Shocking: Many RVers “upside down” on RV loans

By Chuck Woodbury
EDITOR

I was alarmed by the results of our reader survey last week, when we asked, “If selling your RV today, would you need to come up with money to pay off the loan?”

Of the 650 RVers who are still paying on their loans, close to half – 46 percent – would need to pull out their checkbooks to pay off the loan if they were to sell their RV today. They did not report how much they were “upside down,” but I’d guess that $10,000 or $20,000 would be common.

A woman wrote me years ago in a panic. Her husband had died suddenly, and she could not afford the payments on their luxury motorhome. She said if she sold the RV, she would still owe $80,000 on the loan. “Where will I get that kind of money?” she asked.

The fact is, once you buy a new RV it depreciates roughly 25 percent when towed or driven off the lot. If you bought an RV for $100,000, put 10 percent down and financed it for 20 years at 4.99 percent interest, and then got sick or lost your job three months later and needed to sell the RV, get ready to pay up. The RV’s loan balance would still be $89,780, but the RV only worth $75,000. You need to write a check for close to $15,000 to pay off the loan.

The terms on this “deal” is based on 10 percent down and then monthly payments at 4.99 percent for 20 years! Buy this at 65 and you’ll still be paying on the loan and about $78,000 in interest until you’re 85.

I consider it highly unethical for an RV dealer to encourage terms like 10 or 20 percent down with payments for 20 years. Camping World is notorious for pushing these ill-advised loans, even on cheap units that will fall apart well before the life of the loan. But star-struck buyers fall so head-over-heals in love with the idea of the terribly seductive RV lifestyle that they agree to such terms. “Oh, we’ll deal with whatever happens later,” they say.

I dream of being able to reach hundreds of thousands of potential RV buyers to advise them to avoid long-term loans at all costs.

Some of our readers must have bought unwisely for so many to be upside down on their loans. The easiest way to avoid this happening is to buy a well-maintained used unit and pay it off in as few years as you can.

If you need a job, get one selling RVs at an ethically challenged RV dealership. Push 20-year loans to financially unsavvy consumers (an endless supply is out there). You’ll make great money. But good luck sleeping at night.


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26 Thoughts to “Shocking: Many RVers “upside down” on RV loans”

  1. Sandy

    In Illinois they have satuate of limitation law of 15 years debts are erased correct? All states have this

  2. Brenda`

    My dad was a mechanic and only once in my lifetime did we ever buy a new car. The same reason applied to buying a new RV…depreciation off the lot. Also, dad said he would rather let someone else “get the kinks out” and avoid the hassle.

    We have followed the same mantra with our RV purchases — buying gently-used rigs — and have always been able to at least break even on resale. With the poor quality of newer rigs these days, there is even more of a reason to avoid buying new.

  3. Roger

    Bought a beautiful new Class B a couple years ago. Held off until a) we retired and could actually spend a lot of time in it and b) till I could write a check for it and have reasonable maintenance/ taxes/ camping expense /emergency funds set aside. We usually keep vehicles for 15 years, so I won’t be buying another one. For us, the whole point is to have fun RVing, and I can’t do that if I’m worried about paying the next bill.

  4. Scott Davis

    I’m sorry, but financing an RV is in my opinion, nuts. One of the most rapidly depreciating assets on the planet. If you don’t have the cash, you can’t afford it, pure and simple.
    – Dr. Scott

  5. George B. Sears

    I sold my low cost travel trailer because I didn’t trust the seals and it was clear the construction inside was very basic. That was after 7 years. I was going to reach on a unit, but decided to go small and cheap. So the $12k unit was worth around $7 when consigned. I can live with that. People don’t have to go huge.

    It’s just a very strange industry. They don’t make a lot of money. It’s a low margin business at the production level. Depending on how you figure it, Winnebago makes around 5% profit on sales. That’s not much. So the dealers make profits with very aggressive tactics. I bought online, and it seemed to work out for me. It was just a price.

    The thing with it being a low margin industry is that any big improvements in quality are going to be costs the consumer pays. What do Americans want? Do they want something that isn’t what it seems, but looks good? How do you educate people to understand how the industry and the dealers work? Credit and borrowing are basically very dangerous things, and this country is leveraged to the hilt.

    Oh, well. I would like to see an electric van with good insulation, an RV that could use the big battery pack to power heating, cooling, and small appliances. That might be interesting. Some of the van people do interesting stuff. I guess in Europe most RV’s are built on vans.

    You guys do a great job.

  6. Joseph Antolik

    Also forgotten or seldom thought about during the loan process are taxes, extended warranties, delivery, prep, license fees that add up to more than the down payment and you wind up with a loan larger than the original price of the RV

  7. Dean Yoesting

    I purchased a new 2013 Holiday Rambler Endeavor with a tag axle. After 5 years we had to sell the RV because of my wife’s health. I tried to sell it online for what I thought was a fair price, but after 2 months and lowering the price $30,000 I sold it at a wholesale price to a dealer. I had to pay $10,000 out of pocket to sell the rig because of being underwater. We no longer wanted to deal with the rig, or the unnecessary wait for a possible buyer. It is easy to get underwater and you can not always get the retail price for the RV.

  8. Gene Bjerke

    I guess I am one of the dumb ones. Eight years ago we bought a new Roadtrek. Like a lot of people, we couldn’t just write them a check, so we financed it. It looked like a good deal, since the payments would be covered by a state pension that my wife was drawing that was going into a bank account not used for normal expenses. Two months later my wife died, and I was suddenly responsible for the payments. I still have the RV, and the payments (subsequently refinanced for lower payments, but a longer term).

    So my situation is: I have a very expensive RV which will probably not be paid off in my lifetime. I am also paying for mortgage insurance, so that if (probably when) I die before it is paid off, the debt will be paid and my heirs will inherit an asset, not a liability.

    So why do I hang on to this white elephant? I periodically check the blue book listings for my make and model, and so far It is worth more than I owe on it. (Roadtreks hold their value quite well). I could probably do better financially to sell it and buy an older one. The problem is, I really like this unit. I have been modifying and customizing it for our purposes for eight years and it is pretty much just the way I like it (no boat or RV is ever “done”). In my present situation, long trips are my main interest. Without the RV my life would consist of little more than hanging around the farm fighting weeds. So I bite the bullet and whenever we get a few bucks we head out to see all the marvelous things there are to experience in this big, beautiful country. So I guess I am dumb but mostly happy.

  9. Jake

    BEWARE..of Camping World as I have a friend who works for them and it’s strictly money making machine using the customer to nearly bankrupt..We buy our RV’s from the same family business years after years as they take pride in being honest and helpful as it would affect their reputation for sure and likely go out of business..Not the Camping World way for sure..Just for the hell of it we stopped in at CW in Kissimmee ,Fl. and told the salesman it would be a cash deal but he spent more time convincing us of financing the deal and not hardly any of our questions were answered so we decided to walk and he turned his idiot sales manager to save us and the overall experience got even worst as I had to remind the boss that at 6’4″ and 300 lb. and a retired ground force military he was over the line so no more disrespect or things are going to get nasty. That company needs to clean-up completely as they are on the edge of being criminal..I just wanted to show my wife that dealing with our family dealer was the best overall than the slime at Camping World in all respects even tho we live in Florida and our family dealer is in a small town in Western New York..Believe what you here about CW..

  10. Sharon Baron

    I have been reading the articles from RV Travel by Chuck Woodbury for several years when it was just an email. Now it is better than ever with so much information. I followed every recommendation from becoming a tire freak, buying the best of electrical surge monitors, and obtaining the recommended gadgets for safe travel. Never would I travel without a tire pressure monitor, a Volt Alert, gas detector, or other goodies I have collected. I feel very prepared to isolate issues when they occur.
    Yes, I have encountered on 3 or 4 campgrounds where my Progressive monitor would not allow any voltage to pass to my camper. One was at a KOA in SW Florida. Although the maintenance man said it was my Progress that had a problem , I brushed that nonsense off and and was allowed to plug into the site beside my rig. It worked and my camper was safe and sound. He later told me there was and issue my site and it was fixed. I now back into the spot and the first thing I pull out is my Progressive. I watch it recycle through and feel confident my camper will not be fried…or me. Then I set up and enjoy.
    Thank you Chuck for all the time you have spent writing these most important life saving articles for all these years. With the knowledge I have learned from these articles I do feel confident being on the road.
    Now if we can get some of these jerks who are flying down the roads going over 75 mph I really would feel more safe out there.
    I watched a Class A fly by at the speed of light almost missing his exit then exiting over the grass almost hitting a car who was legally driving on the exit ramp. Wish I had that one to put on UTube.

  11. Esta gardberg

    Oh, could I wrote a story, but we don’t have all day, this is the condensed version. We bought a 2006 holiday gambler in 2012, looked great, everything supposedly worked, our last t.v. Was a popup. It cost 105,00, more than our house. In the next 4 years of full timing, we had 2 new floors, due to leaks, that was almost $12,000, 3 windshield which cracked, paid for by insurance, Florida has no deductible on glass, problems with fridge, inverter, microwave, steering, plumbing, lots of electrical, we spent more on this t.v. Than in a house. We decided to sell, of course after we fixed everything, and found that after putting it on consignment no one looked at it. So we got in touch with a rent to own place and they found a buyer for us, a large chunk down and they make the payments for five years and then buy it, I hope we live that long, we are in our seventies, but a pilot has it in Colorado and payments come in every month, it has been almost a year, God bless to everyone who is stuck in a large loan, find some way out of it. We are now looking for a very small class c just for vacations and escaping the summers in florida. It will be a cash deal, we learned our lesson, and yes we are still married, by the grace of god, thanks for listening.

  12. Stefan Trestyn

    you guys are missing the point. People are taught to finance the things they want. I personally don’t finance, I have no credit cards and that’s the way I was brought up. I was in a big box store looking at tv’s a couple of years ago. I was talking to this couple that was also looking at tv’s. They needed something cheap. They then found out about 0% interest financing for 2 years and thought that was a great deal. They wound up buying a $5,000 TV. There is no way they can pay that off in 2 years, they will be stuck with all the back interest

  13. Mike & Louise

    We presently own our 13th RV unit, a used 2006 Carriage 5th wheel. Well built all around. We purchased a new unit off the lot only once in 2010, and took a hit when we decided to sell it after two years. Lesson learned for us. In present times, the problem of long-term loans is exacerbated by the poor quality of manufacture whereby the consumer is most likely to have a lemon on their hands.

  14. Mike M.

    Hi Chuck,

    You are so right about a lot of RV owners owing more on their rig than it is worth. Over the years, I bought six RV’s, mostly pull trailers, and on two of them the seller had to come up with cash to pay off their loan in order to sell to me. Amazing.

    Our M.O. was to buy a trailer about five years old, keep it five years, then upgrade as the family grew. I was blown away when after five years of ownership, the sellers still owed money on it. We had a rule: don’t finance your fun!

  15. Ken Pratt

    Sadly, the same thing occurs in other businesses as well. You want that new car but your used car is not worth the price of the down payment or you already buried yourself during a previous purchase. Some dealers will bury the difference to sell you the car and put you in debt to do it. Then there is the real estate financing that recently brought the housing financial institution downfall. Not surprised that some in the RV industry are doing the same thing. I imagine the same vehicle being sold by the same dealer two or three times after repo.

    1. Chuck Woodbury

      Ken, one difference between RV and auto loans is that the maximum number of years a car is financed is six or sometimes seven. RVs, which are a luxury item and a lousy investment, are financed for up to 20 years, which makes it a whole lot easier to be upside down on the loan.

      1. Bud

        Car loans are often “upside-down” too…so we now have the push to purchase “gap” insurance, to cover the “gap” between the current value of the car and the loan balance.

  16. Bill T.

    I can tell you first hand that finding “good, clean and well maintained” used RV is very very hard to come by. My wife and I looked for months for a two to three year old RV, from both private a dealer sellers and their were in such terrible shape. They were dirty and beaten up with dents, rust and peeling paint and graphics. Really? these were two year old RV’s. We ended up buying new in order to find a rig that suited most of our needs, (floor plan etc). There were lots of rigs for sale on RV trader and other sites, but I was not going to shell out thousands in airline tickets and hotel fees just to go across the country to look at rigs. There has to be a better way. Congrats to those who are lucky enough to find a decent rig close to them, but IMO, that doesn’t happen often. What are we to do?

    1. Bill

      You may want to go beyond two to three years old. RVs tend to have fairly low mileage so the chassis won’t be all that worn. Our first RV was 12 years old when we bought it (I had to overhaul the engine but it was only $2000) and our newest is a 2005 diesel pusher we bought in 2016. The primary problems we have had is in repairing things that deteriorated because they weren’t used enough. QUALITY units hold up for 10 to 20 years, the cheap ones are already junked.

      1. Bill T.

        Thanks for your input. I have looked at 10 – 12 year old rigs as well and I can’t believe dealers and private sellers sell their junk with broken wiring, water stains on the ceilings and walls. I don’t think I would pay $10000 for a 10 year old rig and need to put $20000 into it, to make it usable.

        1. Kevin Hogle

          I’m with Bill. I ordered and bought new so I know what I’m getting. Not somebody’s mess.
          We would be in a world of hurt if nobody was able to finance a new car, truck, motorhome or residence. Buying new keeps the auto, truck assembly running. Let’s middle class people buy houses while their kids are young.

          1. Kevin Hogle

            Bill T. I meant. Apparently more than one Bill

  17. Tom

    I remember talking to an elderly gentleman who had a beautiful Class A which cost in the high 200,000 dollar range. Since he said the loan was for 20 years, I asked how it would be paid off? He said , “Not his problem, he is dead and gone.”

    What a gift to his family!

    1. John Snell

      The same mentality of leaving the national debt to your heirs.

    2. Sandy

      Hi. I also got stuck with a motor home I bought new and had to get rid of for $$reasons I sold it to CW and they were the only ones that made a reasonable offer but I still owed the bank. The man at the bank said everyday they get people that come in and leave the keys for rv s trailers and boats and they never pay another dime. Banks never come after you for the money if under 30,000. Has anybody heard of this

    3. Vicky C

      Not a great gift for sure, but when a person dies and owes debt, it is the law that it’s a forgivable debt, they can’t make heirs pay it unless they want to keep it.

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