Depreciation, Trade-ins, RV Loans, and being upside down

[JimmyLeggett]

Originally Posted by BoogieMan

What is the typical period of an RV loan?

I can see due to other messages in other discussions that RV's tend to lose about 50% of their Fair Market Value in 5 years or so. If you take out a 20 year loan on an RV that loses that much value that quickly, how do you deal with selling the old RV in 7-10 years and getting a new(er) one later on?

What goes into making the decision on how long to have an RV loan for you? What did you do? What would you not do again? Help out a n00b. Wifey is concerned about being upside down on the loan (RV worth less than remaining loan) and sees potential financial disaster in the future....

Can you help open our eyes with your experiences?

This is my second and last DP. It is a used 2009 with low miles but we have since put 10,000 miles on it. We are upside down and always will be, as to trading, unless a super drop dead deal comes along we will not trade it. We traded an 05 for this one to have a newer coach going into retirement, less problems. We had a few problems but they are all fixed and we have a coach that will last us the rest of out time.

It is not the coach I would have liked but given my future financial situation it is what I can afford to buy, maintain and enjoy.

Let your concience be your guide and go for it. and happy RVing, its a wonderful life.

[BoogieMan]

Originally Posted by JimmyLeggett

This is my second and last DP. It is a used 2009 with low miles but we have since put 10,000 miles on it. We are upside down and always will be, as to trading, unless a super drop dead deal comes along we will not trade it. We traded an 05 for this one to have a newer coach going into retirement, less problems. We had a few problems but they are all fixed and we have a coach that will last us the rest of out time.

It is not the coach I would have liked but given my future financial situation it is what I can afford to buy, maintain and enjoy.

Let your concience be your guide and go for it. and happy RVing, its a wonderful life.

Pardon me for prying but what were some of the particulars of the trade on the '05 that made you do it? How did you deal with the financials. Only give us as much as you are comfortable with, if at all.

[golden]

Originally Posted by RickO

I don't believe that to be true. We were full time for two years and wrote off the coach interest as our only home interest.

Rick

What don't you believe to be true??? IF you have a self-contained RV you can write off the interest as a 2nd house. It stands to reason that if you full time you can write off any interest as well. There is no second house involved in this case. Plain and simple.

[Francesca]

My apologies to the Original Poster if I've raised a question outside his query!

There could easily be something peculiar to our situation that prevents us from taking an interest- related deduction...
I'm definitely looking further into it, though!

Thanks to all

Francesca

[BoogieMan]

Originally Posted by Francesca

My apologies to the Original Poster if I've raised a question outside his query!

There could easily be something peculiar to our situation that prevents us from taking an interest- related deduction...
I'm definitely looking further into it, though!

Thanks to all

Francesca

Don't worry about it. I want. To know as much as I can on this topic.

[Francesca]

Thanks!
And here's an update that once again proves that
I Am As Dumb As A Rock...
My FA called me back and patiently explained that we can't deduct interest on a "second home" RV because...drum roll please...

We already have a declared (stick built) second home!

Francesca

[refncpa]

Originally Posted by Francesca

Hi, Rick

We asked our F.A. about doing this and he says we can't...
I'm not sure why- any tips as to how to write that money off ?

Thanks!

Francesca

I would get another FA. The RV qualifies as a second home and the interest is deductible under that provision of the tax code. There are some limitations. Additionally some of the registration fees and probably the sales tax should also be deductible.

[TXiceman]

I figured out a long time ago...and I am not a financial genius...just a poor old mechanical engineer....You are MUCH better off buying a 3 to 5 year old, gently owned RV and letting someone else take the big depreciation hit.

Ken

[Texas TC]

I have always financed for 20 years on all three of my coaches. And when I traded or sold my previous units, I did write a check for the difference in the loan amount and the value of the coach. My latest coach is financed for 20 years at 4.99% interest. I had to convince the dealership to get me a 20 year loan because most all the loans they are writing now are for 15 years max.

I, too, write off the interest on my federal income taxes.

You really have to want a RV and like the lifestyle. Like pools, boats, and other hobbies, they are not investments. You just have to enjoy them for what they are and know that you are probably never going to make any money on them.

My home is paid for so my financial adviser suggested I finance the coach for the write-off. It has worked out well for me and reduced my tax liability substantially.

[TXiceman]

Originally Posted by Francesca

Thanks!
And here's an update that once again proves that
I Am As Dumb As A Rock...
My FA called me back and patiently explained that we can't deduct interest on a "second home" RV because...drum roll please...

We already have a declared (stick built) second home!

Francesca

Yep, you are only allowed ONE second home.

Ken

[Z714X4]

BoogieMan, are you already considering trading in the QBA?
Man that was quick!! LOL

For reasons I don’t need to go into here, we bought brand new, our choice. We did not go into this thinking we would trade in a few years and if I thought we would I wouldn’t have made this purchase. We’re in it for the long haul and with our plan we will never be upside down.

DW and I put 25% down and financed for 20 years. Our plan is to look at our finances every year and pay at least an extra 10k every year on the principle. My goal is to have it paid off in 5 years inside and 6 years outside. In the meantime we have low monthly payments and I get to write off the interest portion on my taxes… which is NEVER the only reason to take out a loan, only one of many options I will take advantage of.

I like RickO’s statement:
“Everyone has to make their own decision based on their personal finances and on what helps them sleep at night. Many would never consider buying a "toy" like an RV until they can pay cash for it while others (like us) could pay cash but prefer not to. There's just no single "right" way to go about it.”

Our plan is to never be upside down. Should we ever have to sell due to illness or whatever, I know I could unload it quickly. We would loose all the money we already have in it, but my DW or I could get out from under it in no time. That helps us sleep at night.

We bought this knowing we would loose money on it. I think it’s important to understand that concept. This is a depreciating asset and we will loose money on it. In our situation we just happen to think the family fun and the vacations will more than offset the money spent.

That’s our take on it.

[bucks2]

Just to make sure I got this right........

You get an RV loan for 20 years and pay (in round numbers) 5% interest.

This saves your capitol which is losing money in the stock market (unless you're a full time analyst spending 12 hours a day following the stocks)

This allows you to keep you money invested in long term bonds, some paying up to 3%, most less.

This allows you to keep your money in your money market account at less than 1%.

This allows you to keep your CD's paying less than 1%.

The only advantage I see is if this deduction alone allows you to change tax brackets every year, AND you make this calculation in advance for the next 20 years. Anybody here know exactly how much money they will be making in 15 years so that the calculations will be accurate to change your tax bracket each year?

It doesn't pencil out for me. I pay cash.

[jfran304]

Originally Posted by bucks2

Just to make sure I got this right........

You get an RV loan for 20 years and pay (in round numbers) 5% interest.

This saves your capitol which is losing money in the stock market (unless you're a full time analyst spending 12 hours a day following the stocks)

This allows you to keep you money invested in long term bonds, some paying up to 3%, most less.

This allows you to keep your money in your money market account at less than 1%.

This allows you to keep your CD's paying less than 1%.

The only advantage I see is if this deduction alone allows you to change tax brackets every year, AND you make this calculation in advance for the next 20 years. Anybody here know exactly how much money they will be making in 15 years so that the calculations will be accurate to change your tax bracket each year?

It doesn't pencil out for me. I pay cash.

[Oldrtrcr]

One should check with their accountant for tax related questions, not their financial advisor.