Why are RV Loan Rates So Looooooong?

[kampfirekid]

I can't fathom these 72 and 84 month cat and truck loans, but looking at purchasing a trailer, I can't see why anyone would go 144 months or more unless it's for a $250,000 motor home. Twelve years on a $20,000 trailer? I assume most pay it off early, but I'm trying to get back into a Travel Trailer, and just can't see that kind of term. I guess a longer term, lower payments, and doubling up or tripling payments would be okay. A high payment for a shorter term leaves less flexibility. I wonder how many finance without any money down? I am the firm believer that you should never owe more than something is worth, but we are down to one income, can comfortably afford a trailer payment, but the down money is slim right now. I may eat my words as time is ticking. Only a couple precious years before colleges and boyfriends/girlfriends take our kids interest in camping. They say "never", but I wasn't born last night... just at night.


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[rbrumfield]

You don't have to take a long term loan. You will probably get a lower rate on a shorter period.

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[lightcs1776]

They want your money. Best thing to do, in my opinion, is to refinance and pay off early.

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[Woodworker]

2 words, credit union

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[javamon]

It's usually a function of how much you borrow to how long the max. repayment terms are. Here's a good example from Good Sam:

https://www.goodsamrvloans.com/rates/

[pconroy]

There long so my kids can experience the same "fun" I do every month.

[farnik78]

They know a lot of people shop based on monthly payment amount so the longer the financing the lower the monthly payment so they can sell a 40k rv for a 12 year note for the same monthly payment as a 15k rv on a 5 year note


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[RedHorse1]

Most folks finance a house for 40 years, the TT is just like a house so 15-20 is the norm.

I hope everyone hears my sarcasm.

My neighbor's TT is falling apart and he still owes on it and it's not due to neglect and it's not a Jayco.

[Nighthawk 96]

Lower monthly payment, higher interest rate for the longer loan. As a former credit union CEO, amen to going with a credit union. Car loans for 72 months have twice the default rate of a 60 month loan. Some loans on more expensive motor homes can be up to 15 years. What is the resale value of a 15 year old motor vehicle?

[64osby]

A 12 year loan at 6.49% (Good Sam) on a $20,000 trailer will cost $8,840 in interest.

You have just increased the value of your TT by 44%.

I'm of the opinion you pay cash for toys, buy what you can afford. I like to buy used so someone else takes the big hit on depreciation.

[Hohenwald48]

I can't imagine why anyone would finance an RV for more than about 30 minutes. Save your money and pay cash.


I just got back from looking at a motorhome that's probably worth about 15-17K and the guy says he still owes 45K. I'm sure that when he bought it he thought he was being smart by using "other peoples money". That's a financial wizard if I ever saw one.

[sawdust]

We have owned a tent trailer, a hybrid and now a Jay Feather LGT all bought use and paid cash. We can't enjoy something like a rv if we are making payments on it. Our budget just won't allow it. Unlike many people we are lucky to be able to store our trailer in the back yard so no storage fees.

I was at a meeting last night and a fellow told me he has a 20 year loan on his motor home. With his payments, storage and insurance he is paying nearly $1,000.00 a month. He does seam to use it quite a bit tho.

[kampfirekid]

"Oh, it's only $137 a month" he said. I just can't believe what people think and do.
I was on a truck Forum the other day, and guys were saying the best time to sell their trucks is when "you owe less than it's worth". REALLY????? So they go into a note to start and pay on it for years and finally after 36 or 48 payments, owe just less than it's worth. And we wonder why people have credit cards maxed out and their loans are upside down.
I was just asking why the RV Industry permits 12+ year notes on trailers worth up to $50,000. It's like an auto, and no auto companies or banks are stupid enough to lend for 144 to 166 months. 84 months I see... still way to long.


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[Isaacs]

I think you can deduct interest paid on a TT or motorhome on your taxes, right? Some people confuse a deduction with a tax credit and feel they're not paying the interest. But they are, at least most of it. A salesman would probably try to use this as a selling point.

[oldnnew]

I financed our trailer. I simply don't have the cash for one and it would take me literally until my kids were out of the house before I would have enough saved to buy a TT with cash. So, we get back thousands of dollars in taxes every year due to having 7 and 8 year old kids. We use that to make a large single payment per year on the trailer. Yeah, I pay some interest, but I guess that's the price we pay to make memories... It's worth it to me. That one payment per year pays for our recreational entertainment for the summer.

[rbrumfield]

Originally Posted by kampfirekid

"Oh, it's only $137 a month" he said. I just can't believe what people think and do.
I was on a truck Forum the other day, and guys were saying the best time to sell their trucks is when "you owe less than it's worth". REALLY????? So they go into a note to start and pay on it for years and finally after 36 or 48 payments, owe just less than it's worth. And we wonder why people have credit cards maxed out and their loans are upside down.
I was just asking why the RV Industry permits 12+ year notes on trailers worth up to $50,000. It's like an auto, and no auto companies or banks are stupid enough to lend for 144 to 166 months. 84 months I see... still way to long.


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20 yr X 12 mn = 240 months. Banks loan that on higher priced units including fifth wheels. Some people think it is stupid others not. Personally it doesn't bother me what other people do with their money. Me personally I am 63 no kids no wife and if I croak before a loan is paid off I could care less. I save 33% of my retirement income each month and I have a credit rating above 800. In addition my credit cards are paid in full each month and I have several with various cash rebates which adds to the bottom line. I paid off two divorces as well. Starting this year I now have to pay quarterly estimated taxes to both the state and federal tax departments. Not everyone fits the cash only mold. It all depends on your circumstances and how well you can handle money. So you all live your life the way you want and I will live mine and we will get along just fine.

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[Deal Breaker]

There are several offerings in the 60 month range. I was looking at BofA and Banc of the West. 60 months 5.25%, they'd up it to 6% on a 120 months.

[Deal Breaker]

https://www.essexcredit.com/home/rv/rates/

[Dropnaduece]

Originally Posted by kampfirekid

I can't fathom these 72 and 84 month cat and truck loans, but looking at purchasing a trailer, I can't see why anyone would go 144 months or more unless it's for a $250,000 motor home. Twelve years on a $20,000 trailer? I assume most pay it off early, but I'm trying to get back into a Travel Trailer, and just can't see that kind of term. I guess a longer term, lower payments, and doubling up or tripling payments would be okay. A high payment for a shorter term leaves less flexibility. I wonder how many finance without any money down? I am the firm believer that you should never owe more than something is worth, but we are down to one income, can comfortably afford a trailer payment, but the down money is slim right now. I may eat my words as time is ticking. Only a couple precious years before colleges and boyfriends/girlfriends take our kids interest in camping. They say "never", but I wasn't born last night... just at night.


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I'm in the same boat. Our kids are 12 & 16 and we wanted to close out there home years with some fun camping and outdoors without the computers, PlayStation, and I-phones. We have plenty of income but only a few thousand for the down payment. So we went for it instead of letting another year go by saving. We have had made many sacrifices since our kids started school because they have been in private school for all their lives and 2 kids are not cheap especially now one is in high school so saving a lot of liquid cash is not easy and we don't want to touch any retirement money. The long term loan is crazy to me but it's nice to have a payment of $189 but we make 250-300 a month payments. But we have the flexibility to go low or double up when we want. Also a trailer is a tax right off so we use that on tax day. Plus we will have the trailer for at least 7-9 years we figure so no rush to pay it all off and smaller payments during those months it just sits next to our house seems a little easier. The interest rate is so low so why care if the bank carries the note while you sit back and enjoy. If you have the means to pay cash then go for it but either way why tie up your money in a trailer? Use it to invest with a bigger return. Again we have a 3.2% rate which is peanuts compared to using a chunk of your cash which could be used else where to make money. If I pay cash then I will most likely be new model envy and trade it in more often which will cause me to lose more money than I financed anyways. Hey think of it this way no matter how you roll the dice the world wins when it comes to buying a depreciating item like a trailer or a car.

Just my thoughts.

[Sunflake]

We had been without a trailer for about 4 yrs. our old one was a 1990 Kit Sunchaser. Time just kept slipping by and we wanted to go camping so badly. Making family memories were slipping through our hands with our 10 yr old. Didn't want the issues with a older used one again so we bought our 27BHS with 180 month term which we could afford,and I think the interest rate was 4-5% through a credit union. Our hope is to pay it off sooner than that. Sometimes family memories are totally worth a less than ideal term.