RVers lament being upside down with their loans

Here’s why a wise person should never finance an RV for more than five or six years. And try to put at least a third down. If you can’t afford to buy on these terms, don’t buy: You can’t afford the RV! And never buy with zero down. And be damn sure that you are not buying the RV at the sucker price of the day. If you can’t get at LEAST a third off the MSRP, go somewhere else. And even if you get a third off, don’t gloat that you got the best price. You probably could have done better (be patient). And if you’re really smart, buy a used RV that’s a few years old but in great shape.

Camping World, as well as other dealers, are pushing loans of up to 20 years these days and many RV buyers are taking advantage. They’re financing cheap tent trailers that cost less than $10,000 for 12 years with 10 percent down! Imagine that! Motorhomes that sell for $50,000 and more are available — and there are plenty of takers — with terms 20 years or longer. Read my story about what this really means!

Here, from the IRV2 Forum, are three posts from a long thread about what to do if you find yourself upside down in a loan and need to either get out of it, or want to buy another RV. Good luck!

Situation #1
We are thinking of moving to a Class A from our very nice travel trailer. However, the loan (even after two years of larger than required payments) is way underwater. RV dealers we’ve spoken with say they can handle 10-12 grand in the new loan, but we are closer to 18k. Is there a way to deal with this? Pay more and wait until we’re closer to even? Take out a personal loan and pay off the trailer and sell it? Walk away from the loan and trailer and take the credit hit?

Situation #2
When we bought the present rig we were upside down by $93,000 on the old rig. I wrote out a check for the amount owed and got it to the bank. Then I wrote another check for $50,000 for a down payment and state use tax.

Situation #3
After owning our motorhome for 11 years, they gave us $65,000, but 11 years into a 20 year loan, we still owed $50,000! Took the money out of our retirement fund and moved into a trailer, then a bigger one and finally our current fifth wheel full time. 

Read the entire thread at the forum.

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18 Thoughts to “RVers lament being upside down with their loans”

  1. Linda Mudge

    We do have a 20 year loan. We know RVs do not appreciate. We have allot of credit card debt and a empty house that has not sold. So what? We bought an rv to be able to see family in New York and travel. Why wait?

  2. Ross Reed

    All the articles I’ve seen in RV Travel about 20 year RV loans make it sound like it’s a recent phenomenon when in fact it’s been pushed by the RV dealers for decades. I’ve had RV’s since the early 70’s, I knew many people getting 12-15 year loans on MH’s by the early and mid 80’s. I first heard about the 20 year RV loans in the early 90’s. A lot less money for an RV back then but it was still a very bad (AKA stupid) financial move. This brings me to my main point, why all the sudden excitement from several outlets (including RV Travel) about the absurdity of these 20 year loans when this concern/outrage should have started at least 15-20 years ago or sooner. With one exception that I paid cash for I’ve always bought used because of the absurdity of a 2 decade vehicle loan. What’s happened recently to make a horrific problem worse?

  3. Irv

    Sherry,

    We got a very competetive loan from LightStream.com. We had the funds within a few days with an easy application process. (We didn’t borrow a lot and it was only for three years.) Their rates seem to be very sensitive to credit scores.

    Worth checking to see if it works for you.

  4. livingboondockingmexico

    In the thread, someone mentioned moral obligation. That is a hard line to follow when the financial world is based on lies, deceit and corruption. How many times have we bailed out the banks and they have never had to pay the price. I no longer believe in the line.

  5. John Rakoci

    I guess the financial courses taught in 5th – 7th grades in the 1960s is no longer taught. borrowing can be a good thing, but things may change at any time. Always have enough to cover any contingency before borrowing. In a mid- cost of living area a retirement income of over $100,000 is needed to be comfortable.

  6. BO

    Paying cash is a wonderful thing. But I wonder how many folks can actually do that? RVing is the best thing about retirement and I doubt our payments are more than many spend on their hobbies/recreation. It is our “house on the lake” but we can move to whatever lake we want. We have a stable income and no other debt. What I won’t do is sell my bricks-and-mortar home; if it comes to that, the RV will go. Otherwise, I will make my monthly payment and continue to enjoy the ride.

  7. Wayne Caldwell

    I read a couple of the above responses to my wife and thanked her.

    Two months ago we upgraded our 20 year-old, 276k mile truck to a 3 year-old, 65k truck so we could pull our 17 year-old travel trailer (that we paid cash for two years ago). When we bought the new(er) truck, we made a 100% down payment. We have no house, van, truck, car, or camper payment.

    And we like it that way.

  8. Booneyrat

    Whatever happened to “living within your means”? Stop being greedy and making feeble attempts at “keeping up with the Jonses’s”…you never win with that idea.YOU are the only one who cares about what others think or say…and since the RV lifestyle has turned into “I got mine at any cost” perhaps it’s time for a reality check..if it takes going broke..then maybe you learned a lesson. Those that fail to learn from history are doomed to repeat it.

  9. Sherry Dawson

    Chuck, could you have an expert do an article on how and where to get the best RV loan? I will definitely buy used, and I hope not to buy from a dealer, but I wouldn’t use their financing sources if I did. I’m sure there are better rates elsewhere. But I don’t know how to find them.

    I find RV financing resources online, but an article on how to find a trustworthy loan source, and the best rates (assuming good credit) would really be helpful to those of us who will definitely take only a short-term loan.

    I have a paid-for RV now, but I need something larger and want to buy later this year or early next year.

    1. MikeJ

      Sherry Dawson, when we bought our 2017 Class A we got online and found the cheapest loan rate we could, which we then took to our local Credit Union (we’re a member) and they matched it. We put a third down payment, took a 12 year loan, and make a 50% additional payment in the middle of the monthly payment cycle. Total timeframe for payoff: 3 yrs, 9 mo.

  10. Gerard

    I don’t think I’d be proud to admit to that.

  11. Dave

    3 basic keys to financial success, 1) Pay yourself first (save at least 10% of everything you make), 2) Never have credit card debit, ever! If you can’t pay off that credit card every month in full, CUT IT UP! 3) NEVER EVER take out a loan on depreciating assets. If you can’t pay cash for a depreciating asset then you can’t afford it!

  12. Kenneth Ernest Pratt

    The best payment plan is zero down and nothing a month. CASH.

  13. Timm simms

    Pay cash for toys. If you can’t, you cant afford the toy.

  14. Deen Adolphe

    By the way, you left out the last sentence of the post. You know the part about the bank not really wanting to finance us due to our age.

    1. Chuck Woodbury

      Deen, I know. I felt it wasn’t relevant to this discussion. That’s a whole other topic!

  15. Deen Adolphe

    We actually had enough to pay the amount we were underwater, the sales/use tax and about $25,000 down and pay cash for the newer rig. But the investment pays more than the loan cost and paying cash would have cost us $100,000 in income tax

  16. Deen Adolphe

    Situation #2 is mine that I posted on IRV in response to the OP.

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