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Old 12-13-2014, 05:56 PM   #1
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May be a dumb question but...

just curious as to any guesses as to how many new, or almost new, motor homes are financed versus paid with cash. And if one were crazy enough to contemplate a financed purchase, any guesses as to the monthly payment a $150K coach would require?
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Old 12-13-2014, 06:20 PM   #2
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According to Essex Credit's calculator... new $150k motor home financed at 4.12% for 20 years results in a monthly payment of $918.48. I would suspect the vast majority (90% ) of new MH purchases are financed to one degree or another.

You can plug in the numbers and terms you are interested in here... https://www.essexcredit.com/home/calculator/
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Old 12-13-2014, 06:27 PM   #3
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And a lot of motorhomes cost much more than $150k. Mid-range diesel pushers are running upwards from $240k (MSRP) and high end models start around $500k.
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Old 12-13-2014, 10:27 PM   #4
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I think a large percentage of new / newer RV are financed, one of the reasons for buying new is the financing availably.
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Old 12-13-2014, 11:30 PM   #5
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There are too many variables other than the MH price to determine what your payment would be. Is the msrp 150k or is that the purchase price, what is your tax and license, ours is 10%(combined) of the salesprice. then how much do you want to put down, how many years you want to finance it and what is your interest rate. It is easy to figure out, just go to a payment calculator(you can find it on the RV Trader or RVT) and plug in all your variables to figure it out. So for example if you want to keep your monthly payment at a certain rate, just keep increasing the downpayment until you get there and you will know exactly what you need to do for the expected outcome. You can very easily get your payment down below $500 per month if you have a decent down payment.
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Old 12-14-2014, 10:03 AM   #6
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We paid cash for our coach. When it is time to upgrade, I will most likely finance. I have averaged 14% annual return on my portfolio. 4% interest to keep the cash on hand seems like a small price to pay. We full time and I use the MH for business. I will put plenty of money down so we are never upside down.
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Old 12-14-2014, 07:22 PM   #7
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We had some savings for "Our Dream" of Full-timing. We also had a truck and a 5th wheel that were paid for. After doing some soul searching, we decided that we really wanted a motor home, so we took the time before we retired to cleanup, fix-up, wax-up our truck and 5th wheel and put them on a lot in our small town and sold them at a tidy profit.

We then immersed ourselves into studying motorhomes on this and one other forum. After about a year, and also about a year before we retired, I found the rig we had "funneled" our search down to. The first one, I found was sold while I was waiting on our Credit Union to figure out whether or not we could get the loan. FRUSTRATION! We had a sterling credit rating and I couldn't understand why the posturing. I then had a major discussion with our Loan Officer and he decided to pre-approve us for an amount way large enough for what we needed. (I later found out that my first request had gotten in the way of a little trip he was taking.)

We next found an almost identical rig, at a better price. Unfortunately it was 700 miles away in Houston at PPL.

We ended up buying a rig that was 3 years old, a GREAT brand, and at a good price.

We ended up financing a portion of the price after we paid down the saving that we had ear marked for "Our Dream".

We ended up paying about $ 500/month on our rig for 10 years. Has worked out great!
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Old 12-14-2014, 07:39 PM   #8
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Your question was not dumb, but your statement was pretty naive: "And if one were crazy enough to contemplate a financed purchase,"

A local Newmar dealer represented that the average down payment was $50,000.
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Old 12-14-2014, 08:01 PM   #9
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Hello Jake21,
Regarding "We paid cash for our coach. When it is time to upgrade, I will most likely finance. I have averaged 14% annual return on my portfolio. 4% interest to keep the cash on hand seems like a small price to pay. We full time and I use the MH for business. I will put plenty of money down so we are never upside down."

I'm not following your post at all:

First, buying a motorhome is not an investment, its an entertainment/personal cost.

Second, If you are buying new, your whole analysis is dead = depreciation. You are standing on your head with respect to what you can recover on the coach vs what you agreed to pay for it, the moment you walk out the dealer's door.

Third, if you can make 10% difference guaranteed, you ruined your down payment, and plenty of cash down payment upside down financial planning. It is within your best interest to put the smallest amount down as you can. And why you ever paid cash for your first coach is again inconsistent financial planning.

Fourth, the words upside down are used in an investment like a home where the market values are normally higher than the loans, except, with some exceptions, when you speculate in an up market and it takes a dive. The motorhome is always diving downward until it reaches the near bottom and then its value is based on something only the narrow special use market buyer understands.
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Old 12-15-2014, 12:54 AM   #10
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Quote:
Originally Posted by RodgerS View Post
Hello Jake21,
Regarding "We paid cash for our coach. When it is time to upgrade, I will most likely finance. I have averaged 14% annual return on my portfolio. 4% interest to keep the cash on hand seems like a small price to pay. We full time and I use the MH for business. I will put plenty of money down so we are never upside down."

I'm not following your post at all:

First, buying a motorhome is not an investment, its an entertainment/personal cost.

Second, If you are buying new, your whole analysis is dead = depreciation. You are standing on your head with respect to what you can recover on the coach vs what you agreed to pay for it, the moment you walk out the dealer's door.

Third, if you can make 10% difference guaranteed, you ruined your down payment, and plenty of cash down payment upside down financial planning. It is within your best interest to put the smallest amount down as you can. And why you ever paid cash for your first coach is again inconsistent financial planning.

Fourth, the words upside down are used in an investment like a home where the market values are normally higher than the loans, except, with some exceptions, when you speculate in an up market and it takes a dive. The motorhome is always diving downward until it reaches the near bottom and then its value is based on something only the narrow special use market buyer understands.
RodgerS, you are a little off base here and how people invest/spend their money is their own business and not it's not crazy to finance a MH as you have eluded to in this post and others. Everyone who buys a MH(that has done their research) knows that a MH is not a financial investment that will make them money. But it is an investment in your chosen lifestyle, and the one who made the money gets to make the decision on how to spend/invest it. With that when people refer to being upside down in their MH they are refering to the fact that they owe more money on it than it is worth and in the event they sell it they will have to make up the difference. So it is used in used as a term in the MH industry and everyone buying one knows they depriciate.

I think what he is saying is that if he is paying 4% interest on his loan, and his other investments are yielding 14%, then it makes sense to put less down on the MH and keep the money in his other investments. That's what my financial planner told me to do, and it make perfect sense. His other investments are most likely covering his depreciation, just with the money he did not use as a downpayment. I never like to be "upside down" in a loan so I put alot down on mine, but kept the balance earning me in other areas even though I could have paid cash for any of the MH's I was interested in buying.
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Old 12-15-2014, 02:42 PM   #11
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It is the smartest thing in the world if you can borrow money at 4% and then earn 14% on i. What the poster was saying was that rather than use money on which he could earn 14% he would prefer to borrow at 4%. It is not a question of living beyond one's means, but how most intelligently to finance one's living.
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Old 12-16-2014, 09:09 AM   #12
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"First, buying a motorhome is not an investment, its an entertainment/personal cost."

Actually neither. It is a business cost. I am in outside sales and decided over two years ago to take my business on the road full time. I calculated that the cost of depreciation and road expenses was less that the way I was previously traveling and now I am working on the road all the time. Example: before we went full time, my airfare alone was 15-20k per year. Add in hotel, rental car and meals. It was a big number. Then throwing money into a home on top of that. We decided to give RVing a two year trial.



"Second, If you are buying new, your whole analysis is dead = depreciation. You are standing on your head with respect to what you can recover on the coach vs what you agreed to pay for it, the moment you walk out the dealer's door. "

I was talking used. I do not think I will ever buy a new motorhome, but I might if the deal is right.


"Third, if you can make 10% difference guaranteed, you ruined your down payment, and plenty of cash down payment upside down financial planning. It is within your best interest to put the smallest amount down as you can. And why you ever paid cash for your first coach is again inconsistent financial planning."

This was our very first motorhome and I did not know if the DW was going to like it. We had just sold our home and I didn't want to bother with a loan if it was only a two year run. I think I will always put at least 20% or so down just to be more in the black when we sell it. I am not worried about 10-14% on an additional 10-20k compared to not having to bring money to the table when it is time to sell, but that could always happen anyway. No one knows the future.

"Fourth, the words upside down are used in an investment like a home where the market values are normally higher than the loans, except, with some exceptions, when you speculate in an up market and it takes a dive. The motorhome is always diving downward until it reaches the near bottom and then its value is based on something only the narrow special use market buyer understands."

That is correct, but as stated in this thread, they are also used in the MHoming community when the value of your MH is less than what you owe on it.

After over two years of full timing, this lifestyle has helped increase my over all income and significantly grow my business due to being on the road all the time. The money I have spent in expenses, including the depreciation of the MH is less than I was spending before in business expenses and I get to sleep in my own bed every night and be with my wife all the time. It has worked out and we are now considering an upgrade. This is an interesting thread and always appreciate other points of view that help me base my future decisions.

J
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Old 12-16-2014, 09:14 AM   #13
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Since a motor home qualifies to be financed as a house, it makes sense to take advantage of a long term loan at low home mortgage rates. That being said, one should make sure there are no early pay off penalties.
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Old 12-16-2014, 11:01 AM   #14
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As I understand home financing, those loans are non-recourse loans. Meaning if the borrower defaults the lender can seize the home, but can not come after the borrower for any balance over what the home may be worth.

If a motor home is financed and the borrower, for whatever reason, goes into default, and because motor homes depreciate so much, is the borrower on the hook for the deficiency?

With respect to my "crazy to finance" remark, it was merely reflecting a feeling that one of the joys of being on the road is the total freedom from life's complications. Including financial matters. Regardless of one's financial health, isn't their a certain peace which comes from being totally debt free, regardless of how much money may be sitting somewhere. And most of us are at an age where we are not worrying about nest eggs for college, retirement or new career startups. If we don't have it now, we probably aren't getting it!
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