Community Forums

Dickens · 07-27-2014, 08:40 AM

We're looking at a new DP and have been offered 1.99% interest from one dealer. That seems too good to be true. Another dealer has said that really isn't a good deal and has offered us 4%. He indicated that the 1.99% isn't what it appears to be. Both are long term loans (20 years). The 1.99% dealer said we would have good equity quickly. The other indicated it isn't all that it appears to be. It would seem that the lower interest would be better because more of the payment goes toward principal. Can anyone give us some unbiased information on the low interest rate on a motor home loan?

Tha_Rooster · 07-27-2014, 09:11 AM

I'd guess the 1.99 may have a interest buy down attached.

sailwing2003 · 07-27-2014, 09:18 AM

A buy down as suggested, or funny trade numbers differences.

In anything we sign, the large print seems to give, but the small print sometime on the back takes it all away.

Best would be to look at the two choices, with what you are borrowing, and the total of the payments you will make.

Also, down load the phone app, AppBox. It has a Loan app. and it allows you to insert, into two side by side columns, each loan. So, amount, term, annual interest rate, start date. You will then see, monthly payment, monthly ave. interest, total interest, and total you will pay. With the app, you can figure you costs, from your side of the sales desk, and you can walk out the door. Most loans are simply interest, where the amortization table will show you the breakdown each month. The loan app, has a % amortization table as well.

I just in less than a minute did, $150K, 10 years, the two % rates, and see, you pay $14,819.34, or $32,241.25 in interest. Change to 15 years, and you pay, either $22,506.86 or $49,715.74. Easy.

Good luck.

Gary RVRoamer · 07-27-2014, 12:55 PM

A 1.99% simple interest rate on a large, 20 year loan IS too good to be true, so you need to find out what the rest of the deal is. Might be a first year only rate or maybe they have rolled a buy-down into the purchase price (which means you finance that too).

Currently you should expect to pay at least 4-5% on a 20 year loan, depending on the amount and your credit score. Smaller loans may run 6-9%.

By the way, a 20 year loan is an expensive choice in the long term. You pay a lot more interest than with a 15 year loan and you are "under water" for just about the entire loan period, so you can't sell/trade without adding cash to the deal and you are at risk for the difference between ACV and the loan balance if the RV is stolen or destroyed. You may be required to buy extra insurance to cover that gap.