Cash vs. Finance (again, I know)

[jk70]

So another cash vs finance question:

My wife and I are in our early 50's and want to purchase a class c MBS. Probably will go no higher than ~$160k.

Our home is paid off, retirement accounts maxed (we don't have 401k access), kids 529 plans healthy, etc. I work but income can be zero one month and 2000 the next so lets assume I don't make anything for this scenario. Wife still works and makes ~$82k per year

We have $100k in cash that I usually put in the market but left it to the side because of market conditions. I have private stock that can get that up to $60k if I wanted.

- I can put that cash in the market and get an RV loan (or split)
- Put that cash in the market and refinance or HELOC the 160k (or split)
- pay cash for the RV that doesn't put me in a dire situation but I don't have that much more cash after that; enough to deal with insurance, maintenance, etc. though (I have plenty in a taxable investment account but I don't count that)

Any thoughts?

Also, in no hurry to get one immediately. Going to Hershey show in September to check things out but whenever something looks good I will jump at it

[carybosse]

What is the interest rate on RV loans today? I suspect it is much higher than it was when I purchased a year ago.

My numbers are smaller than yours, purchased a $27K TT, but similar evaluation. I could have paid cash, and will probably get it paid off in maybe 3 years. I put a good chunk down, note is about $150 per month, I don't really pay attention. I usually pay $400 per month or more, I am several months ahead. (Similar situation on my truck, will probably pay the truck off slightly quicker since I am paying a higher amount each month and have a lower interest rate.)

My income can be $0 or $10K in any month, or anything in between, so I like to keep a nice buffer in the bank, entirely liquid and not at risk of loss. My retirement accounts leave a whole lot to be desired, to be expected when you go back to school at 45 and make a complete change in career path.

Not a decision that anyone can make for you. You have to determine the risks you are willing to take.

One consideration: When I took out loan on TT, if I took out less than $12K, the interest rate was significantly higher. So, I took out $15K loan and just started paying ahead on the loan. That sort of situation on a RV loan may influence your plans as well. It may be different for a MH than a TT, may be different depending on the mortgage company.

[Marine359]

You should seek counsel from a certified financial planner. No member of the forum should give financial advice. Every person’s circumstances are unique, and their considerations and motivations can be wildly different from one member to the next. So, one size does not fit all. Good luck finding the rig you want at the show.

[raboud]

We had more than enough cash to pay for our Class A. After we negotiated the price that I wanted to pay I brought up financing. It turned out that with excellent credit we were able to get a 2.99% mortgage on the RV which for tax purposes is being treated as a second house.

Now, we're in a position that we could pay off the coach at anytime but feel that using the MH as a second home with a mortgage will give us a better tax advantage.

[NLOVNIT]

Originally Posted by Marine359

You should seek counsel from a certified financial planner. No member of the forum should give financial advice. ....

I wholeheartedly agree here. Our members are wonderful with RV advice but I wouldn't trust any of them with financial advice. No hard feeling, folks. This isn't a financial professionals forum.

[chuckftboy]

I have always felt that if I need to finance somthing, then I don't need it but that is just me. Never wanted to pay to use someone elses money and it has worked well for me.

[n2zon]

Originally Posted by NLOVNIT

I wholeheartedly agree here. Our members are wonderful with RV advice but I wouldn't trust any of them with financial advice. No hard feeling, folks. This isn't a financial professionals forum.

I'm with you. Ours said to pay cash at the time, but that answer might not be the same today. The difference between doing it right and doing it wrong might run to a trip or so a year.

[bhammond1980]

Originally Posted by theroc

I don't know, I don't see any reason why other RVers can't give their opinions. That isn't necessarily "financial advice" but just like all other questions people ask on the forum about insurance, ERS, extended service contracts, etc. ...or any other posts seeking advice or information, all we are doing here is offering opinions, thoughts, and experiences. Ultimately, one has to decide what's best for them whether financial or what tires to buy for the motorhome. Some of the "advice" or information given on a forum such as this one is inaccurate, wrong, or just plain misinformation but when it gets down to it, ultimately in the end one has to make a decision on their own with whatever feedback or thoughts from others is given on the forum.

With that said, for me personally, I don't like to finance a depreciating asset and the reason I've always paid cash for the RVs I've purchased and the majority of the cars I've bought too through the decades. Many tell me I'm wrong or disagree. But I understand that the stock market could be (or may not be) at the low end of a cycle. Nobody, not even a financial expert or advisor can accurately predict with complete accuracy where the stock market will be in six months or a year or two years.

So that's my own opinion just like I weigh in ad nauseam on my choice of tires to buy for a motorhome ...it's just my personal opinion and not necessarily "advice" or whether it is right, wrong or just plain misinformation what I or anybody else writes on this forum so weigh what you read pertaining to what others say but in the end, you obviously must make the decision for yourself.

Agree 100%
I'll add, it's easier to buy more than you can afford when you buy it on time.

[202235f]

Originally Posted by raboud

We had more than enough cash to pay for our Class A. After we negotiated the price that I wanted to pay I brought up financing. It turned out that with excellent credit we were able to get a 2.99% mortgage on the RV which for tax purposes is being treated as a second house.

Now, we're in a position that we could pay off the coach at anytime but feel that using the MH as a second home with a mortgage will give us a better tax advantage.

X2!

[Teamfoxy]

Last fall, a good friend passed and left his wife with a 12 year old motorhome that was originally financed for 20 years. She owed about twice what the coach was worth and the payments were $1800/month. Without her husbands pention, her income was about $1100/month.
At some point, we all have to give up RVing. Plan for that day and make sure your exit won't be a disaster like theirs was.

[OldWEB]

Originally Posted by Marine359

You should seek counsel from a certified financial planner. No member of the forum should give financial advice. Every person’s circumstances are unique, and their considerations and motivations can be wildly different from one member to the next. So, one size does not fit all. Good luck finding the rig you want at the show.

Originally Posted by NLOVNIT

I wholeheartedly agree here. Our members are wonderful with RV advice but I wouldn't trust any of them with financial advice. No hard feeling, folks. This isn't a financial professionals forum.

Neither is it a professional electricians forum.
But is it allowable for members to continually offer electrical advice on the 30A or 50A wiring conundrum when it is obvious they know little on it?
If the financial professional was a dedicated RVer, then maybe, but I would listen to all members here on how they handled their money situation and make the necessary 'gamble'. Either way, listening to the "expert" electricians and "expert" financial whizzes in this forum can get some people 'burnt'.

[LarryJB]

Originally Posted by chuckftboy

I have always felt that if I need to finance somthing, then I don't need it but that is just me. Never wanted to pay to use someone elses money and it has worked well for me.

I used to have this attitude, but I have found it is not that simple. It sometimes can make much more sense to finance rather than pay cash for big ticket things. For instance, if the money you would use to purchase that dream MH was making 5% while invested, and you can get 3% financing which also comes with a nice tax deduction, how does it make sense to pay cash? You are shooting yourself in the foot. It is also, not as simple as my example, there are many other factors involved. Just because you can, doesn't mean you should.
I also agree that speaking with a professional advisor is the best way to make the right decision.

[LarryJB]

Originally Posted by Teamfoxy

Last fall, a good friend passed and left his wife with a 12 year old motorhome that was originally financed for 20 years. She owed about twice what the coach was worth and the payments were $1800/month. Without her husbands pention, her income was about $1100/month.
At some point, we all have to give up RVing. Plan for that day and make sure your exit won't be a disaster like theirs was.

This situation is one of those other factors, that should always be considered. If you do get upside down, you should at least have a path to pay off the loan. If not, then it might not be smart to do the deal in the first place. Again, this is where a professional advisor can help.
In my case, I did have enough money to pay cash for our coach, but I still financed about 1/3 of the cost. I felt that I would never get upside down on the loan, but would still get some of the advantages of financing. In looking back, I think I maybe should have financed a little more, but who knows. If I died today, the coach could still be paid off, even if the DW kept the coach.

[jk70]

Originally Posted by OldWEB

Neither is it a professional electricians forum.
But is it allowable for members to continually offer electrical advice on the 30A or 50A wiring conundrum when it is obvious they know little on it?
If the financial professional was a dedicated RVer, then maybe, but I would listen to all members here on how they handled their money situation and make the necessary 'gamble'. Either way, listening to the "expert" electricians and "expert" financial whizzes in this forum can get some people 'burnt'.

I agree with people's take on seeking a financial professional but I'm not worried about that. I actually work in finance but like to get fresh ideas; hence why I asked the question. I make sure I don't always assume I know everything about finance (even after 25 years) so asking what others do/did in this situation makes me consider. Don't worry - the off the wall, crazy, makes no financial sense at all suggestion I wouldn't consider.

So I agree with OldWEB. It's okay to see what others did AND seek a financial professional if needed