wrong time to make any major purchase.
Down 18.4% since the beginning of the year. But you missed the point, I'm not in this for the short term. Like the title of this thread says "20 years". As a matter of fact, I'm doubling down and investing more right now.

So since December of 2013 (when I started tracking my return and keeping detailed records) I have an Average Annualized Return of over 7.5% per year. That's the point; long term the market returns (google it) 7% - 8% per year. So let's talk again at the end of the year. I don't even look at it nor do I keep records of it month to month (other then the quarterly statements they send me).

bid_time

Michigan

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Posted: 03/26/20 08:01am Link  |  Quote  |  Print  |  Notify Moderator

valhalla360 wrote:

...Buying on margin works great when the market is red hot. When it takes a dump, it's really painful.
Not at all, it's only painful if you sell. Holding a paper loss costs you nothing, just like holding a paper gain nets you nothing.

way2roll

Wilmington NC

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Posted: 03/26/20 08:12am Link  |  Quote  |  Print  |  Notify Moderator

valhalla360 wrote:

way2roll wrote:

Not sure why the interest question even comes into play. You can deduct the mortgage interest as a second home. Personally I'd rather use the banks money, amortize the debt, take the interest deduction and have my cash work for me. Recent events aside - I can earn a conservative 8-10% in the market or a 401 and net 5% or more difference over what I financed. I don't consider RV's as toys especially the Class A's I've owned, but you guys paying cash for your "toys" might do well to take an economics class. Paying cash for a depreciating asset is far worse than keeping your cash and putting it to work, using the bank's money, get the interest deduction and earn profit on the cash you still have. I get tired of the same 4 crusty mattress stuffers and your condescending remarks about not only who does what with their money, but reducing peoples love for Rv's to toys and advocating that financing is stupid. You are the ones who are missing the boat and could actually net money by financing. But go ahead, spend your cash on a depreciating asset. Get out of the 30's and start understanding how financing can actually be to your benefit. You have less cash and a depreciating asset. I have all my cash, plus net profit from the market by having that cash, and the RV. But I guess I'm a fool. Been in the banking industry for 25 years, not about to take financial advice from someone who pays cash for a depreciating asset. I think that falls under the list of "what not to do".


So you pay $1000 in interest to get $250 off your tax bill?

Buying on margin works great when the market is red hot. When it takes a dump, it's really painful.


Did you miss the rest of the points?

Real life example, when we purchased our first Class A MH about 10 years ago, I could have paid cash. About $90k. instead, I said to myself how can I get the RV and not have to pay for it. So I kept the cash I would have spent on the RV, purchased a duplex as a rental ( I owned several rental properties at the time) and rent profit eclipsed what my payments would be on the MH. I applied a decent down payment on the MH and financed it for 10 years. Had I spent that money on the RV, I would have instead invested in a depreciating asset. And frankly would have made me sick to my stomach. instead, I invested that cash not only in an appreciating asset, but one that turned a residual profit. And I was able to do it because I financed the RV.

To each his own.

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