Getting out from under an underwater RV loan

[Tom Boles]

The original purchase is way under the bridge and now we are thinking of moving to a class A from our very nice travel trailer.

However, the Loan (even after two years of larger than required payments) is way underwater. RV dealers we've spoken with say they can handle 10-12 grand in the new loan, but we are closer to 18k.

Is there a way to deal with this? Pay more and wait until we're closer to even? Take out a personal loan and pay off the trailer and sell it? Walk away form the loan & trailer and take the credit hit?

Thanks!

[bamaboy473]

There is no good option, as you know.

Stick with what you have (and contracted for) and make it a five year plan to be out of it. You got great financing up front, and those deals only work out when you go term on the loan.

Foreclosing the loan is a financial option, of course, but it is probably a personal honor question more than anything. You would be screwing somebody for personal benefit. Can you live with that for the rest of time?

Try to trade into something that a dealer can roll your negative equity into the new purchase. It might cost you some money to even things out, and you might have to settle for the dog that the dealer offers, so there's that.

The good news is that Arizona and Texas have dealers that can make things happen. Start talking to people.

[rk911]

when you find yourself in the hole...stop digging. accelerate your payments and when your current loan is paid off start saving for the next RV. pay 100% cash or at least enough with a short term loan to always be right side up.

[deltam]

Originally Posted by Tom Boles

The original purchase is way under the bridge and now we are thinking of moving to a class A from our very nice travel trailer.

However, the Loan (even after two years of larger than required payments) is way underwater. RV dealers we've spoken with say they can handle 10-12 grand in the new loan, but we are closer to 18k.

Is there a way to deal with this? Pay more and wait until we're closer to even? Take out a personal loan and pay off the trailer and sell it? Walk away form the loan & trailer and take the credit hit?

Thanks!

Worst choice would be walk away and take a credit hit. The bank could still hold you liable unless you are dirt poor. Second worst would be to use credit cards for a cash advance.

Only reasonable choice would be to use your current RV and be happy.

Most times if you need that much money the lender will want some type of collateral. You might could get a home equity. At least the interest would be deductible if you itemize.

[rk911]

Originally Posted by deltam

Worst choice would be walk away and take a credit hit. The bank could still hold you liable unless you are dirt poor. Second worst would be to use credit cards for a cash advance.

Only reasonable choice would be to use your current RV and be happy.

Most times if you need that much money the lender will want some type of collateral. You might could get a home equity. At least the interest would be deductible if you itemize.

deltam had it right...Only reasonable choice would be to use your current RV and be happy.

a HEL or HELOC is a very bad idea in this case. the deductibility of a HEL or HELOC does not outweigh the risk. consider....something causes disruption to your income stream would put your home at risk. or an unexpected life issue rears its ugly head. have you saved for college?

pay off the loan as quickly as possible (and begin to work in becoming 100% debt free while you're at it). build cash, start investing, build wealth. or go for instant gratification, stay broke and keep wondering what's wrong.

[winniman]

I know this is not what you want to hear, but selling at a loss is your only option if you want the new rv. Just be aware that you are getting into the same situation with the new loan. Rvs are a major depreciating investment. Unless you pay cash for a second hand rv, be prepared to get hit again. Sorry

[TonyMac]

So, what went wrong here. You bought something and were upside down, with no way out. And you want to do it again?


So what's wrong with the trailer. If you cannot afford the trailer, as in a sizable down and big payments to stay above water, then why would you look at something with traditionally a bigger depreciation and much higher maintenance vulnerabilities?


Walk away and you'll take a credit hit, more like a credit knockout punch. Then the bank will dump the trailer at a severe loss to get it sold in the current tax year so they can take the loss in the current tax year. Then the bank hit you with a judgement on the remainder and the costs of getting it repo'd and sold. This judgement will likely have interest. Say goodbye to your retirement.


Buying the trailer the way you did, underwater, was a bad idea, otherwise you'd not be in this situation. I would't compound it with a worse idea.

[Mr_D]

When we bought the present rig we were upside down by $93,000 on the old rig. I wrote out a check for the amount owed and got it to the bank. Then I wrote another check for $50,000 for a down payment and state use tax. Even then the new bank didn't like financing the rig due to our ages, which is illegal.

[Oldelevatorman]

Like others have said, there's no good option. We had a similar story. After owning our Motorhome for 11 years, they gave us 65k, but 11 years into a 20 year loan, we still owed 50 k! Took the money out of our retirement fund and moved into a trailer, then a bigger one and finally our current fifth wheel full time. We're not looking back but maybe once in awhile! Good luck!

[Arizona]

I would keep the unit you have and enjoy it. RV’s depreciate faster than cars and don’t stop until they hit 0.

[Whirrlly]

we've taken a few hits, we just wrote a check for the difference and paid up but we were willing to do it cause RV'ing is what we DO spend our money on and love it, so it was our choice to do it that way. Not one regret. But we have cash on hand that was not earmarked for anything else.

You said take out a personal loan to pay off difference? That we probably wouldn't do.

either way you swing it you will be owing money. It stinks but it happens and you just gotta decide how you want to roll. Money is money. Many of us can take a hit and move forward with our new rvs and be happy as a clam, some won't give up a dime to get a new rv if it means spending cash like that...…...so it really boils down to how you want to do your finances, and how bad you want that new rv and all that jazz. Just personal choice on this one for you. best of luck

[Tha_Rooster]

All of these post about being upside down loosing tons of money. One thing financially doesn’t make since is people paying 30 years for there S&B and it’s gone putting it into a RV.

[ransil]

Maybe they are screwing you on the trade in, sell it yourself.

[Murf2]

I would at least, check into this. Maybe list your trailer for sale & see what market value really is?

Good luck!
Murf

Originally Posted by ransil

Maybe they are screwing you on the trade in, sell it yourself.