First Time Buyer - Should I Finance?

[SarahW]

Originally Posted by Shaky

... Do what works for you. It isn't the best of tax write offs and will require monetary transfusions no matter how new it is. If you are young and are claiming it as a second home maybe financing makes sense for you. Your financial advisor would be the one to discuss that with. Whatever you decide to do enjoy your new wheels and have a great life.

[CaptainSkip]

We paid cash for ours. Now what we're doing is paying ourselves for the "loan" to ourselves. We went to a bank to check out a HELOC loan and after crunching all the numbers we decided that rather pay the bank we'd pay ourselves. We found out what the monthly payment would be for the HELOC for the amount of the motorhome and that's what we put in the savings account every month. My wife has the discipline to do it so I know we will save the money back. In the end we've got the motorhome, our money and the bank didn't make a big chunk of change off of us using their money.

[Car54]

How about this general statement. I think everyone will agree to this.

If you don't have the financial "ability" to pay cash for a motorhome, probably best not to get one.

[vapor3000]

Originally Posted by CaptainSkip

We paid cash for ours. Now what we're doing is paying ourselves for the "loan" to ourselves. We went to a bank to check out a HELOC loan and after crunching all the numbers we decided that rather pay the bank we'd pay ourselves. We found out what the monthly payment would be for the HELOC for the amount of the motorhome and that's what we put in the savings account every month. My wife has the discipline to do it so I know we will save the money back. In the end we've got the motorhome, our money and the bank didn't make a big chunk of change off of us using their money.

CaptainSkip and company are smart folks. Their plan is brilliant!!!!

[MrBelvedere]

UPDATE: I've just returned from picking up my new Newmar Ventana, and wanted to share the "buying" experience. My plan was to pay cash, however I did have a LofC from my local bank with a 3.77% that I could use if needed. After much discussion, I allowed the gentleman to "search" rates from banks that this particular dealership utilizes. Within 10 minutes, I was presented with 3 offers including one from US Bank with a rate of 3.09%. So much for local bank best deal!.

In the end, I decided to finance half with US Bank and write a check for the difference. I was also allowed to put a significant amount of the charges on my AMEX Rewards card which will earn points toward "all the crap" you need to buy for the new rig.

[Coma]

Well played, sir.

[oakcreekeric]

Originally Posted by Coma

Well played, sir.

Congratulations... I'm glad you found a formula that works best for you !!

Now go out there an enjoy your new rig (by the way... there's a saying here on IRV2... if there aren't any pictures, it never happened... )

[vapor3000]

Congrat's!!!

[Mr_D]

Originally Posted by SarahW

To keep from having an upside down loan against it?

Or, do like we did and put an extra $50,000 down.

[Bucky1320]

The method you used sounds reasonable to me! Usually if they say they can do better IF this or IF that....it tells me they have wiggle room I haven't eaten up yet. Time to put the gloves back on.

[BeachDude]

Originally Posted by MrBelvedere

..... I was also allowed to put a significant amount of the charges on my AMEX Rewards card which will earn points toward "all the crap" you need to buy for the new rig.

WoooHooo, trip to Hawaii, Europe, Bahamas!!

I have purchased all of my RVs using a credit card with rewards, and end up visiting places, "for free", where I can't even dream of taking the RV!

Ironic?

[Vacay Wheels]

Originally Posted by MrBelvedere

In the end, I decided to finance half with US Bank and write a check for the difference.

I agree with this approach, too. Putting half down should keep you above water the whole time, which removes a big emotional burden if you need to sell unexpectedly.

Personally, I am a big fan of financing motor homes, especially if you still have significant income coming in. The way I see it, the tax code is PAYING us to finance, by allowing a deduction for the interest.

Here's an example. Let's say we finance $100,000 over 10 years at 3.09%. We pay $16k interest over the life of the loan. Assume a 25% marginal tax rate this reduces our taxes by $4k, for a net outflow of $12k over the course of the loan. That's equivalent to a 2.3% loan. So by pledging our coach as collateral, we can get money pretty cheaply.

What could we do with that money? A moderate/low-risk whole-market bond fund (e.g. Vanguard VBMFX) returned 4.29% annually over the last 10 years. We can take a bit more risk, such as a Target 2040 fund, which comes in close to 7% annually, even through the 2008 recession.

Obviously there is some risk to this approach, which not everyone is comfortable with. For those who are, the access to cheap money is pretty handy.

[MJoyce]

I'm impressed with the smart people on this thread that know personal finance. Having an RV requires a good handle on your money. No one has mentioned the words "risk tolerance", but many have alluded to it. Different levels of risk tolerance will produce different behaviors. Everyone can be right. I think the compromise solution of half cash/half loan was a great solution for you.

[Car54]

We were able to get Amazon and Sears gift cards with our rewards which both sells a ton of RV/camping.