WE're buying a used motorhome and need to finance $50k. Should we get an RV loan at a rate of appox. 8% for 15 years? Or take a chance that our equity line rate will stay under that and put it on there, currently at a rate of 2.2%? Is this a no-brainer? Or should I be considering the RV loan? Any feedback would be appreciated!
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You should probably save your money until you can afford it and buy a nice motorhome for about $20k. Your $50k will be $20k in about 3 trips if you are at all typical.
delzy, i appreciate your opinion, but we are very seasoned rv'ers and currently have a 1986 motorhome that we have owned for 9 years after purchasing it from my parents who owned it since it was new. we use our existing motorhome a minimum of 1-2 times a month - we definitely get our use out of it! i'm simply asking which way it would be best to finance, not whether or not to buy it.
socalgirl1 said:delzy, i appreciate your opinion, but we are very seasoned rv'ers and currently have a 1986 motorhome that we have owned for 9 years after purchasing it from my parents who owned it since it was new. we use our existing motorhome a minimum of 1-2 times a month - we definitely get our use out of it! i'm simply asking which way it would be best to finance, not whether or not to buy it.
So being a seasoned RV'er makes you a financially savvy consumer? I don't see how the two line up but as the old saying goes.. it's YOUR money!
On the other hand, you're coming and asking for advice on the transaction on fatwallet, so the advice you get will be guided to help you make the most informed FINANCIAL decision. So there's no need to get up in arms about someone's opinion, which btw I agree with.
okay, once again, i do not need any advice on whether or not to BUY; we are buying this motorhome. i'm not a new member; i've been a member for several years. this is a USED motorhome; we're paying $60k for it, but it is only 5 years old and sold new for $150k. we take our rv out ALL THE TIME, so it is not a depreciating asset for us. we keep our motorhomes a very long time; our existing motorhome is 22 years old! so please do not reply to this post if you are going to lecture on whether or not to buy; i simply wanted opinions on whether to get a loan or use our equity line. thank you,
Drain the HELOC and put it in a CD if and when they freeze the account. Get the loan if you have to have the RV today. If some financial hardship occurs you can give the RV back and not jeopardize the house.
Purchase of rapidly depreciating resource hog: check Paying interest on said rapidly depreciating resource hog: check Whining when people offer you sound financial advise: check
The smart thing to do, if you simple cannot live with your still functional RV, is to save aggressively for a few years and buy with cash (buyer's market)... So no need to soil yourself trying to justify your purchase when people give you the most prudent advice.
Also, while you're at it, tell your state to suck less at budgeting.
i say do both get some from the house and the rest in a rv loan. or which makes you the most comfortable but my general feeling towards home equity is to only take it out to make additional investments and a RV is not an investment, its more of a vacation. A 8% loan is not bad for a rv loan but considering the economy is tight ask the sell or lender how much you need to put down to get a lower rate. maybe 4-6% then i would do that and not have the RV tided to my house
soxfan1 said:Prime would have to jump 6% to hit the break even point. Plus any interest you pay on the HELOC is tax deductible. Seems like a no brainer.
Interest on the RV loan would likely be tax deductible as well, since most RVs qualify as second homes. Assuming, of course, that the OP doesn't already have a second home that the OP is deducting interest on. So the tax deduction angle is moot.
socalgirl1 said:okay, once again, i do not need any advice on whether or not to BUY; we are buying this motorhome. i'm not a new member; i've been a member for several years. this is a USED motorhome; we're paying $60k for it, but it is only 5 years old and sold new for $150k. we take our rv out ALL THE TIME, so it is not a depreciating asset for us. we keep our motorhomes a very long time; our existing motorhome is 22 years old! so please do not reply to this post if you are going to lecture on whether or not to buy; i simply wanted opinions on whether to get a loan or use our equity line. thank you,
"not a depreciating asset to us" but it is to everyone else? that means.. it's a depreciating asset. Regardless of whether you ENJOY it or not doesn't mean it's an appreciating asset. Your decision is made that you're buying it, so be it.. but you do realize that you're not paying $60K for this right? You keep throwing out that number.. if you're financing $50K over 15 years, you will really pay $96,000 for this RV assuming you take 15 years to pay it off. Even if it's a little less than that, you're still paying way over.
So is the RV worth $96,000 to you? Or alternatively.. you tie up your primary HOUSE in this thing, still pay more, and create additional legal/liability concerns.
This is why people tell you to pay cash for things. Because then you would actually pay $60,000 for it, and you wouldn't be talking about putting an additional lien on your house and having yet another payment to manage.
It's silly you're looking to buy things you can't afford.. but whatever. Enjoy it until us taxpayers have to bail you out because your financial house of cards falls out from underneath you.
Why in the world would you pay 50k for an RV? You can find really fine, low mileage units with rebuilt engines for 10-15k. I'm not talking about a piece of junk either, ready to roll.
What I'd like to know is why so many RVs with low mileage have rebuilt engines. My almost baseless guess is that it's because people that own them run the engines while they're standing still in order to power stuff, wearing out the motor while adding no miles to the odometer.
If you insist on tossing away $35-40k, I vote for the HELOC. Leave enough to draw some money for when the engine needs rebuilding.
soxfan1 said:Prime would have to jump 6% to hit the break even point. Plus any interest you pay on the HELOC is tax deductible. Seems like a no brainer.
Believe it or not RV loans are deductible because it passes for a 2nd home.
"not a depreciating asset to us" but it is to everyone else? that means.. it's a depreciating asset. Regardless of whether you ENJOY it or not doesn't mean it's an appreciating asset. Your decision is made that you're buying it, so be it.. but you do realize that you're not paying $60K for this right? You keep throwing out that number.. if you're financing $50K over 15 years, you will really pay $96,000 for this RV assuming you take 15 years to pay it off. Even if it's a little less than that, you're still paying way over.
So is the RV worth $96,000 to you? Or alternatively.. you tie up your primary HOUSE in this thing, still pay more, and create additional legal/liability concerns.
This is why people tell you to pay cash for things. Because then you would actually pay $60,000 for it, and you wouldn't be talking about putting an additional lien on your house and having yet another payment to manage.
It's silly you're looking to buy things you can't afford.. but whatever. Enjoy it until us taxpayers have to bail you out because your financial house of cards falls out from underneath you. $96k is a bit light.
She also has to factor in the cost of the insurance, which will be required if she takes the RV loan. On top of the insurance, she will have to build in the opportunity cost of carrying that insurance for her specific marginal cost of funds, since she will be carrying debt in order to buy this RV.
She also has to factor in the cost of the gas and the maintenance, and the same opportunity costs due to her marginal cost of funds as outlined above.
All in, the cost of this is in excess of $100k. That, with decades of investment returns or compound interest, makes one hell of a nest egg for retirement. Of course, thinking like that just doesn't fit with the mentality of the American consumer, who sees affordability as being based on room in the monthly budget to borrow and buy.
I don't understand RVers. At all. Right off the bat, all I can think of is the fantastic vacations I could take for the next 15 years of my life with $60,000 plus whatever you'll spend on putting gas in that thing. And I wouldn't be pumping out my own toilet on that trip and showering in a closet or visiting rural Alabama on those trips, either. I'd be staying at the Ritz in Dublin, Florence, Melbourne and Maui.
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