Did you finance or pay cash for your Class B?

[goreds2]

Please read my signature.

[Roadtrek Adventuous RS1]

Originally Posted by Leland

It's hard to enjoy yourself when you're saddled up with payment(s). It takes the fun out of it

SO.. you use the RV daily??

[Alain_M]

Putting on 20 years makes sense if your investments have a higher yield than the loan rate

[rvsprinterguy]

We were fortunate enough to be able to.

[<<B-Guy>>]

For things like this, if I can't pay cash, I don't buy.

I watched an interesting tv documentary about buying cars here in Canada - likely teh sme in the US. Some of the tactics are barely legal.

Seems the salesmen only push what the biweekly payments will be and only talk purchase price if forced to do so - biweekly payments sound pretty good - if based on an 8 or 9 year loan as they now often are!! People - especially young folks who get caught up in this - are sucked into buying a much more expensive vehicle then they otherwise would.

They also get talked into the fact that they can always pay off the loan when they want to trade in on something newer - that then brings up the subject of "Negative equity" which is a situation existing whereby the car they have is worth less than the outstanding loan balance!

The more weasely car dealers will then build that negative equity into the loan for the new car in the sales agreement by tacking it onto the purchase price using some obtuse language like "added retail amount" or some such - the buyer is then even deeper in the hole!

Guess i'm a cheap S.O.B., but I feel a whole lot more comfortable with my approach - can't pay / don't buy!

I've had a whole lot of vehicles in my lifetime so far, and only very recently have started buying new ones! Couldn't afford the before!

Brian.

[avanti]

Here's my other "credit" aphorism:

There are two kind of people: Cash People and Credit People. There are two differences between them: (1) It takes several years longer for a cash person to achieve a given level of consumption; and (2) Credit people pay 17% more for stuff.

It is not a moral choice, it is a pragmatic one.

[mls1919]

Finance for twenty, pay off in ten. Nothing stopping you but lets you preserve options just in case...

[oilman]

Let's see, I can buy now and pay 5% interest for 10 - 15 years and use and enjoy the thing. On the other hand I can try to save and watch the price of the rv increase yearly at a higher rate than the interest I would be paying.

[GeorgeRa]

We tend to analyze large purchases from 2 points of views: investment to our well-being and financial investment, results are not always black or white.

For years we use the same financial advisor helping us to decide and sometimes paying cash are financially advantageous and sometime loans are financially better options.

Personal investment for our mental well-being varies to, so our decision is drawn from these 2 perspectives, sometime using an analysis matrix to facilitate discussion.

One form of finances we never did nor will do is leasing a vehicle, just against my grain.

[dhectorg]

Originally Posted by Roadtrek Adventuous RS1

WOW....the sales folks make this sound so easy... just finance it over 20 years.... trouble is..I realized that it would cost another $60,000 in interest charges just for that!

So, after 7 months I found a way to "retire" the loan...

Still, I could not do that again..one time thing..

Is it worth financing an RV for 20 years..? Just because you can doesn't mean you should?

And, these things are really toys... depreciating assets like cars...

Unless something changes.. I'll probably keep my used RV until I decide not to have one!
These things are so insanely expensive to purchase and maintain...

I'm lucky that I like my RV... turning it around for another one is not a good idea.. especially if you just acquired it...

Despite the fact that RV loan interest is tax deductible, that will not even come close to compensating for the depreciation that will occur over 20 years of ownership, or even far less than that. I'm not saying financing never makes sense. A short term loan (up to about 7 years) could make sense as long as it allows you to avoid a negative equity situation.

Personally, I plan to pay cash for my class B, which is the reason I don't own one yet...I'm still saving up. I'm very much anti debt, so it's a personal thing with me. I also realize that waiting years before being able to make my purchase is a downside, but I won't have significant time to travel anyway until I retire, so I'm OK with waiting.

If you decide to finance, just make sure you don't let yourself get upside down (negative equity) in the loan because then you're stuck, and the only way to do that is to keep the loan term below 7 years.

Good luck!

[dhectorg]

Originally Posted by Davydd

Has anyone kept a Class B for 20 years?

I've paid cash for my three Class Bs and traded them in at 65,000 and 61,000 miles and already have 63,000 miles on my current one in 3-1/2 years. At my rate I would put well over 400,000 miles on one in 20 years and I doubt it would last that long. And I certainly wouldn't want to own something that was stored in a garage unused for several years. But I may not live another 20 years and it is a depreciating asset unlike a house.

I have to be honest, that sounds crazy to me. You have to be losing tons of money trading like that and maybe you have it to lose and that's OK too, I guess. However, I plan to buy just ONE class B that I will travel in for the rest of my life...hopefully for 25 years. I realize I'm probably in the minority on this, but I tend to keep my vehicles for a long time and I take excellent care of them so they last. I have no problem owning one RV for decades, it's the only way to get your money's worth out of it, considering how much they cost these days. I'm hoping to go with Advanced RV, which will cost well over $200k, so it better last! I strongly believe it's all about doing excellent preventive maintenance.

[Roadtrek Adventuous RS1]

Originally Posted by dhectorg

I have to be honest, that sounds crazy to me. You have to be losing tons of money trading like that and maybe you have it to lose and that's OK too, I guess. However, I plan to buy just ONE class B that I will travel in for the rest of my life...hopefully for 25 years. I realize I'm probably in the minority on this, but I tend to keep my vehicles for a long time and I take excellent care of them so they last. I have no problem owning one RV for decades, it's the only way to get your money's worth out of it, considering how much they cost these days. I'm hoping to go with Advanced RV, which will cost well over $200k, so it better last! I strongly believe it's all about doing excellent preventive maintenance.

You are absolutely right... keeping it for a long time and maintaining it is the best way for saving money... I kept my 1995 Honda Accord until I sold it in 2014...ran perfectly..
I sold it because it was too low to the ground to tow my teardrop trailer.... and my Subaru Outback Limited has a lot more towing capacity...plus ground clearance..

Look, I understand where some people are...you can't take it with you and if I were closer to 80 and wanted everything brand new just because I could ... maybe I might have a different view...

But, if you want to have fun and still have money left over for emergencies... there's no reason aside from bragging rights about having the "best"....

Yes, there are plenty of people who keep their cars and RVs for an extended period of time.. trading anything too soon is NOT a wise financial move....in my opinion.

[baritone]

Originally Posted by cruising7388

Personally, my m/o truncates this advice to: never borrow money, period, but that said:

Maybe. Maybe not. It depends on the cost of borrowing and what you do with the resources conserved by borrowing plus the potential tax deduction advantage of an RV qualifying for a second home. The inputs to the equation and the resultant financial bottom line will be different for everybody.

If you make payments over 20 years, you don't have a large payment going out monthly, you have your second home write-off to help with the interest paid, and you are leaving the bulk of your money working for you as an investment to bring a little higher return than the interest rate of the loan vs. just having it gone and sunk into the vehicle. And, yes, there are cons to this approach, too. That's why I like the "Maybe. Maybe not." answer!

[dhectorg]

Originally Posted by baritone

If you make payments over 20 years, you don't have a large payment going out monthly, you have your second home write-off to help with the interest paid, and you are leaving the bulk of your money working for you as an investment to bring a little higher return than the interest rate of the loan vs. just having it gone and sunk into the vehicle. And, yes, there are cons to this approach, too. That's why I like the "Maybe. Maybe not." answer!

In my opinion, there are only two cons to paying cash. 1) Losing the investment earning potential of that cash. However, with interest rates on RV loans hovering at 5% and climbing (with excellent credit), it's unlikely you'll consistently earn enough investment income (after taxes and expenses) to outrun the cost of the loan. 2) If you're not cash rich, having to wait years to save up enough to make your purchase can be difficult, especially if you're ready to hit the road now.

But if you plan to keep the RV for the long term, there's no reason to worry about the 'sunk' cost of a cash purchase, since it's a one time expense and will negate the need to make payments, leaving you with more cash in your monthly budget.

If you can afford to pay cash or don't mind waiting to save up until you can, cash is the best way to buy, in my opinion. I see no significant benefit, other than instant gratification, to giving $10s of thousands of hard earned dollars to a bank.

[ponti33602]

Originally Posted by dhectorg

I have to be honest, that sounds crazy to me. You have to be losing tons of money trading like that and maybe you have it to lose and that's OK too, I guess. However, I plan to buy just ONE class B that I will travel in for the rest of my life...hopefully for 25 years. I realize I'm probably in the minority on this, but I tend to keep my vehicles for a long time and I take excellent care of them so they last. I have no problem owning one RV for decades, it's the only way to get your money's worth out of it, considering how much they cost these days. I'm hoping to go with Advanced RV, which will cost well over $200k, so it better last! I strongly believe it's all about doing excellent preventive maintenance.

Might want to add a 1 to that starting digit. Many of their used ones are close to $300K.

[BBQ]

.

Everything is relative

Everything depends on context


If you are young and a dreamer, you buy a beat up VW.

If you are a middle-aged reformed Gen-X, you buy the $150k RV.

If you were a hippie and have achieved everything that needs to be achieved in life,
you can do whatever you want. No explanation (or financing) is required.

[Davydd]

Originally Posted by dhectorg

I have to be honest, that sounds crazy to me. You have to be losing tons of money trading like that and maybe you have it to lose and that's OK too, I guess. However, I plan to buy just ONE class B that I will travel in for the rest of my life...hopefully for 25 years. I realize I'm probably in the minority on this, but I tend to keep my vehicles for a long time and I take excellent care of them so they last. I have no problem owning one RV for decades, it's the only way to get your money's worth out of it, considering how much they cost these days. I'm hoping to go with Advanced RV, which will cost well over $200k, so it better last! I strongly believe it's all about doing excellent preventive maintenance.

So far in our first Class B, I paid $63,000 for it and traded it in for $55,000 after 5 years and 61,000 miles of use. I then bought a Class B for $90,000 and sold it after 3 years and 65,000 miles of use for $70,000. I probably sold it for less than I anticipated because I was looking at winter in Minnesota in November and was willing to shed it. Hindsight leaves me to belief I made the right decision. So I had about $28,000 depreciation over 8 years and and 126,000 miles of use. That's not crazy. Do the math if I had financed them. I drove both maintenance and worry free, and I got a lot of use from them and improved my travel with upgrading from experience of what I needed or wanted from a Class B. When I bought my first Class B lithium ion batteries were practically unknown and AGMs weren't offered either. That is just one evolution in use I've gained.

It's unknown how I will do on my current Class B. I haven't explored it yet. But compromise is not in my vocabulary but challenge is.

[dhectorg]

Originally Posted by ponti33602

Might want to add a 1 to that starting digit. Many of their used ones are close to $300K.

I am aware, but those are loaded with every option they offer. I only plan to option useful equipment, not aesthetics. I also don't want the 24 footer, which is what their used ones are. Their conversions start at about $225k. I expect to be in the mid $200s.

[Davydd]

Originally Posted by dhectorg

I am aware, but those are loaded with every option they offer. I only plan to option useful equipment, not aesthetics. I also don't want the 24 footer, which is what their used ones are. Their conversions start at about $225k. I expect to be in the mid $200s.

People seemingly take glee in only reporting the highest price while at the same time only quoting the lowest price without options of their favored RV.

[ponti33602]

Originally Posted by Davydd

People seemingly take glee in only reporting the highest price while at the same time only quoting the lowest price without options of their favored RV.

Hmm. Not sure if glee. I spoke to Mike before on a build. Not too fancy on a 144”. He hadn’t done one yet. I was told upper $200’s to plan on. He has many used fancy ones above $250.


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