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Old 07-18-2014, 09:38 PM   #57
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In my reading of posts on this site, I find most are over the age of 50. With that being said, most purchase an rv like we would a house, using the banks money and making payments for say 20 yrs. And I don't think most of us should be behind the wheel at say 80 yrs. Old. I agree with responsible financial decision making, I don't think an rv is a wise financial investment at all, but yet I have one and wish my loved ones could enjoy it with me.

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Old 07-18-2014, 10:38 PM   #58
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These threads always make me laugh.
Its no wonder the dealers are busting at the seams with new units.
People trading in a couple year old units, eating depreciation, then rolling that lost equity into a new loan??
Im nobody's Dad but man that tells me someone cant do simple math.

The "right" deal is one where you buy new, get a discount, put ZERO down, and your payments match depreciation.
Whether the coach is $10k, $100k, or $1,000,000.
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Old 07-18-2014, 11:31 PM   #59
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I am grossly upside down on my 20 year mortgage for my 2002 Monaco Windsor. I financed 100% at 4% and have less than 10 years before it's paid off.

However, I knew what I was up against PRIOR to making the purchase so I thoroughly did my research of EXACTLY what I wanted to live in for many years to come.

I go to RV shows and have looked at many other coaches but I have always come away with the verification that I made the right choice back in 2003.

I have no desire to make a coach change especially after making all of the personal upgrades that I have done over the years.

There isn't a coach out there that could take its place. There are some that come close but at $350,000 in addition to whatever I happen to be upside down on my current home, it ain't going to happen.

Now if I were to come into $500,000 of unexpected cash I may think about it but it still would take some time and research as to whether it makes sense.

Sometimes old is better then new.

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Old 07-19-2014, 05:57 PM   #60
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Sorry but its hard to take your question seriously. There is no magic. Pony up the cash necessary to get rid of the coach, or keep it until you are no longer underwater, or roll your underwater loan over even further underwater on a bigger coach--those are your choices and any dealer who claims he can somehow make your situation go away should be run away from as fast as your legs can work. As long as you don't stiff the rest of us, no harm no foul. But be under no illusion, someone somewhere will 'pay' whether you die owing or not. I am not without empathy for you as we probably have all been where you are now, at least in theory if not degree. I also empathize with CJBrown about doing things now while you can. But underwater loans, bad mortgages do not 'disappear', they get paid one way or another and often of late by us taxpayers. I have to agree with 89Sandman's gist, if not, his tone.
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Old 07-19-2014, 06:34 PM   #61
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The best advise given here is to double up on your payments, even if it hurts, and enjoy the RV lifestyle in your great coach while getting debt free. It's a very good feeling to be have no debt. Everything is more enjoyable.
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Old 07-20-2014, 06:05 AM   #62
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I guess I should have been a little more specific, I realize that there is not a magic solution to the equity issue. I heave not had a lot of luck with the dealers relatively close to me here, has anyone had a dealer that they have dealt with in a case like this that was helpful and able to make something like we are looking to do happen. I know what we want to do and are able to do financially.

Appreciate all of the input thus far.
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Old 07-20-2014, 06:23 AM   #63
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Basically you need a dealer to manipulate the sales agreement to show more equity. I'm not sure a dealer will stay in business too long using these principals. !! My two cents
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Old 07-20-2014, 07:02 AM   #64
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This is not rocket science! It is strictly by the numbers.

If your current rig has a loan balance of $100,000 BUT the trade in value is only $50,000 then you are upside down by $50,000.

If the new rig you want to purchase is $250,000 most places will only loan you a certain amount of the collateral value which is called LTV. Normally it is in the 70%-80% range.

There are places that will loan you up to 115% LTV such as Bank of the West however you need to purchase GAP insurance which will protect the banks interest if you default.

So if the bank or credit union will only loan you 80% of the $250,000 which is $200,000, then you will have to come up with a down payment of $100,000.

The down payment would be lower ONLY if the bank is willing to do a LTV of something between 80% - 115%. It is purely what the bank or credit union will agree to.

It has nothing to do with the dealer at all. It is entirely up to you and how much cash you have available at the time of purchase.

Does this NOW make sense to you?

Remember that stones do not spew out blood and money does not grow on trees at least where I live.

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Old 07-20-2014, 08:17 AM   #65
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Quote:
Originally Posted by flynnwalter View Post
5string71

Sorry but its hard to take your question seriously. There is no magic. Pony up the cash necessary to get rid of the coach, or keep it until you are no longer underwater, or roll your underwater loan over even further underwater on a bigger coach--those are your choices and any dealer who claims he can somehow make your situation go away should be run away from as fast as your legs can work. As long as you don't stiff the rest of us, no harm no foul. But be under no illusion, someone somewhere will 'pay' whether you die owing or not. I am not without empathy for you as we probably have all been where you are now, at least in theory if not degree. I also empathize with CJBrown about doing things now while you can. But underwater loans, bad mortgages do not 'disappear', they get paid one way or another and often of late by us taxpayers. I have to agree with 89Sandman's gist, if not, his tone.

I agree completely. But also want to add, we take for granted the opportunity we have to live were we can borrow money, we can own things that others might not be able to. I was in a conversation once with a guy who had a bit of an attitude and to me seemed rather arrogant. During a conversation he made the statement,"well, if these people can't afford to pay for their RV up front, they shouldn't be allowed to buy one". At the time he was sitting in my rig, drinking my coffee. A rig that is financed, never missed a payment, and a little under water. And yes, I wish I wasn't a little under water, but man I sure am fortunate ( change that to Blessed) to be able to be where I am.
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Old 07-20-2014, 09:07 AM   #66
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Originally Posted by ChallengerRN
Basically you need a dealer to manipulate the sales agreement to show more equity. I'm not sure a dealer will stay in business too long using these principals. !! My two cents
Here in BC (Canada) automobile Dealers, for every brand, do this all the time. It is done openly and clearly explained on their web-site "build & price" calculators. If you wish to pay cash your price is X....if you wish to finance your price is X + Y.


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Originally Posted by Dr4Film
This is not rocket science! It is strictly by the numbers. If your current rig has a loan balance of $100,000 BUT the trade in value is only $50,000 then you are upside down by $50,000. If the new rig you want to purchase is $250,000 most places will only loan you a certain amount of the collateral value which is called LTV. Normally it is in the 70%-80% range. There are places that will loan you up to 115% LTV such as Bank of the West however you need to purchase GAP insurance which will protect the banks interest if you default. So if the bank or credit union will only loan you 80% of the $250,000 which is $200,000, then you will have to come up with a down payment of $100,000. The down payment would be lower ONLY if the bank is willing to do a LTV of something between 80% - 115%. It is purely what the bank or credit union will agree to.

It has nothing to do with the dealer at all. Dr4Film ----- Richard
In this example....I can't agree. I think it has everything to do with the Dealer and it is not illegal or unethical. It is done All The TIME. Underwater buyers & people who trade just pay the full MSRP ...rather than the cash discounted price of the unit.

If the rig is $300K and a "cash buyer" can purchase for $250k....you will need to purchase for the full $300k. The Dealer can show you a $100K trade value.... (which should equal your loan) & you borrow $200k which would be 80% LTV. At the end of the day...the Dealer ends-up with $250k from the cash buyer and $250k ($200 borrowed + $50 trade) from you. Of course you will now be underwater $100k...PLUS.... The instant 30% ($75K) the new rig will depreciate as soon as your signature drys on the purchase contract....voila you have tripled your debt from $100K to $300K ($200k + $75K + Tax).
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Old 07-20-2014, 09:23 AM   #67
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The best advise given here is to double up on your payments, even if it hurts, and enjoy the RV lifestyle in your great coach while getting debt free. It's a very good feeling to be have no debt. Everything is more enjoyable.

Thank you for reenforcing my post. I bought a new Newmar Canyon Star 3911 in 2013. I hated to buy new, but could not find a used handicapped accessible coach anywhere that met my particular needs. I had to borrow some money to make the deal. First time I've had a loan in over 15 years. I have been paying down the principal by either doubling or tripling each month. Will soon have it paid off. Hardly anything except health issues worse than debt issues. I've personally seen it destroy relationships & families.


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Old 07-20-2014, 09:38 AM   #68
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I agree completely. But also want to add, we take for granted the opportunity we have to live were we can borrow money, we can own things that others might not be able to. I was in a conversation once with a guy who had a bit of an attitude and to me seemed rather arrogant. During a conversation he made the statement,"well, if these people can't afford to pay for their RV up front, they shouldn't be allowed to buy one". At the time he was sitting in my rig, drinking my coffee. A rig that is financed, never missed a payment, and a little under water. And yes, I wish I wasn't a little under water, but man I sure am fortunate ( change that to Blessed) to be able to be where I am.

Yes, it is arrogant. It's all good if you can generate enough extra cash after paying living expenses to buy an RV. Most wage earners are not in a position to do that. So basically what they're saying is if you're not creative or fortunate to have investments or entrepreneurial opportunities you shouldn't be able to own one. I find that extremely smug and arrogant.

It reminds me of a couple of different conversations I've had with business owner's wives. One said, "If something happened to [owner's name] I would just fire everybody and sell the business." Gee, it's the employees that make your company go, if you fired them there wouldn't be anyone to do the work, what value would the company have then? Another one was contemplating the specs for garments that employees would wear and when it was pointed out that one would be more comfortable and they would be more likely to wear them, she said, "I don't care about that, I want our logo to look right." Wow, the arrogance displayed is simply incredible. Fortunately this tends to be an owner spouse and not the owner, the guy that created it usually has more sense.

*********************
Here's what we found out through our local RV dealers...
We went out looking at new motorhomes yesterday, Newmar, Tiffin, Forest River, Winnebago, Fleetwood. We were trying to decide if it makes sense to try to do something now anticipating that we would retire in 8 to 10 years and at least part time live in one. We liked the Newmars the best, nicest finish, had the most features we were looking for, like gas-electric double door fridge (for dry camping off grid) and washer-drier plumb for when we do get to a park. A king bed would be really nice but there aren't very many of them that have them.

One dealer explained the finance picture exactly as Dr4Film has - the banks are only loaning up to a certain value, or LTV percentage, so you have to have cash for the rest. Back when we bought there were more than a dozen finance sources - today there's less than a handful. A LOT of defaults through the past 6 years and many of them simply went out of business. Back then you could finance 100% or more of the full purchase price with a simple signature - not so much today.

There is generally enough difference between dealer cost and msrp for the dealer to make sufficient profit and put you in a coach for sales tax and license. On some models, and ones that have extra incentive, there's more room and they can hide or cover some negative equity there. They said the Georgetown and Bounder were good examples, neither of which really fit what we wanted. So in the end it didn't really make sense to figure out where to come up with a bunch of cash to buy a rig we didn't really want anyway.

So yeah, the banks are really cautious on these loans now, you need to cover your negative equity or most of it, plus a down payment on the new one, or at least tax and license.

Now there's also a difference between wholesale and retail on a used RV. A dealer does't take into consideration any special care, upgrades, or options. So for some selling on their own can definitely close the gap on the negative equity. And the market is coming back - there's a LOT more activity, buyers, people wanting to get in. But it can be difficult to attract a buyer and close the deal. The biggest problem is people don't generally know what they want and that's why they shop the dealers. When they find what they want they buy if they qualify and if they have the $$. A smart buyer or one with less money to put down, may go looking for a used coach and that may just be what you're selling. There's a lot of 'by chance', and by-gosh and by-golly. It could very well be that a consignment might make it easier to find a buyer. Of course then you're paying a commission to someone to find that buyer and close it. And you're still dealing with loans and LTV ratios for most buyers so whatever the banks will loan plus a down is all you can realistically hope to get for your used RV.

In our case we'll make the updates on the things that most interest us, like a modifying the bed platform and putting in a slightly larger mattress, change out the TV's for led lcd's, likely some solar panels - have already changed out all the incandescent lighting to LED. Otherwise the unit looks good and runs good, has very low miles, and does everything we need it to. We'll make extra payments as if we WERE buying a new one, and wait for some windfall earnings for work done. In a short time we'll be in a position to sell or trade and get what we really want for that retirement rig. At least that gives us options and a pathway to our end goal.
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Old 07-20-2014, 10:51 AM   #69
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I have read this thread from the start and I have not responded because there is nothing to do for the OP but pay off the note...

....cause one way or the other you will pay the note no matter how you roll it over or other words hide it......
.....Now having said that I suspect if you default someone else will have to pay but the note carrier is going to get paid..........

I have never been able to borrow my way out of debt, but then I am only 70 years old so I have some more time to practice I guess........may sound harsh but it is reality.............

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Old 07-20-2014, 11:23 AM   #70
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You, as it seems a few here, seem to miss the point. It's not about 'borrowing your way out of debt', it's about paying your debt off on something you want to own. If you're making a payment anyway, why not make it on something you want instead of something you're stuck with? You either make a bigger payment on the current one, or a bigger payment on the new one.

At least everyone agrees you have to pay off the depreciation either way. If I understand correctly, many don't like the idea of rolling depreciation or negative equity into the next one and that is sound logic. But if you have the cash flow and you want to do it why not? At the end of the payment term it all gets paid anyway.

The term 'hiding' or 'covering' the negative equity is simply way to push the debt forward. It's not about doing away with it. I don't think anyone is advocating not paying for it. I also think people anticipate a change in their financial situation so it makes more sense for them. If you have retiring debt or increasing income or cash flow, it can make sense for some to do this and get what they want now.

It's like when you hold stock and it goes up or down, the gain or loss is called a 'paper' gain or loss. It's only an actual gain or loss if you sell. I hear of people all excited or all depressed depending on the advance or decline of their investments. What difference does it make until you are ready to cash out?

Depreciation is a loss of value due to market value - which is variable. The amount of said depreciation is only set when a transaction takes place.

I think the other thing a fiscal conservative is concerned with is financing a depreciating asset. You lose value as you make the payment - it's like throwing money away. I don't think anyone is confused about that either. It's a lifestyle choice. If you earn the money you get to do with it what you wish. I don't think it's reasonable for someone else to come along and say you shouldn't do that. If you want to buy a lifestyle choice, well that IS your choice.

How many times have you heard that it doesn't make sense to own an RV at all? Why not just rent one when you want to use it? Of course it depends on your level of involvement, commitment - it's a lifestyle choice.
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