High interest rates on MH?

[rocketpod]

We're researching a new Winnebago Sightseer or Sunova 35J. I've seen interest rates listed online at 5.62% for a MH. We're going to finance for 15 years. Then my friend tells me its more like 8.25 to 8.75% because it's a luxury item... I'm not sure who gave him the interest rate info. What was the interest on your recent purchase?

[rhorn]

we had planned to save a couple of years and pay cash but got the bug early and upgraded to a newer used rv. With excellent credit our experience was little over 5% for used motorhome- for 20 years which we plan to pay off early--no penalty for early payoff after 180 days and no better rate if we went with fewer years. may keep cash invested, who knows apple stock should net me more than the interest rate.

For new MH you should be able to get the 5.62%.

Thats our experience.

[DRosedale]

Interest rates are at an all time low right now. I have never heard of interest rates being based on whether it is a luxury item, but I have heard of a luxury tax.

With interest rates low, so are interest rates on your CD's, IRA's, saving accounts, and 401's, etc. A friend just purchased a new coach and before paying for it, he thought about financing and checked the rates, he said they were 5.5% to 5.9%. Thats been a couple of months ago, not sure if that is same today.

[rocketpod]

Yeah, over 8% seems too high, although my friend did get a 2003 Southwind... but still even for used it seems high. We have great credit so it should be no problem getting the lower rate when we purchase. I'm with you on the Apple stock

[rhorn]

Rocket, I like to tell people (tongue in cheek) i have over 12 years of college but have never let it go to my head (pun intended). However the two glasses of wine have gone to my head so i say "go for it and enjoy" I am afraid interest rates cannot remain lower much longer. at some point we will have to repay the debt. sorry bout to get political.

Enjoy the new rv and enjoy this irv2 forum. it is a great site for information.

[Ranger429]

The age of the unit to be financed also corelates with the interest rate.

[popsuscdds]

rocket pod:
Bank of America.-depending on equity in home and credit rating and other-3.24% annual percentage rate. Interest is also deductible for your pals at the IRS.
Have fun!
MILT

[Triker56]

Before you sign the papers. Make sure you have a loan locked in for the low rate you want. Only the bank can tell you what percent of the MH they will finance and for how much. A big down payment of over 20% may be required by them.

[rhorn]

Our experience is you will have to put 20% down to get best rate. Also my problem with home equity lines is they are typically variable and if you are financing a large amount they could get excessive before you get it paid off if rates go up. For me, if i can afford 5.62 now and know it will not go up that that would be my option.

[Dixieray53]

12-28-2010...15 years @ 6% on a 2009 DP. We put about 30% down and we financed 90'ish. This was at BOA and they listed it as an auto loan
Funny how banks work... Peace...D

[go6car]

The better rates currently are with the longer loan terms, believe it or not. Much different than several years ago.

If, by chance, a 20 year financing term has the better interest rate, I would go for that then pay more per month on your payment to "get" a 15 year term. (Always check to ensure you have NO penalties for paying down or paying off your loan early).

Below is a great mortgage amortization calculator, so you can plug in some numbers and find out what that means, in terms of actual dollars per month to get to your desired loan term:

Amortization Schedule Calculator -- Bankrate.com


Sometimes the 15 year and 20 year rates will be the same; sometimes the 20 year will be better -- it all depends on the lender. Here is a link to Essex credit, who does a lot of RV financing, so you can get a ball-park for what is out there currently for new and used RVs (and also refinancing of current RV loans):

https://www.essexcredit.com/home/rates/rv-rates.dot

Hope this helps! Best of luck to you!

[HoRotica]

I just purchased a 2005 motorhome and took $40K out via a 401K loan. I have little faith that the market is going to be doing anything stellar in the next 5 years (max loan length). Interest I am paying to myself is 4.302% which works out to $4,400 in total if carried to term. Bi-weekly payroll deductions towards loan is $346.

The amount I borrowed is less than 20% of my total K holdings. I contribute 25% of my salary to my K and I have 20+ years to go until I reach government stated retirement age. Our brick n sticks is paid off as are all our other vehicles and obligations.

Was this the smartest move? I dunno but it was quick and easy. Absolute worse comes to worse if I lose my job (19 years so far there) and cant find another I could voluntarially default on the loan and only be responsible for taxes and penalty on the outstanding loan balance. There would be no reposession.

Chris

[Triker56]

Quote:

I just purchased a 2005 motorhome and took $40K out via a 401K loan. I have little faith that the market is going to be doing anything stellar in the next 5 years (max loan length). Interest I am paying to myself is 4.302%

That is a easy way to get it.

I did that once until I realized the money taken out was no longer getting any interest add to the 401K every month. And my company made me pay back 10% interest to myself on the loan.

No big deal you think. But all money in the 401K was put there in pre tax money. And all the interest money used to pay back the loan was taxed money.

That $4,400 you pay back will be taxed again when you take it out at 71 1/2 years old. And when you take it out, it will raise the % amount of tax you have to pay on your SSA money.
I call mine a double tax on the 401K money.

So a loan to yourself from a 401K is really not as cheap as it seems.
A home equity backed loan may have put you back to filing a long tax forms with all the money paid back deductible.

The sad thing is in 5 years that 40K put in the nice MH has probably lost at least $14,000 in deprecation. Not counting that interest money paid.

But the enjoyment may be worth it all.

[HoRotica]

Quote:

Originally Posted by Triker56 No big deal you think. But all money in the 401K was put there in pre tax money. And all the interest money used to pay back the loan was taxed money.

10% of my contribution is pretax, 15% is going into a Roth 401K. Company match is all pretax. Loans are taken out of all funds the same as the contributions are currently being added so roughly half of the money came from Pretax and the rest came from after tax.

Any loan I would take will have both the principal and interest repaid with after tax money. Only if it were a HELOC would just the interest be tax deductible (which would amount to a $1,100 tax avoidance at 25% tax rate)

Quote:

Originally Posted by Triker56 That $4,400 you pay back will be taxed again when you take it out at 71 1/2 years old. And when you take it out, it will raise the % amount of tax you have to pay on your SSA money.

I dont understand what you are saying here. I took out the loan and because I did I will miss out on $14K worth of account growth. How exactly does that missed appreciation make my tax burden % higher during time of withdrawal than if I had left it in there?

Chris