Why are RV Loan Rates So Looooooong?

[wags999]

Not sure how an RV is a tax deduction at tax time...interest perhaps but.. Also if your getting back thousands on income taxes, it's only because your giving the government an interest free loan the rest of the year. Guess I was fortunate, married a gal who also hates debt. Can't remember last time I paid interest on anything. As others have said I do use a few credit cards, on which we get cash rebates, but they are paid off every month. I understand not being able to and I'm not judging anyone, I just never felt I was rich enough to pay interest to someone else. Rather pay it to myself.

Sadly the government runs on tomorrows...spend today let someone else pay for it down the road...it's why we are in the problems we are both at the state level and federal level. I'm more in the Dave Ramsey train of thought, live today like no one else, so you can live tomorrow like no one else. We just tented a season or two longer, till we could afford a pop up...then did the pop up a little longer till we got our first TT.. etc etc..

It's a great country when we can have both vanilla and chocolate, and 29 other flavors at Breslers... were all different, have different likes, needs and desires.. Whatever each of us feel is correct for them.

But we all have the same love of Rving life is good...

[TWP723]

I know a couple who've opted for a longer term at a higher rate to lower their payment, initially. Now when I say longer, I mean 84 mos. as opposed to 60 mos. But as they pay off other loans (car, boat, etc.), they've added that payment towards their RV loan "principle specific". Which we all know, lowers the term length because more is paid towards principle. And they have no early pay-off penalty. It has worked well for them so far. They bought the RV in 2012 and it's months away from being paid off. They are slowly, but methodically, eating away at the original term agreement. Not sure how it all works out as far as interest paid doing it this way as opposed to the other way...I don't know.

[DownTheHighway]

Our first TT we paid cash for and now with the one we have, we did a 10 yr note, however, it'll be paid off in 2 more years for a total of a 5 year note when it's all said and done. With a longer note you have lower payments which allows you to send more every month. Example, if the payment is 232, and send 240, you'll be surprised how quick the principle comes down on it.

[scottyt24]

Some people are just ok with a longer term loan and I am one of those people.

Not everyone has free cash flow of 15-30k sitting around to pay cash on a trailer. It doesn't mean that they shouldn't buy what they want. You only live once. More power to you if you do have the cash lying around. But, someone who takes out a loan shouldn't be considered as living beyond their means or not being smart because of that.

I for one, like the the lower payment and typically add more principal every month, but like the flexibility of if I want to apply that extra money somewhere else I am able to on a monthly basis.

[Woodworker]

An watch out when they yell you if you don't finance thru them you won't be able to deduct the interest you paid for that year. They said they would supply me the form I would need and banks won't. I asked my credit union about that and they had no idea about a form. They said they provide a statement at the end of every year and there is no form. They have customers (including her parents) deducting their interest every year so I would have no problem.

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[wags999]

I guess some of us "older" members were brought up in a different climate. Consumer loans use to be based on "rules of 72", rather than simple interest, as most are today. Under rules of 72 you pay most of the interest first, than you pay the principle. If you took out a longer note, you paid more interest no matter how fast you paid it off. I won't bore anyone with the explanation of rules of 72 and how they work, but, they didn't work for the consumer. One thing it did, was teach people to save and pay for what they purchased rather than finance everything. I can see benefits to both. Instant gratification was not yet in our vocabulary. I'm happy we can all make our own decisions as to what we feel is best for ourselves.

[farnik78]

I took out a 180 month loan at 5.5%. My pickup will be paid for in two years and I'm paying $850 per month on it. Once it's paid off I can put $1,000 per month on the camper and have it paid off in another 2 years.

So taking the long term financing allows me to have the trailer now with the plan to only have the loan for 4-5 years.


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[Hohenwald48]

Originally Posted by scottyt24

But, someone who takes out a loan shouldn't be considered as living beyond their means

I think borrowing for luxury items is the very definition of "living beyond your means".

[farnik78]

Originally Posted by Hohenwald48

I think borrowing for luxury items is the very definition of "living beyond your means".

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[repacs0103]

Originally Posted by farnik78

Attachment 29526



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Thank you.

No need to knock others for perfectly sensible PERSONAL financial decisions. If I were a betting man I would wager that the better part of the members on this forum took out a loan for their RV.

And btw, the dude abides [emoji1360]


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[Woodworker]

I concur.

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[farnik78]

Originally Posted by repacs0103

Thank you.

No need to knock others for perfectly sensible PERSONAL financial decisions. If I were a betting man I would wager that the better part of the members on this forum took out a loan for their RV.

And btw, the dude abides [emoji1360]


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I pay all my bills, my family is well fed, I have 6 figure retirement accounts and I'm still in my 30's. I contribute 15% to retirement and have college savings plans as well. My camper payment doesn't take food off the table and it's something that brings a lot of quality family time to our lives. So if that is living beyond my means then I guess I will live beyond my means. I also have an ATV payment so I guess I live way beyond my means.

I don't know about you but I take comfort knowing he's out there. The Dude. Takin er easy for all us sinners.


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[goducks]

They're long because it's hard for most people to justify paying $400 a month while their $25,000 trailer sits in storage for 5-7 months out of the year. It's makes it easier to swallow a $150.00 payment. It's not a necessity to most.
As far as higher rates vs terms. My CU charges the same rate regardless of whether 8, 10, 12 or 15 years.

[RogerR]

The biggest risk I see in very long car or RV loans is the probability of being upside down if you don't have a substantial down payment.

Upside down is a term for when you owe more than the RV insurance will pay if it is totaled by fire or accident. In which case you have to pay off the loan in excess of what the insurance company values the RV.

If you have the money invested and just want to leave it there to hopefully earn more than the interest that is a different story.

[repacs0103]

Originally Posted by RogerR

The biggest risk I see in very long car or RV loans is the probability of being upside down if you don't have a substantial down payment.

Upside down is a term for when you owe more than the RV insurance will pay if it is totaled by fire or accident. In which case you have to pay off the loan in excess of what the insurance company values the RV.

If you have the money invested and just want to leave it there to hopefully earn more than the interest that is a different story.

Not sure what other policies are like, but my RV is insured for stated value, just like my boat is or like how most classic cars are.

[bansai]

Being upside down is usually only a problem if your financial situation changes and you need (or otherwise want) to sell your depreciating liability..
Just look at the housing collapse that happened 9 years ago to confirm the dangers of going upside down. Nothing insurance is going to do about that. Of course there is also gap insurance available for people that don't have an RV policy that covers full replacement cost. Drop the gap insurance when you are 'right side up' or just get a better policy to begin with.

I stay out of other peoples business when it comes to financing luxury items. If your retirement picture looks good, and you have the monthly cash flow to buy something today that will bring you and your family joy, I say go for it. My grandfather spent his whole life saving money for tomorrow, and he died before he had the chance to enjoy any of it.

[TMatos]

Originally Posted by repacs0103

Not sure what other policies are like, but my RV is insured for stated value, just like my boat is or like how most classic cars are.

I've been watching this thread for a while now. This made me comment.

I'm 25, married, no kids. Both of us work. I sell cars for a living and see where everyone is coming from with paying cash and so on. I also like what others say about it being worth the monthly payment to make memories.

There are just so many different scenarios for people, it's hard to blanket "Financing is a bad idea" We financed 72 months (first time ever that long for us) through a credit union. My wife had been driving a LOADED Mazda 2016 CX-5 we bought new. Once we decided to move forward with the TT, we knew something had to give. So, we bought an 07 Trailblazer for me to pull with, an 08 Impala with 28k miles for her (trade in) and the 175RD. I even got a check for $3300 with the purchase of the TT to "consolidate" a high interest credit card into the loan.

All 3 vehicles came out to $58 more per month than JUST her car. So, it's certainly in our budget. As others have mentioned, the plan is to pay each off, then tack on the payment to the longest loan. 36 months on the Trailblazer, 48 months on the Impala and 72 months for the Jayco.

As for the depreciation, as mentioned above, my insurance pays based off of their systems MSRP. My agreed upon value is $16,700 in the event of a total loss. I financed $16,400 AFTER getting back $3300 from the dealer.

My thoughts

[troutcamper]

our credit union did 1.5% on 5 years on 15K.
not much of a write off but I'll take it.
could have done 36 months, but why push it.
Emergencies can happen even when you have a plan for them.
hardly even notice the payment.
and I have a weekend resort home !
winner winner chicken dinner !
troutcamper

[goducks]

Gap ins for a couple bucks extra a month covers the loan.

[goducks]

Originally Posted by repacs0103

Not sure what other policies are like, but my RV is insured for stated value, just like my boat is or like how most classic cars are.

The stated value is not what you would owe if you had an upside down loan. Thats fine if the ins pays you what your RV/vehicle are worth, but that may not be what you owe. assuming you have a loan.