RV loan vs. equity line

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!

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.

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,

Personally, I'd finance the RV with a separate loan. I hate to attach any extra payments to a home.

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

okay, i can see i chose the wrong place to ask this question. thank you to those that answered my actual question.

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.

ilikebtmoney said:

"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.

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.

I have a coworker who told me that the loan interest he has on his RV is tax deductible. something about it being considered as a second home or something. You may want to look into that.

VanceWade said: 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.

I'm right there with you on this. Beside what you mentioned, you have to pay for a slab at the RV parks, and I imagine that maintenance on these beasts is very expensive, too. Plus, you can't take them everywhere.

I've heard that some Wally Marts let you park in their lot. Doesn't that sound like fun.

Sorry, but it's just not my idea of a fun way to travel.

ilikebtmoney said: kimmers71 said: You know, you people are really amazing. The guy comes on here to ask a legit question and you bash him for buying an RV. How many of you own a boat or a car? Those are depreciating assets. Did you pay cash for those? I bet not. You're telling this person to pay cash for it...how long would it take you to save $50k? He/She clearly got their use out of their 86 RV and it's time for a new Used one. And considering this one he/she's looking to buy originally retailed for $150k, it's more likely a motorcoach not some rinky dink RV.

I own quite a few toys, including some vehicles. The corvette I got 0% financing on for 3 years and paid 20% down when I could have even financed the whole thing that way through GMAC. The custom offroad machine was a $35K project, paid cash, along the way as funds were there as I wasn't going to lien my house or finance something with high interest (yes, 8% is high interest on a 15 year loan) to pay for it. Yes they are depreciating assets.. I love them, get great enjoyment out of them. What's the difference? I actually paid the asking price and didn't financially struggle in the process. Fact is.. what we're discussing here is a bad decision. PERIOD.

And that was before I found FW even, many years ago. Now, I wouldn't even tie up my cash flow on a new vette transaction regardless of the 0% offer unless I had that much cash waiting on the sidelines if necessary to cover it.

EDIT: moral of the story, don't buy things you can't afford.. AND BEING ABLE TO MAKE THE PAYMENTS DOESN'T MEAN YOU CAN AFFORD IT

So if he's putting $10k down (approx. 20%) and if he could get 0% financing, would it then be okay?

kimmers71 said: ilikebtmoney said: kimmers71 said: You know, you people are really amazing. The guy comes on here to ask a legit question and you bash him for buying an RV. How many of you own a boat or a car? Those are depreciating assets. Did you pay cash for those? I bet not. You're telling this person to pay cash for it...how long would it take you to save $50k? He/She clearly got their use out of their 86 RV and it's time for a new Used one. And considering this one he/she's looking to buy originally retailed for $150k, it's more likely a motorcoach not some rinky dink RV.

I own quite a few toys, including some vehicles. The corvette I got 0% financing on for 3 years and paid 20% down when I could have even financed the whole thing that way through GMAC. The custom offroad machine was a $35K project, paid cash, along the way as funds were there as I wasn't going to lien my house or finance something with high interest (yes, 8% is high interest on a 15 year loan) to pay for it. Yes they are depreciating assets.. I love them, get great enjoyment out of them. What's the difference? I actually paid the asking price and didn't financially struggle in the process. Fact is.. what we're discussing here is a bad decision. PERIOD.

And that was before I found FW even, many years ago. Now, I wouldn't even tie up my cash flow on a new vette transaction regardless of the 0% offer unless I had that much cash waiting on the sidelines if necessary to cover it.

EDIT: moral of the story, don't buy things you can't afford.. AND BEING ABLE TO MAKE THE PAYMENTS DOESN'T MEAN YOU CAN AFFORD IT

So if he's putting $10k down (approx. 20%) and if he could get 0% financing, would it then be okay?

It would depend on their entire financial situation, which they haven't openly discussed (how much they earn now, their current commitments, job situations, cash reserves, retirement reserves, etc)

You should pay for your RV like everyone else does... by pawning your NASCAR collector dinner plates. Those babies have probably tripled in value by now, after all they were "limited edition". And those Dale Earnhardt plates have to be worth 10x what you paid for them.

RML51 said: VanceWade said: 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.

I'm right there with you on this. Beside what you mentioned, you have to pay for a slab at the RV parks, and I imagine that maintenance on these beasts is very expensive, too. Plus, you can't take them everywhere.

I've heard that some Wally Marts let you park in their lot. Doesn't that sound like fun.

Sorry, but it's just not my idea of a fun way to travel.Don't forget insurance and license fees. My bro has business in two states. He commutes 1100 miles about 3 times per month. He stays in Wal-Mart parking lots and splits his trip over night. He's got little kids that travel with him and he got tired of them finding things in motel rooms. He's the only person I've met under 55 who can actually get his value out of an RV. Oh, wait, I forgot. I also know some young evangelists that get their use doing revivals. Is that what OP does?

If the original poster uses their home equity line, then the total outlay would be around $59,000 over 15 years, of which the $9,000 in interest would be tax deductible.

Personally, I think buying an RV is a complete waste of money. But who am I to tell somebody what to spend their money on. Some people enjoy boating, sports cars, vacationing, etc.... Obviously the best financial advice is to buy nothing for entertainment and live in a cardboard box eating at the homeless shelter. HOWEVER, if you've decided to actually spend some money on something that you really enjoy and won't break the bank and throw away your retirement, then why not?

Since they already have an RV, the price of maintenance and gas would stay the same (or decrease since the newer RV is probably more reliable and efficient). Also, they would be able to sell their current RV. At the end of 15 years, they would still have an RV that they can continue to use or sell for whatever it's worth.

The difference in insurance between the old RV and new RV needs to be accounted for but can't be that much.

xoneinax said: What is wrong with the 1986 that you cannot keep using it instead ?Why does this most pertinent question remain unanswered?

delzy said: xoneinax said: What is wrong with the 1986 that you cannot keep using it instead ?Why does this most pertinent question remain unanswered?
Ummmm..... It's been unreliable, the interior is worn, they want a change, the new one has better options.....

Why does this have anything to do with the strictly financial question of financing a new RV? I hope that you never ever spend any money on something that you enjoy. That would actually make life fun.

PooDonkey said: delzy said: xoneinax said: What is wrong with the 1986 that you cannot keep using it instead ?Why does this most pertinent question remain unanswered?
Ummmm..... It's been unreliable, the interior is worn, they want a change, the new one has better options.....

Why does this have anything to do with the strictly financial question of financing a new RV? I hope that you never ever spend any money on something that you enjoy. That would actually make life fun.

The point still is, the OP hasn't openly discussed their finances. Based on the things said the assumptions are they can't afford it. PERIOD. They're not spending their money if they can't pay for it.

VanceWade said: 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.

Let me paraphrase that for you. "I can't understand why other people don't enjoy the same type of vacations I do".

Some people enjoy driving. If you like seeing natural wonders (as I do) driving is the best way to catch lots of stuff. The same would be true if you like seeing lots of other things. I don't like seeing all those gimmicky tourist traps (largest ball of twine, etc), but I don't think less of someone just because they do enjoy that stuff, and driving is often the best way to do that, too. Now, it's just me and my wife, so we get along fine in a car. If you've got a couple of kids to take along, the longer the trip lasts the more difficult that can be (I imagine). Also, if you've got more than a couple kids, or if you are bringing along others (like maybe your family of 4 and your best friend's family of 4 taking a group vacation), then driving a regular vehicle can really start to lose the appeal fast. Sharing an RV and having 4 people taking turns driving could be very much preferable.

Now, whether it would be better to rent an RV, buy an older/cheaper used RV, or get something newer and more luxurious, that's up for debate (and largely depends on a lot of factors like how often, how long, how far, how many people, etc). But to simply write off the whole idea of RVs completely just seems a bit close minded.