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Old 01-26-2014, 10:29 AM   #15
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You really have to be in the mind set to loose $40,000 on the rig. In 6 years your rig will be 20 years old and you will still owe 70 grand plus or minus. I am just barely keeping up with the value of my rig after 6 years of over payments and realistically would have to pony about $20,000 to sell it. And I put 25% down. BUT, We travel in comfort in the US with a bathroom. Whenever we get on a plane to go overseas, I thank heaven that we are able to travel by motor coach the rest of the year. Because that air travel is barbaric. If you got it spend it.
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Old 01-26-2014, 10:55 AM   #16
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I personally set up loans for hundreds of high end coaches. Mostly new travel supremes and country coaches, but also many many high end used DP's. Whenever you are considering a 15 or 20 yr loan you are going to be upside down. A 20% downpayment is eaten up almost immediately on a new coach. I would guess 10% depreciation on a used coach the first year. Its just the price of admission. On average you won't pull even until the last 5 years or so. If you can at all afford it I would always recommend a seven year term. When purchasing our new coach a few years ago I ran the #s every which way and 7 years allowed us to pay it off quickly and still have a mh worth enough at the end that I was able to pay cash for the next one. The major problem you will run into with taking a 15 year term on an older coach is that when you go to sell it down the road there will be very limited ways for a potential buyer to finance it. You may severely limit the number of potential buyers down the road. Be prepared to come up with cash at sale time.
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Old 01-26-2014, 10:57 AM   #17
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Hi Bluegrassrv and everyone else,

I have been working with a financial adviser for many years and this is what I have done and how I feel about this. I would love to hear everyone's opinion on this.

Right now the interest rates are very low and the stock market is doing very well. Last summer we purchased our coach for $199k with a 2.49% interest. We put down the minimum, I think 20% and financed for 20 years. I will be doing the same for our new 2014 Cherokee when it comes in. I will be paying 1.99% for a 5 year loan on the car.

First off, we have enough money to be able to pay cash for all of these big purchases and it may in fact feel good to be debt free I do not feel it is the best financial strategy. We can always pay more per month that goes directly to principle to shorten the term if we like. However, if we do not feel like it we have the flexibility to pay less per month.

As long as my investments are doing better than the interest rates I am paying I am making money on the deal. Who cares if the coach is upside down on the loan. You are going to lose money from depreciation either way, pay outright or finance. This way I get to make some money with the borrowed money sitting with my adviser.

For me this has and is working very well and in the end I come out way ahead of paying cash. With the car and motorhome alike, they both are depreciating assets that with the interest rates as they are now I feel I would be foolish paying for them outright even though I could with little difficulty.

Just my 2 cents,

Stuart
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Old 01-26-2014, 01:07 PM   #18
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We'll I've been looking for six months or so and I'm considering a 2004 Country Coach Intrigue Ovation 505. At about $90000 at 4% for 15years, does anyone have a guess on how many years it will take not to be more than a couple G's upside down..
Your question is three parts. How rapid is the depreciation, how much down payment will you make and how much principle will you pay down each year.

All this assumes your down payment creates some equity at purchase. Do not count the Sales Tax and Registration fees paid as part of the downpayment.

Our rig averaged about $8,000 in depreciation over 12 years and we bought it at 7 years of age. (Yes, we have a non-slide but it was purchased during the slide-out era and had some discount for that status.)

NADA provides current market values and MSRP before options in its RV section. The data is not market transaction driven and so may be inaccurate at any given moment. But many buyers and lenders will use the NADA info to evaluate your rig when you are trying to sell it.

You should be able to see a depreciation trend in their statistics. The other info you already have if you create an amortization table for your loan facts.
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Old 01-26-2014, 01:40 PM   #19
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The American Myth

If you can't pay for something, don't buy it. That is the simplest advice you will ever get. Now there will be lots of others out there that will come up with all kinds of logic of how this could work, and how that could work, and how they need the interest to take off their taxes, and the list goes on and on. The fact is, they are all trying to sell you on the idea that you need this. Really, you deserve this! Yes, you can afford this! In fact, you have earned this! ALL A MYTH!

Fact is, no one needs a motorhome. A motorhome is a pure luxury item, for those of us who have the money to pay for it. And the worst part of it is, it is the worst investment you will ever make. An any one of a million idiots on the road can get you in an accident, and it is all gone in an instant. But all those other people telling you, you can do this, well they just want in your pocket.

Forget all the talk of "freedom of the road", "go where ever I want", "make some great memories", that is just talk to justify a poor investment, that you are definitely going to lose money on.

Bottom line, if you can't pay for it now, go ahead and finance it. You will end up paying for it, and a lot more in interest and worry, and jeopardizing you financial security if the economy falls apart.

So now you are asking who is this idiot on a rant. Yes I own a motorhome that I paid cash for. Cash that I earned by working with my hands, and not my head or my financial advisor, or some inheritance. But I knew going in, it was a bad investment, that I was just throwing my money away on something that I hoped I might have some fun with.

So buy it, if you can afford to throw your money away.
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Old 01-26-2014, 02:39 PM   #20
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If you can't pay for something, don't buy it. That is the simplest advice you will ever get. Now there will be lots of others out there that will come up with all kinds of logic of how this could work, and how that could work, and how they need the interest to take off their taxes, and the list goes on and on. The fact is, they are all trying to sell you on the idea that you need this. Really, you deserve this! Yes, you can afford this! In fact, you have earned this! ALL A MYTH!

Fact is, no one needs a motorhome. A motorhome is a pure luxury item, for those of us who have the money to pay for it. And the worst part of it is, it is the worst investment you will ever make. An any one of a million idiots on the road can get you in an accident, and it is all gone in an instant. But all those other people telling you, you can do this, well they just want in your pocket.

Forget all the talk of "freedom of the road", "go where ever I want", "make some great memories", that is just talk to justify a poor investment, that you are definitely going to lose money on.

Bottom line, if you can't pay for it now, go ahead and finance it. You will end up paying for it, and a lot more in interest and worry, and jeopardizing you financial security if the economy falls apart.

So now you are asking who is this idiot on a rant. Yes I own a motorhome that I paid cash for. Cash that I earned by working with my hands, and not my head or my financial advisor, or some inheritance. But I knew going in, it was a bad investment, that I was just throwing my money away on something that I hoped I might have some fun with.

So buy it, if you can afford to throw your money away.
This may in fact be how owning a motor home works for you and also for the majority of rv owners, but not all. We each have our own circumstances. For us our job moves apprx every 3 months & the move is usually 150-2K miles apart or more, but 500 miles is the average over the past 7 years. So our alternative is to rent an apartment, talk about throwing my money away. So you have to ask yourself, how am I going to use with this motor home? The depreciation on the rv is definitely a concern, but one that really can't be avoided. We are not all in a position that we can put up 100% of the cost of a new or used motor home. Depreciation & interest is the cost of our admission into this lifestyle & a cost we are able & willing to take. For the first 3 years we moved in & out of apartments, moving expenses, & buying new furniture every few months was a real pain and a big loss of money. At least with the motor home we have all our own furniture which goes with us, we don't spend countless hours looking for apartments & putting up deposits for rent & utilities. I can't say we have actually saved money by buying a motor home, but we certainly have not lost any more and our life is much easier when we move.
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Old 01-26-2014, 02:58 PM   #21
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Let's not forget that the interest paid on a motorhome loan is in most case tax deductible as either a primary or second home. As such, if I have enough in my coffers to pay for a motorhome with cash or keep my money in an investment that pays more than the interest I am paying on the loan... And... get the added benefit of deducting the interest on my taxes, why would I give up my liquid or semi-liquid position to own a depreciating asset free and clear? That would be a lose-lose just to have the peace of mind knowing I can give my motorhome away when done wanting it for a new one...
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Old 01-26-2014, 05:48 PM   #22
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Let's not forget that the interest paid on a motorhome loan is in most case tax deductible as either a primary or second home. As such, if I have enough in my coffers to pay for a motorhome with cash or keep my money in an investment that pays more than the interest I am paying on the loan... And... get the added benefit of deducting the interest on my taxes, why would I give up my liquid or semi-liquid position to own a depreciating asset free and clear? That would be a lose-lose just to have the peace of mind knowing I can give my motorhome away when done wanting it for a new one...
This is the voice of reason.
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Old 01-26-2014, 06:13 PM   #23
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It is only reasonable to finance anything is if there is a net gain overall. Just because something is tax deductable does not mean it does not cost anything.
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Old 01-26-2014, 06:23 PM   #24
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This is the voice of reason.
The signs of prosperity and leveraging I see are coming back. Using your investment gains over other leveraged debt makes sense on paper. But then, your investments are on paper....aren't they? There's no money coming into the coffer until you sell them. If you sell them at a loss your leveraged debt remains. All of a sudden the thought of having a tax right off on your leveraged debt means nothing to you. Now you have set yourself up to lose both homes if you used a home equity loan. I was hoping that we had learned a valuable lesson recently. It appears we may be setting up a house of cards again. What ever and however you finance anything.....have an escape route.
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Old 01-26-2014, 07:05 PM   #25
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Making payments on a motor home you use as your primary residence kind of makes sense since you are not paying rent or a house mortgage but to finance a recreational
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Old 01-26-2014, 07:10 PM   #26
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[QUOTE="Yellowpointe;1900850"]Making payments on a motor home you use as your primary residence kind of makes sense since you are not paying rent or a house mortgage but to finance a recreational vehicle for 15 or 20 years is something I can't quite understand. I think after making payments for a couple of years I would start to really resent the thing, maybe I am old fashioned but if I can't afford it I ain't having it.
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Old 01-26-2014, 09:36 PM   #27
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BluegrassRV - To answer your original question - Yes 15 year finance is likely too long a chew if you are fairly sure you will trade in five years. The CC Intrigue Ovation from 2004 might just be one of the best motorhomes ever made. If this 10 year old coach is something that is in very good condition and you really like I would suggest extending your 5 year keeping a bit. If you cannot do that maybe you should keep looking at coaches till you find one you want to keep 7+ years.

Some of our close RV friends just bought a brand new 38' 4 slide coach. It is a Tiffin Red. It is not nearly as nice inside as our 12 year old Country Coach. I'm keeping ours.
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Old 01-27-2014, 05:57 PM   #28
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Foreverfree, did you finance thru a dealer? We bought our MH from a private seller, put 1/3 down and borrowed the rest. My credit union wouldn't give me a regular RV loan because it was too old (2004). Their lending rules were clearly stated and didn't just apply to me. I have been a member of this credit union for almost 40 years. I didn't think I could get a better deal from a bank. Dealers can often get loans that consumers can't get on their own.
Yes, we did have to go through a dealer to get the loan. When we first sat down with the finance person they offered a much higher interest rate with the 25% down. We said no, the interest must be less or we would need to put down less. We always planned on putting that down but used it to negotiate almost 1.5% lower interest which will add up in the long term.
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