RV financing

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TXviking
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RV financing

Postby TXviking » Wed May 25, 2016 1:01 pm

I'm currently shopping for an RV, and I'm finding myself on unfamiliar territory when it comes to financing one. It's not quite like a car loan; however, in spite of involving a mortgage, it's not quite like buying a house either.

On the off chance that anyone here has bought an RV before, any recommendations on good/bad lenders, what to expect etc would be helpful.

I have learned that many lenders have a 10-year age limit on what they'll finance. I've also learned many RVs drop in value around year 10 for the same reason; as a consumer, I'd like to find a 2006 year model RV so I can take advantage of a lower purchasing price. But where does that leave me when I go looking for financing? I'm looking to put 20% down.


thom02099
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Re: RV financing

Postby thom02099 » Wed Jun 01, 2016 11:55 am

TXviking wrote:I'm currently shopping for an RV, and I'm finding myself on unfamiliar territory when it comes to financing one. It's not quite like a car loan; however, in spite of involving a mortgage, it's not quite like buying a house either.

On the off chance that anyone here has bought an RV before, any recommendations on good/bad lenders, what to expect etc would be helpful.

I have learned that many lenders have a 10-year age limit on what they'll finance. I've also learned many RVs drop in value around year 10 for the same reason; as a consumer, I'd like to find a 2006 year model RV so I can take advantage of a lower purchasing price. But where does that leave me when I go looking for financing? I'm looking to put 20% down.


I purchased a 25 foot travel trailer several years ago, and used Essex Lending, which is a division of Bank of the West. They are very RV friendly, the process is quite simple and painless, and quick. But you will run in to the 10 year issue. When I was looking, I was actually looking for an older trailer, but found that no lenders I could find would go beyond 10 years as a purchase, and some would allow a few more years if it was a refi. This is not unlike financing a car or truck as far as age. I ended up with a 2007 year trailer.

Depreciation, just as with cars or trucks, will depend on what type of RV, and just as importantly, the manufacturer. If you're talking motor homes, are you looking at Class A or Class C, or something smaller, as in a Class B? If you're looking at trailers, are you looking at bumper pull or 5th wheel? What's the price range you want to consider? I'm presuming that you're probably considering a motor home vs a travel trailer.

Some of the high end Class A or Class C motor homes are going to hold their value much better than others. Same thing with certain trailer manufacturers. Depreciation, just as with cars and trucks, starts as soon as you drive it off the lot, if buying new. When I was doing my research, I found that, at least with Keystone (the manufacturer that I have), the value (or resale value) stabilised at about year 10. But this is dependent on age, mileage, condition, and amenities.

And those last 3 points above, mileage, condition and amenities, will determine what's going to be a fair price in the used market. A 9 year old Newmar motor home, for example, generally will have a higher price than a 9 year old Winnebago motor home, because it was a higher end MH when it left the showroom, had higher quality amenities, and (subjectively) were built better. Also, a diesel pusher generally will be able to hold up to much more mileage than a gasser, in motor homes.

Also, when looking at used units from a private party, I would look for 1 or at most 2 previous owner units. If buying from a dealer, you'll likely not be able to determine this. With a private party purchase, look for retirees or older folks who are selling and moving up, or discontinuing RV'ing. Generally speaking, they will have taken better care of the unit, and more likely, purchased the unit new, and therefore are a 1 owner rig.

If you happen to consider buying new, a rule of thumb for making an offer is to START at 40% off the MSRP and work from there. All RVs are grossly overpriced, and one should never accept anything less than 30% off the MSRP. That 30-40% range is where you should be in making an offer and having the dealer accept. Also, look for freebies as well. If buying a trailer, have them throw in a weight distribution and sway control hitch, which can be worth $1000 or more.

Good luck in your venture into the RV world!
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TXviking
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Re: RV financing

Postby TXviking » Thu Jun 02, 2016 7:02 pm

Thanks for the response, thom02099! I'll add Essex Lending to my list of places to research.

I've run into the 10-year issue with a car before as well. In the end, I was able to get help from a credit union to purchase a 1992 Corvette in 2005. It helped that both the loan amount ($10,000) and the term (3 years) were low. Unfortunately, that is not likely to be the case with my RV purchase.

I'm looking at a Class A diesel pusher. I prefer diesels for fuel mileage and reliability; it's also been my observation that diesel pushers are generally more solidly constructed and of better quality than equivalent gasoline-powered RVs -- not just the drivetrain, but the interiors as well.

Newmar is actually quite high on my list of contenders, along with Monaco and Beaver as my top three. I haven't ruled anything out yet, however. (Beaver went out of business, which is a bit of a concern for spare parts – but existing Beaver owners I've spoken to don't seem overly concerned about this.)

I'm looking for RVs from about 2004 through 2007. I don't want to do anything newer because of price, but also because newer RVs have to comply with federal diesel emissions requirements (DPF since 2007, DEF/urea systems since 2010) that overall increase complexity (and therefore the risk of breakdowns), decrease fuel mileage and increase operating costs (more repairs, plus adding another consumable you have to purchase every few fillups in addition to diesel.) I certainly don't want to go brand new, as the depreciation hit is extreme (a high-end RV can depreciate by $100,000 per year for its first 3-4 years on the road. I'm not looking to buy anything quite THAT high-end, but the same effect is observable further down the totem pole.)

Ultimately, if I can't find a lender willing to go beyond 10 years without ridiculous interest rates, I may be limited to 2007 year model RVs to squeeze in under that limit. Either way, I appreciate the advice! :cheers:



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