Lemonis not worried about tariffs. Why? Long-term loans

By Chuck Woodbury
EDITOR
We asked RVtravel.com readers last week who had bought their RVs at Camping World what they thought of the experience. It was no surprise to me that nearly half of those who responded (48 percent to be exact), said they regretted buying there.

Any successful businessman will tell you they’d go broke if that’s the way their customers felt. But somehow Camping World can pull off such a pathetic level of customer satisfaction.

My main beef with Camping World is how it strong-arms its RV buyers into financing their new RVs for 15 to 20 years. What this does is put these buyers in a terrible pickle a few years down the road when they want to sell their RV: To do so, they’ll need to bring their checkbook to pay the difference of the significantly depreciated RV from how much they can sell it for. They may need to write a check for $10,000, $20,000, $30,00 or far more.

Camping World CEO Marcus Lemonis knows this, but as far as I can tell, doesn’t care. He cares about pleasing his shareholders and padding his own pocketbook, not those RVers who get suckered into the long-term loans, most of them on cheap RVs which aren’t meant to last very long to begin with. Many are basically assembled with staples, glue and the cheapest components the manufacturers can buy – usually from China. In the industry, these RVs are referred to as “stick and tin” models.

Marcus Lemons appeared on CNBC two weeks ago to talk about the RV industry and Camping World. He was asked if increased tariffs might put a damper on sales. He explains in this 45-second excerpt (recorded at a low bandwidth for viewers with data limits). Pay attention to his very casual reference to 180- and 240-month loans. 

See the full interview here.

 

 

Related

11 Thoughts to “Lemonis not worried about tariffs. Why? Long-term loans”

  1. theresa

    my two cents – lousy and very expensive service – gave them two tries and was disappointed X 2… then I heard that this turd also made know that if you’re a conservative or Trump supporter not to come near Camping world… SOLD!

  2. Kelly R

    We have been debt free for many years. We have only financed our two houses and a couple of many cars. Our purchase of our Class B four years ago was the most we have ever financed. We had shopped for years prior to retirement and knew what we wanted. We were ready to purchase and our insurance company wanted $950 every 6 months for insurance and our credit union wanted 17% on a loan. That stopped the deal right there . We talked with the RV dealership and they hooked us up with a finance company and an insurance company that dealt with RVs. We financed for 20 years to get the monthly payment we wanted. They found insurance for less than half, specifically for RVs. The loan they got us was for 12% less.

    1. We had the cash to buy out right, but once the cash was gone, it would be gone, however if life took a turn we could bail ourselves out.
    2. We put $13,000 down. I was told we did not have to put that much down, but that is the way I wanted to do business. Later I found out that had I not put that much down that I could have gotten the loan for a few points less.
    3. Come time to make the annual payment on the insurance, the fine print said that I did not get the best rate because of my credit score. I called the insurance company and asked why I could not get the best rate? They stated that I did not have enough debt – I did not have any loans. I stated that I had one big loan on the RV they were insuring. I gave them the information they requested, they contacted the lender and my credit score went up as far as they were concerned and they dropped my insurance payment by $100.

    We took the 20 year to get the low monthly payment, just in case we ran into a financial problem, we could still make the monthly payment. We have been double, triple, or quadruple paying and will have it paid off in another year, saving tens of thousands in interest.

    A. The more you finance, the “cheaper” the loan. ???
    B. The more debt you have the better deal you get on insurance. ???

    We bought new from a local regional dealer. I am not a Camping World fan, or any kind of dealer fan, but it evidently is not just the dealers that are the culprits. The lenders and insurers have us all upside down.

    It is not the life this country boy understands but I guess it is the way life is. Born 100 years too late!

    It is my daily driver and my wife’s dream after decades of VW van camping.

  3. Eric Kaminsky

    I have never purchased an RV at Camping World nor am I particularly a fan of Camping World or any other dealer, big or small. (From what I know of him, I do not like Marcus Lemonis.) But with well over 30 years as an RVer and having owned three motorhomes, along with over 40 years as a practicing attorney, I feel qualified to put my two cents in.

    The use of long term loans to finance an RV is not unique to Camping World. Without such loans the RV industry could not exist. To say people should pay cash instead of financing, give higher down payments, or seek higher payments by getting shorter term loans, would drastically curtail the number of people who would be able to buy RVs, new or used. It is also a fantasy. How many RV buyers are in a position to pay cash for an RV? (Note that I would never Reccommend pre-retirement people pay cash. If they have large amounts of cash they are better off investing the money for the future and make payments on the RV to enjoy it now.)

    Here are my suggestions:

    1. Have enough RV experience behind you to know you want to RV for the long run before a big purchase. Start small.

    2. Make sure you can EASILY afford the payments. Expect that if you do not keep the RV for a comparatively long time in relation to the term of the loan you may owe more than it is worth when you decide to sell it.

    3. Know that you can shorten the term of the loan and lower interest paid by voluntarily paying higher payments than called for by the contract. Notwithstanding, before signing on the dotted line, understand how the interest is calculated. Is the interest simple interest, compounded, front-loaded, or what? Do not take a loan that allows the payments to be applied first to interest. You want the interest portion of the payment spread throughout the term of the loan based on the balance owed when the payment is made. Do not let the salesman push you into signing the loan contract before you have had an adequate chance to review it and understand it. Take it home and show it to someone knowledgable if necessary. Be forcefull. Tell the salesman that if you can’t take the proposed loan agreement home to study before you sign you will not buy from him. Do not back down.

    4. Before buying any brand from any dealer, research what others have experienced requarding the quality of that brand and the after sales reputation of both the dealer and manufacturer. Know that the quality of most new RVs is poor and many dealers and manufacturers have poor reputations for after sales service.

    5. Always take what a salesman says with a grain of salt. You should have done your homework before stepping onto the dealer’s lot. If you haven’t, at least do it before signing. Know that batteries, as an example, are not “add-ons.”

    6. Everything promised by the dealer MUST be reduced to writing. If the salesman says it, or the dealer promises it, but will not put it in writing, walk out. Things are generally not better after the purchase.

    7. Remember, before the purchase the customer has all the power. After the purchase, the dealer and manufacturer have all the power. Do not relinquish this power. All the consumer protection laws in the world will not stop the purchase from becoming a nightmare if the customer does not do his homework. Even with homework, the after sale experience can be a nightmare. This is why research on the dealer should be done before stepping on the dealer’s lot, and research on the manufacturer should be done after picking out the unit but before signing on the dotted line. This can reduce the chances of the purchase turning sour.

    Disparity between the balance due and the value of the RV (or car or other expensive item) is common for anyone selling the RV after a short time of ownership relative to the length of the loan. The disparity is not unique to a purchase from Camping World. It is called being “upside down” and has always existed for loans for big-ticket items.

    Remember how the tortoise beat the hare. Slow and steady should be the rule. Salesman make their living by manipulating your emotions. KEEP CONTROL AND BE PREPARED TO WALK OUT. There is generally no deal that will not be available the next day, no matter what the salesman says.

    1. Chuck Woodbury

      Eric, I totally agree with most of what you say. If only people were smart enough to buy what they could afford and not what they cannot afford. Nobody should be financing a quickly depreciating asset for 20 years. Personally, I don’t care if that reduces sales. To me, it’s about the people/consumer not the RV manufacturers and the dealers. I know Camping World is not the only dealer doing this, it’s just that it’s the big fish (by a long shot) in the pond and in my opinion it’s not only selling the RV “dream,” but the RV nightmare when these buyers get sick. lose a job, or decide to hang up their keys in 5 or 10 years, and aren’t able to do it without financial hardship.

      1. Eric Kaminsky

        Chuck, if we were to accept what you say, few RVs would be sold.

        I have always supported long term loans but they must be simple interest loans. This insures that each payment reduces the balance when paid, like mortgage payments on a house. Interest is never paid in front, only as earned. Why do I advocate long term loans. Simple. Payments are lower but nothing, I repeat, nothing stops a person from paying more each month. Assuming the right loan terms, the extra money goes directly to reduce the principal. Thus the term of the loan is reduced and the amount of interest paid is reduced. (Sometimes it may be better to take a home equity loan rather than a loan on the vehicle. This more likely insures a loan with good terms. In many cases vehicle loans with good terms are not offered by dealers or banks. A buyer must understand and shop the loan with the same criteria and tenacity as with other big purchases.

        One last thing, I also advocate long term loans because they have lower payments and there may be times that making a higher payment (necessitated by a loan with shorter time terms) may be difficult. People’s finances change over time and a temporarily lower payment can be helpful. After the financial problem is resolved the option to pay extra each month can again be exercised.

        I agree that most people are not knowledgable with respect to loans but, in reality, all I advocate is for them to slow down the process and take the proposed loan contract to someone who can explain it to them. Just this one extra step can make all the difference. (Sometimes just getting a loan from a credit union instead of the dealer or from a bank can make all the difference.)

        I will not comment on whether people are smart enough or what it means to put off a purchase until it can be afforded. These discussions are for another day.

  4. D Daniel

    The banks are the ones offering the long term and no money down financing loans. Camping World nor any other RV dealer are self financing these purchases. Why single out a dealer when the entire industry uses the same banks?

    1. Bob Hyatt

      Nah. Camping world is getting kickbacks on the interest collected on these loans. They have a vested interest in trying to maximize the interest you pay. We paid cash for our new Tiffin. The local dealer (we did not buy from them) kept pressuring us to finance for 7 months and then pay it off. Told them no. They told us the final price would be higher if we paid cash. I told them “no it won’t.” Sales manager asked “how are you going to do that?” I said “like this” and got up and walked away..

  5. MovingOnWithMargo

    Chuck, the only thing we can do right now is continue educating the mass public. We can save a few from falling into the debt trap by encouraging them to buy used rigs instead of new, pay cash instead of credit, but when billion-dollar quarters push past the perimeters of morality, there is no recourse, as I see it.

    Currently, the moral of the citizens of the USA is very low. Trying to escape depression is stimulating a lot of risk-takers who eventually walk away from the debt. The loss of credit may then save their lives as “cash only” relieves the stress of long-term debt. Just my 2-cents worth.

    In the past, I have blogged many posts on the problems the RV industry is passing on to the customer in the hope of enlightening even a few to the issues. I do see some light at the end of the tunnel thanks to your efforts as well as Greg Gerber (rvdailyreport) and others. Press on!

  6. Mike

    Im sure I’ll get skewered for this. But, what Marcus said is, in fact, true. I don’t blame him for folks who take financing for 180-240 months. The consumer should make his/her own educated choice and accept consequences accordingly. I get that dealers paint the rosy picture to entice the consumer, but in the end, the consumer has a choice. This is different than predatory lending practices (my opinion).

  7. Jeff

    NEVER BUY AN RV FROM CAMPING WORLD! SIMPLE AS THAT!

    LOOK, BUT NEVER BUY, YOU WILL BE SORRY.

  8. Tommy Molnar

    Why is he imitating a back-window bobblehead?

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.