Financing Limitations on RV Age

[swadia]

Our van had only 30,000 miles and spent most of its life in the south. My husband is handy and could spot most of its problems before we purchased it. The major problems were dry-rotted tires, had to have new trans., new brakes, and fix leaks inside. We redid all upholstery and other cosmetic things.

The van is very comfortable with its captain chairs. We probably have about $15,000 in it. All in all, we are happy and have no payments.

[HWDean]

Originally Posted by booster

So, 20 year vehicles can certainly be a money pit, but also can be reliable drivers for probably another 10 years depending on their condition. Either way, if you are hiring repairs done, you certainly are at higher risk of big costs on the road, though, than most newer good condition vans would be. I think it is important to make sure you have access to the funds to either get the van and you shipped home or cover the costs of a major expense like a transmission or engine failure. I think the trans failures would be most common higher cost one in 20ish year old vans, unless they have already be replaced.

I agree. That's one of the reasons I would prefer to finance the older vehicle - if I pay cash (up to 35k) a large repair expense would be very uncomfortable in my financial situation.

If you can find a 20 year old van that has not seen salt and has been stored inside, you can probably be about 7-10 years ahead of the aging issues if the mileage is lower (up to 120K maybe) as long as the maintenance has been good. Some rubber deterioration and oil leaks would probably still be there, though. Our 2007 Chevy 190P Roadtrek fits that description so I have been able to watch how it is aging and so far it is doing very well. The only time it has sat outside was the 15 months on the dealer lot before we bought it.

I will definitely be doing my due diligence regardless of the age of the used RV with records, inspections, etc. I did see a 2003 PW Excel with 24k miles (https://inlandempire.craigslist.org/...245075924.html) in my price range. Of course the RV-related stuff would be old

Here is one I would be interested in (if it were closer to my area), but hesitant to dish out cash for the reasons you give - https://yuma.craigslist.org/rvs/d/yu...230244279.html

Just want to keep my options open as I survey the landscape.

[wny-pat]

Originally Posted by HWDean

Thanks, but I don't qualify to be a member

Most credit unions only require you to set up a $25 or $50 share account to become a member. I had to do that to use Pentagon Federal Credit Union in Arlington Va. Never been to their credit union. Have a cash reward credit card through them and have financed vehicles through them.

[HWDean]

Originally Posted by wny-pat

Most credit unions only require you to set up a $25 or $50 share account to become a member. I had to do that to use Pentagon Federal Credit Union in Arlington Va. Never been to their credit union. Have a cash reward credit card through them and have financed vehicles through them.

In this case, I had to live in one of several Alabama counties and I live in Los Angeles. But they only required a $5.00 deposit. I think I have a way into the California Credit Union.....stay tuned

[HWDean]

In case anyone is interested, California Credit Union does not have RV loans. Personal loans start at 7.99%. In my personal situation it would be cheaper for me to take an IRA distribution, for which I am qualified, pay the taxes (and pay myself back).

[HWDean]

Originally Posted by gksmith

I used lightstream.com for a 14 year old Leisure Travel van four years ago. Not only were their rates the lowest, they did not ask for any security. In fact they requested that no papers be filed regarding the loan. And there was no penalty for paying off early.

Lightstream is the winner! I called them (finding their phone number was like a treasure hunt) and they have no limitations on age, make or mileage.

The only downside, though not a deal-breaker, is loan-length is max 7yrs.

[swadia]

Congratulations

[Roadie1]

Sorry maybe I’m too much of a Dave Ramsey fan but pay cash or don’t buy it. It’s a depreciating asset. And for goodness sake don’t take a second mortgage (HELOC) out on your home. That’s just plain stupid. If you can’t afford to pay cash for it then you can’t afford it. The saying “the borrower is slave to the lender” is true. Think about it!

[HWDean]

Originally Posted by Roadie1

Sorry maybe I’m too much of a Dave Ramsey fan but pay cash or don’t buy it. It’s a depreciating asset

You're making too many assumptions about my situation.

But here are a couple of rhetorical question that demolishes your argument: What if the returns on my savings is greater than the interest I will be paying? In that case it will cost more money to pay cash than to pay principle + interest. This is known as "opportunity cost."

Sometimes a situation will arise when you have to use someone else's money to get what you want. There will be a cost to using that money (known as interest) but there will also be the opportunity cost for using cash. One should weigh both options, not simply reject one on principle (no pun intended).

What if the value of the RV is greater than the selling price? This would complicate your "depreciating asset" argument.

Like all other costs, interest is measured against the value of the thing being obtained. The fact that the resale value may be lower than the principle balance is not relevant here. The RV will depreciate whether I pay cash up front or monthly with some interest.

What's more important is cost per use. Each outing will cost only a few more dollars in an RV with a loan than without a loan. In some circumstances the choice will be paying a few bucks more per night of RVing versus no RV. In other words its the "marginal cost" that counts.

I must respectfully disagree with your advice to choose the "no RVing" option outright. Once I choose an option I can afford (e.g., monthly payments, down payments, etc) the real question becomes: do I find enough value in the goods and activity I am acquiring to justify the cost. In other words: is it worth it TO ME?

[magicbus]

Well said.

[swadia]

There are other reasons why people would finance. Are you assuming one doesn't have the cash ? Perhaps, one doesn't want to use his short-term savings, esp now. Who knows, with these crazy times, what emergency might happen?

I've laughingly asked my hubby, why not put a little $$ down on a hugh purchase, say a $100,000 B camper. Finance it for 20 years at a few hundred dollars a month and enjoy it. I doubt at our ages we would pay it off. Then our kids could turn it in or pay it off. Just musing, ha,ha, life is too short !

[HWDean]

Originally Posted by swadia

I've laughingly asked my hubby, why not put a little $$ down on a hugh purchase, say a $100,000 B camper. Finance it for 20 years at a few hundred dollars a month and enjoy it. I doubt at our ages we would pay it off. Then our kids could turn it in or pay it off. Just musing, ha,ha, life is too short !

I go through the same thought process (although, I am single). My mental budget is 30k. If I get a newer vehicle costing twice as much, I can go for a 15yr loan instead of a 7yr loan term loan and the monthly payment will be about the same (with 100% financing). My dilemma here is I may have to get an RV costing more than twice as much (a vehicle less than 15yr old) in order to use a lender that will allow more than 7 year term and use some savings to keep monthly payment down to affordable levels.

In that latter scenario, I will need to use IRA money. Although I would lose the return on those savngs, the consolation there is my tax burden will be less than the total interest paid.

I suppose it will all crystalize when I find that RV with my name on it.

[avanti]

I have always lived by the following credo:

"There are two kinds of people in the world: Cash people and credit people. Credit people can reach a given level of consumption a couple of years sooner. Cash people pay 20% less to do so."

This is a cartoon and there are many exceptions, but I think it captures the essence of the situation. I taught it to my children.

BUT, reading some of the points made above, it occurs to me that it mostly applies to young people. Later-life decisions are more complicated, and constrained by previous behaviors and future prospects.

[booster]

Originally Posted by avanti

I have always lived by the following credo:

"There are two kinds of people in the world: Cash people and credit people. Credit people can reach a given level of consumption a couple of years sooner. Cash people pay 20% less to do so."

This is a cartoon and there are many exceptions, but I think it captures the essence of the situation. I taught it to my children.

BUT, reading some of the points made above, it occurs to me that it mostly applies to young people. Later-life decisions are more complicated, and constrained by previous behaviors and future prospects.

Yep, there are those that think debt is essential, some think it is just a way of life, and even those that think it is good. There are also those that think some debt like a house is essential but not other stuff and there are also those that think any debt is horrible.


Plus everybody in between all of those things.


Over time some change a bit, but from what I have seen many/most don't and stay what they are. Personally, I find it absolutely amazing how many seniors I know that are carrying mortgage, car payments, credit card debt into their fixed income retirement years. Unless you have a lot of savings to cover all of it and are just choosing to preserve assets for emergencies that just doesn't seem like a good idea.

[Roadie1]

Originally Posted by HWDean

You're making too many assumptions about my situation.

But here are a couple of rhetorical question that demolishes your argument: What if the returns on my savings is greater than the interest I will be paying? In that case it will cost more money to pay cash than to pay principle + interest. This is known as "opportunity cost."

Sometimes a situation will arise when you have to use someone else's money to get what you want. There will be a cost to using that money (known as interest) but there will also be the opportunity cost for using cash. One should weigh both options, not simply reject one on principle (no pun intended).

What if the value of the RV is greater than the selling price? This would complicate your "depreciating asset" argument.

Like all other costs, interest is measured against the value of the thing being obtained. The fact that the resale value may be lower than the principle balance is not relevant here. The RV will depreciate whether I pay cash up front or monthly with some interest.

What's more important is cost per use. Each outing will cost only a few more dollars in an RV with a loan than without a loan. In some circumstances the choice will be paying a few bucks more per night of RVing versus no RV. In other words its the "marginal cost" that counts.

I must respectfully disagree with your advice to choose the "no RVing" option outright. Once I choose an option I can afford (e.g., monthly payments, down payments, etc) the real question becomes: do I find enough value in the goods and activity I am acquiring to justify the cost. In other words: is it worth it TO ME?

Actually that really wasn’t directed toward you. Just a general statement. I see so many people that owe for everything. Cars, credit cards, their home, collage loans,etc. it would scare the hell out of me.
Of course I have no idea about your financial situation.
I just know for me at my age, 56 and getting ready to retire and not owing a single dime for anything and having a home paid for, cars, my kids college and my Revel and investments have all taken me a long hard 35 years of really hard work to get to where I am today. I can’t imagine going into retirement without being 100% debt-free. There is absolutely no way I would finance anything at any interest rate especially an RV or boat let alone for 20 years. It’s astonishing how much more money one has when there is no debt. To those that choose to live life in debt, enjoy the payments. I hope it all works out. Cheers and see y’all on the road!

[HWDean]

Originally Posted by Roadie1

Actually that really wasn’t directed toward you. Just a general statement. I see so many people that owe for everything. Cars, credit cards, their home, collage loans,etc. it would scare the hell out of me.
Of course I have no idea about your financial situation.
I just know for me at my age, 56 and getting ready to retire and not owing a single dime for anything and having a home paid for, cars, my kids college and my Revel and investments have all taken me a long hard 35 years of really hard work to get to where I am today. I can’t imagine going into retirement without being 100% debt-free. There is absolutely no way I would finance anything at any interest rate especially an RV or boat let alone for 20 years. It’s astonishing how much more money one has when there is no debt. To those that choose to live life in debt, enjoy the payments. I hope it all works out. Cheers and see y’all on the road!

I don't believe there is anything inherently wrong with borrowing money. As I hinted above, my retirement savings earned 11% this year, but it was a good year. If I used that money to pay for an RV cash I would have lost that 11% growth. If I borrowed the money at, say 6% my account I would still earn that 11% while paying interest for net PROFIT of 5%.

As you can see it can cost more money to pay cash than to borrow and pay interest. No reason to lose money for a mere "feeling" about debt. By borrowing money, RV cost of ownership can be less than it is when paying cash. And if that is the case, then the smart thing to do is borrow.

On a more personal note, my only debt is my car. I own my home. I am shopping for an RV that can also replace my car; and when I get it I will sell my car (its not upside down). I get what your saying, but I am not looking for something I can't pay cash for. I am looking for something that will create a monthly payment I can afford -- say 250/mo

Even more important - even if I can afford it, will I find enough value in RV activities to justify that cost (this will be my first RV). Until I make the plunge, that is the big unknown. If not, no biggie; I can always sell it.

[jrobe]

Reminds me of the old saying - The difference between the rich people and the poor people is that the rich people collect interest and the poor people pay interest.

I also remember a friend of mine that financed a travel tailer many years ago. He owned it for about a month before it was totaled it in an auto accident (not even his fault). When his insurance company settled with him for the depreciated value, he was upside down on his RV loan and had to come up with the balance. I bet he never financed a toy again.