Don’t get suckered into buying an RV this way!

By Chuck Woodbury, editor
RVtravel.com
Do not buy this RV under these terms. Do you see the small print? This price does not include title, license, prep, freight, and dealer document fees.

So let’s assume a buyer got the dealer to lower the price down from here. All those other fees would probably bring it back up to more than the $134,999 as advertised. At the terms offered here with payments of $899 a month, the dealer would receive a down payment of $13,400 and an additional $137,000 to be financed.

But what’s most disturbing about this to me is whoever buys the RV under these terms — putting 10 percent down and then financing the rest at 4.99 percent interest for 20 years — yes, 20 years — will put themselves in a precarious financial position for all that time. For example, buy this RV at age 60 and you’ll still be shelling out $899 a month until you’re 80! The loan would not be paid off until February, 2038!

Does that seem wrong to you? Yet RV buyers fall for this. Notice this particular deal is with Camping World, which many RVers, me included, believe will do just about anything to make a sale. 

What if:
•The buyer loses his or her job?
•The stock market dives and they lose their nest egg?
•The buyer or spouse gets sick and can’t RV anymore?
•The buyer has a big medical bill that robs them of precious savings?
•The RV fall apart in 10 years and they can’t afford to get it fixed?
•The buyer tires of RVing.

An RV does not appreciate – quite the opposite: It depreciates, and quickly. This RV will lose about $34,000 in value the minute it rolls off the dealer’s lot!

AT THE END OF THE LOAN, the buyer will have paid a down payment of approximately $13,500, principal of $137,000 and interest of $78,466 – for a grand total of about $229,000! If they buy today (February, 2018), they will still be paying more interest than principal for six years, at which time they will still owe $109,693 on the loan. Assuming the RV is worth maybe half what they paid for it then (I doubt it would even sell for that), they would receive about $62,000. But wait! They would still owe $109,693 on the loan! So, in order to pay it off, they would need to come up with $47,000 out of their pocket right there and then!

Actually, under the terms of this loan, no matter when the RV is sold – whether in two years or 15 years – the owner would still be upside down on the loan and need to hit their savings account to pay it off.

Be warned: Do not get suckered into such a trap. 

##RVT834

 

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38 Thoughts to “Don’t get suckered into buying an RV this way!”

  1. Bill

    If you plan properly when going in to a deal like this, and are aware of hidden fees, and with proper financial planning, including a plan B, then problems can be mitigated. It’s a good article for those who fall for the “glamour traps” of buying an new RV, but not for those who prepare properly. Keep up the good work you are doing, but keep in mind not all of us gullible.

    1. Rob

      People, unfortunately, want it now, just walk through an RV show and you can see the folks foaming at the mouth walking through the shiny RV’s. $30 in their bank accounts but have a credit score which allows them to qualify for a loan at 5% for life on a depreciating asset. I bought my old 1993 RV for cash and enjoy camping much more knowing I am not throwing money away each month on interest and an asset that quickly becomes worthless. Our schools should be teaching our kids that money is to be respected and if it is respected your life can be so much easier and enjoyable. IMHO

      1. Jane B

        Sometimes these (money) lessons can be taught better at home with personal examples such as these.

  2. Bill semion

    Good story. However what about those who must or almost most financethis way.? One solution is to refinance at a search is a credit union which offers far better rates than any RV sales loan person probably can.

    1. Jeff

      IMHO the person who “must finance this way” is buying a RV that is to expensive tor there budget. The solution is to buy a lower price RV,

      1. PeteD

        That was my thought exactly but many are more concerned with image. We met a couple while in Alaska who had bought a $300,000 motor home on the 20 year plan. We asked them if they would like to loin us for dinner at a local restaurant but they declined stating they couldn’t afford it. They sure had a nice rig though. We were parked next to them in our 9 year old used and paid for Winnebago.. we had the time of our lives and money never crossed our mind. If you havenit, spend it but if you don’t, swallow your pride and buy what you can afford. Preferably pay cash.

        1. Bill T.

          Yes it sounds like those folks spent beyond their means. But it is perfectly okay to finance a new/newer rig that better suits your needs. I mentioned earlier that with proper planning and not falling in to those “glamour traps”, you can enjoy a nice rig without having to search all over creation for a used one or worse yet, settling for a piece of junk you don’t want just because it fits your budget.

  3. Roy Ellithorpe

    Stopped at Dennys Park and Sell in Yuma yesterday. An old fellow trying to sell his 2004 Winnebago for $80K. He said he still owed over $90K.

  4. Jack Duncan

    I saw saw post on Facebook that Camping World owner wants all Trump supporters to keep out of Camping World. Did anyone else see this? Just asking.

    1. Rich

      Yes, haven;t been in one since!!!

      1. Vick

        I guess I am welcome then!

      2. Tera Madden

        We never go there anymore!!!

    2. Glenda Alexander

      I’m not a Lemonis or Camping World fan; but maybe it would be helpful to get a fuller picture of this by checking out this Snopes article : https://www.snopes.com/camping-world-ceo-trump/

      1. Tommy Molnar

        I no longer have any faith in Snopes if ‘it’ can be in any way political.

        1. Terry

          So sorry for you, Tommy.

    3. Michael

      Lemonis is anti-Trump and he used the Charlottsville Unite the Right rally to attack Trump and his supporters.He did not precisely say that he did not want Trump supporters buying from him but he quite satisfactorily conveyed that message anyway. He refused to apologize and instead suggested that those who criticized his remarks may be racist, haters, yada, yada, yada. I just use my local RV sales and repair shop now. They aren’t bigots and they appreciate my business.

  5. Doug

    I’m guessing, but I think I see many instances of upside down folks trying to sell their RV’s on RVtrader.com. They advertise their rigs way above other comparable listings or NADA values. They also include info such as “5 years left on warranty”. I am hesitant to contact folks about their RV’s with these advertisement characteristics. I just don’t want to confront them about their pricing even though I have been interested in a few of these RV’s.

  6. Jeff

    One of the biggest things to take away from this article is NEVER BUY FROM CAMPING WORLD!

    1. Cherie trimborn

      We made the mistake of buying from Chicago camper world. One of the worst dealerships around. What a BIG mistake!!! Call the better business bureau before even looking. We never would of went there if we would have checked. They have a trouble rating. Do your homework!!

  7. Sick of it!

    Political posts AGAIN?????????

    Can we have no respite from this constant barrage ANYWHERE?????

  8. Gary D Bogart

    Never put both husband and wife name on a motor vehicle title. If circumstances create a money problem, assets of the marriage can be attached. Also in the event of an accident involving personal injury same scenario

  9. Jerry X Shea

    Keeping any particular dealership out of the picture, let me give an opposing viewpoint on financing an RV. Assuming a couple/person is retired and living off their retirement accounts (Pension/IRA/401k) plus Social Security. They could take 120k and pay cash for an RV. Or, they could put 20k down and make payments for 20 years. Here is their “choice.” Take 120k of your retirement money and buy a depreciating asset and not make money on that 120k. 2nd choice, put 20k down and leave that 100k in your retirement portfolio and earn 10,12,14% interest on that money over the next 10 years (because you will sell the rv then) while you make monthly payments at 4% interest. In many cases, the monthly payment can be made from your SS check without touching your long term investment. In ten years when you sell it, yes, you may be “upside down” and have to come up with more cash but it won’t be that 100k. In retirement it all comes down to “cash flow” and having money for your future, however long that may be. Blowing 120k of your retirement money today – NO WAY JOSE.

    1. Chuck Woodbury

      Jerry, maybe these people should not be buying an expensive RV in the first place. It’s a terrible investment. It’s a luxury item. Your argument has merit, but if people can’t easily afford an RV and need to finance for 20 years, then they should not are buying an RV in the first place.

    2. Bill T

      Hi Jerry:
      Well said. People who plan properly can have a great retirement RV’ing, without going in the whole. Depending on the age they retire at, they could have the rig for twenty or more years. My Aunt and Uncle did that, had their rig for 28 years before their health made them stop. Making small affordable payments is easy to manage in exchange for having fun in your retirement. So many people die or become too sick to enjoy their retirement. Get out there and have some fun. As an additional thought, if both retirees die before the rig is paid off, who cares? You can’t take it with you.

      1. Jerry X Shea

        Hi Bill T. – nice to see someone understand how to manage your money in retirement. A lot of people buy a 500k house, not because they have 500k but can make the monthly payment. I don’t think Chuck understands the concept. In my post he felt that if you can’t afford an expensive coach you shouldn’t buy it. I can’t agree with that. If you can make the monthly payment you can buy what you want and enjoy a “quality” of life. As you said “you can’t take it with you” and it is my money, not my kids. It may be a depreciating asset but “so am i.” Ha

        1. Chuck Woodbury

          Jerry, I understand from a purely financial point of view. But you do not get the mail I get from desperate people four or five years into such a loan, who are upside down when they get suddenly sick or lose a spouse, or their income suddenly takes a nosedive. You don’t sit where I sit and read their pleas, “But, Chuck, where I am I going to get $50,000 to pay off the loan?” Looking at this from a purely financial angle, 10% down, low interest and 20 years to pay if off can make sense. But look at it from knowing we live in an imperfect world, where things don’t always work out as we plan, and it does not make sense. I say if you cannot easily afford an RV without financing is for a ridiculously long 20 years, don’t buy it. Buy something a few years old, finance it for eight years and don’t risk a financial crisis down the road when things don’t go just as you dreamed. Finance a home for 20 years, but not an RV, or you’re cruising’ for a bruisin’.

          1. Terry

            I think both of you (Jerry and Chuck). Jerry paints a picture of a couple who may well be able to afford the RV. They could well have multi-millions of dollars in their IRA account. But it is not a smart financial decision to take the cost of the RV out of the retirement. There are two reasons for that. One, as Jerry says, the average return of the market over a decade or two is likely to be far more than the interest incurred for the RV loan. And, two, the tax bite from going into another income tax bracket will increase the initial outlay significantly. Chuck paints a picture where the couple does not have sufficient funds to cover contingencies. Perhaps they only have a few hundred thousand in their account. There just isn’t sufficient income buffer from that size investment to take the risk.

    3. Rob

      10,12,14% interest. Most folks are lucky to get 4% on their retirement investments if invested to ensure you don’t lose your money. However, that said I do agree that taking $120000 cash out of retirement monies and buying a quickly depreciating asset makes no sense at all. It’s all relevant in my opinion. If you have a guaranteed income from an indexed pension paying that payment for 20 years might make sense since an indexed pension is 99% secure. My thought has always been just because you can pay a payment doesn’t mean you put yourself in that position. Every situation is different. Me personally I would sleep at night knowing I was paying $224000 for a vehicle worth half that. It almost makes sense to stay in Hotels or buy a rental property down south than throw away all that money on interest and depreciation. IMHO

  10. DA

    Bought our 2013 RV less than 2 yrs ago. Seller was upside down and came to the table with $30k to pay off their loan. Luckily this young couple could pull thie money out of savings but I worry 90% of the impulsive buyers today can’t do this especially since the stats we are hearing are the younger generation making the purchases. It is just a matter of time that the RV industry will implode and we can pick up RVs cheap. New RVrs will get fed up because they can’t find a reservation, quality and repairs will frustrate newbies and the financing woe as stated in the article will lead to repossession.

    1. Rob

      We have re-thought our retirement plan for exactly that. With the RV population exploding and the scarcity and quality of RV sites available (cost of those sites) and the price of fuel to tow our 5th wheel, it really doesn’t make sense in my opinion. The last thing we want is to be worried about where we are going to park our rig. Even though we are lucky to not have payments on our rig or truck if overall the cost per night is more than a hotel room or owning a mobile home down south etc makes more sense and these choices can appreciate in value over time. When did retirement get so costly and stressful?

  11. Wayne Caldwell

    We are so very fortunate. Back in ’87, I bought a 26′ Nomad Weekender to live in after divorce. Subsequent marriage and not using it because of work schedules, we sold it after almost 20 years of ownership for half what I paid for it. Not a bad deal. Then A couple of years ago, we started giving thought to getting another trailer (I’m now retired, my bride still works, empty nest, house and vehicles all paid off, etc, etc). A couple at church made us a deal that was impossible to pass up. We bought their (at the time) 15 year-old 32+ foot CrossRoads travel trailer for about 15% of what they originally paid. Like others have said, the bugs are all worked out, it’s in almost new condition. It’s paid for, we’re not up-side-down, and we thoroughly enjoy it. (Ok, it takes about 20 to 30 minutes to set up or take down, but with what we paid I can spend that much time). And, so far, my 20 year-old Dodge Ram Cummins diesel pulls the CrossRoads at 65mph just fine. And we can afford the RV lifestyle.

  12. Denny Brandt

    We/ve been full timing for 13 years and enjoying it all. Sometimes we are workampers and sometimes we just kick back and enjoy. I find it interesting that in all this talk about buying a high end rv and being able to afford it there has been no mention of the reality of what happens when you do buy a brandI new rv and expect you will be OK because you have a full warranty.. I’ve bought 2 new units and both of them spenct more time in the shop having “warranty work” done than being on the road. If you buy new, expect to spend lots of time getting to know your dealer as you live in his back lot waiting for repairs to be done. My advice to newbies….buy a unit that is at least 2 to 4 years old and save yourself a lot of grief and a lot of depreciation. You can buy an aftermarket warranty to cover everything on that vintage of unit for a reasonable price and you won’t have to keep taking it back to the dealer you bought it from for repairs. If you are a full timer it’s no fun to have to drive hundreds of miles back to the selling dealer for repairs as required by the manufacturer in most new units

  13. Jennifer M.

    Unfortunately I bought a new ‘off the lot’ RV just like the article states and a 20 year loan. I did do some research but after talking with the sales people it seemed like this was the way it was done. I was told it was like buying a second house and you could deduct your interest on your taxes. It is my first RV so I believed it would be best to buy new as I had not owned one before nor figured out how everything worked, how to fix things, etc. I was also convinced that the sales person would take into account my needs, family size, travel desired, etc. and steer me into the best product. I ended up with something way too small and I am miserable. I believe it was to get it off the lot in a hurry and who better than someone who was in over their head and not realizing it.
    Also yes…you will not have your RV for long periods of time if you need any type of dealer repairs. Hope you did not have any prior reservations anywhere because you won’t make it and they won’s care.
    I regret purchasing the RV more than you can imagine. I researched a lot but in addition to that what I really needed was some ‘practical’ advice from other RV owners. What a huge mistake.

  14. Norm

    Is there not one Manufacturer out there that produces a quality product, that isn’t a nightmare to own? If not and everyone is buying these Rv’s that have nothing but service problems they spend more time in the dealers lot than in an RV Park how is it possible for this industry to always be producing new units at a record pace. Also if that is the case, why do I keep hearing that you can never find a place to park in any of these RV Parks, if so many people are camping in their dealers parking lot because these factories are building nothing but problem units. I’m lost and scared because I just bought one of these new 5th wheels and we are going full time and yes I’ve heard of a few people that have experienced alot of service issues and down time, but it appears to be the exception to the rule not the norm. If I’m missing something please save me now, I’d rather lose a 5,000 deposited and be happy about it. Than to buy something I can never use or find a place to park except my dealers lt.

  15. Tom

    My $0.02…
    Buy a USED (4-6 yrs old), good condition RV for a fraction of the cost of a new model. When financing, put at least 25% down, and limit the term to no more than 15 years (5-10 is preferable). Set aside a maintenance/repair fund equal to 5-10% of the purchase amount. Make sure to take the mortgage deduction (now limited to $10K per year).

    As to operating costs…. ditch the crappy, overpriced private RV parks, stay at little to no cost on public lands (western U.S), either in improved campsites or boondocking. Stay put for awhile, if you can, to reduce the mechanical wear & tear and fuel costs (consider getting solar). Move with the seasons.

    Sell that dead albatross of a brick & sticks residence! Save the expense of property taxes , insurance and upkeep.

    If needed, workamp from time to time. At minimum, it’s a free site (often with full services), and occasionally with a small wage, in exchange for a 24-32 hr work commitment per week.

    Whatever your budget, get out there and experience this beautiful country we’ve been blessed with. But most importantly, relax and enjoy life! It’s shorter than we’d like to think!

  16. sally hansen

    Man, what a great article. Chuck good work here. Honestly a note for 20 years financing an rv should not exist, as risk vs return is so poor. In fact Notes should be limited to 5 years on the outside. If a person cannot afford a 5 year note, then they buy cash. end. It is very misleading that the industry has somehow positioned the banks to even CONSIDER financing these things for 20 YEARS! So, lets think about this. financae for 20 years-ok-but they only carry a 1 year warranty. Does anyone read ? Do people think after a 900mo payment they will somehow have 1K avail to replace that Dometic AC Unit that lasted for 1 yr and 1 day? or the furnace? How about new tires once a year, good ones run 900$ or so. I dont see how it could ever really work, I mean its akin to being “House Poor” or “Car Poor”. Add in depreciation, after about 5 minutes of ownership you are upside down for duration, you arent getting out of it if things are fixed income based. Add in the manufactures are soo bad now, all the good ones have gone out of buiss because they actually honored their warrenties instead of pretending to fix things while your rig is in the bay for 9 weeks o more and you get it back with the very same issue you sent it in with.

    Pay cash. End. Save up. Pay Cash.

    I know eveyone says they just cant save it, so they MUST finance. No you MUST not finance. Save it. Have it. Buy it. Own it. end.

    In 2012 we got sick an tired of paying rent and decided to go FullTime instead as ANY rental we could live in that was SAFE cost us our entire months income of about 3K to keep up WITHOUT buying food. (rents went up massive in 2012) So, about this same time, our landlord gave us a months ntice that his home was bing foreclosed due to back taxes(they raised his taxes and he could not keep up) we had 6K in the bank we had just socked away from a relative dyign leaving us some money(thank god) and we decided we were not sinking that 6K into yet ANOTHER rental. We moved back to my parents, we shelled out 2K for an old beat up 5th wheel.

    My parents installed a pad, and 50 amp service , sewer ect.. for full hookups for us. We paid off that cost for the install because we saved in Park costs. Then we sat tight for 3 years.

    2015 We paid cash for a 2004 5vr 38 ft unit. 4 slides, MINT condition, usd 2X yr by 1 owner family. All we had to do was improve it where we wanted. we had nothing we had to repair that was in disrepair. We bought an Agreed Value Policy on it PIF 1 yr.

    We have since sunk tons into modding it with massive upgrades.

    We made a cabinet for Water softner install(outside). We got rid of the Atwood Range and ordered a Dickenson Marine 3 Burner LP Range/Oven. We got rid of the LP fridge, installed a Residential Vertical Freezer. We installed a Slendide XC 7100 Ventless(luv it). removed table and charies and changed into a a game room. removed the front living area and modded into a 2nd bedroom, complete with special order residential mattress. Pulled the Garden shower glass and shower pan and refinished with Marine Paint. got rid of the crap electrical shore power cords and adapters and replaced with made in usa Marinco Shore Cords and adapters, bought two 30 amp Honda 2Ks. Bought nice new Trojan agm 125ah batteries, Replaced every single appliance and added a second 13K AC(we replaced with Atood Air Command(for Austrailia) units. countless other stuff,

    point is there is NO WAY we could have upgraded this coach in this way if we had the monthly payment, and there would be NO way we could get ourselves out of it should crap hit the fan down the road.

    The odds are agaist a person financing in today rv market.

    Thans for this article, it reaffirms alot of us out here who also think this way.

  17. sally hansen

    Edit: Sorry so many typos, I am typing on a small keyboard on a toughbook, its easy to do.

    I wanted to add, we bought our rig from a couple who were upside down on their loan, so no bank would finance anyone who wanted to buy it with a note, it turned out that only a “cash buyer” would work for their sale.

    They had 6 other people fall through before us.

    We were that cash buyer. It Nada’d at 13K, they owed 16K, and had been paying for 11 years, had 4 more years to go and owed 17K. They paid 1K and we paid 16K, so they could unload it. He had a terminal Dx andw as given a yr. He wanted to unload their debt payments so his wife would not have the massive debt for their toys(they had alot of them) .

    They had no plans to have a terminal illness it just happened, so as Chuck points out, you “dont know” whats coming, you have a plan and dont plan for that to be interrupted.

    We did so many massive upgrades, that we had it revalued at 25K later.

    Again, it would have “never” been in the budget to do ANY upgrades had we had a Note. Never happen.

  18. Cecilia

    Newbie RV owner here. Plan to RV 6 months of the year. I did a lot of research before my first purchase. That’s how I came across this website to begin with . ( which btw is very addictive 🙂
    Not having a high threshold for owing, I opted to pay cash for the best quality I could afford. This meant leaving room for other life essential expenses after RV purchase.
    Walked in to the dealer of my choice and looked only at the RV that I had in mind to see what it felt like in real life. Also attended more than one RV shows prior to going to dealships to make RV comparisons. Researched which dealer carried the model I wanted, as well as how those dealers did business. I never rely on sales person to tell me about anything I purchase. Reading brochures, visiting manufacturers websites, looking for reviews etc were more informative. I come in knowing more about it then they do. From specs, how it’s built, offering price,to weight capacity for my truck. Have finances preapproved prior to going to dealership. I follow Chuck’s financial advice regarding affordability and not fall for the monthly payment plan that appears affordable. Always look at the end total of the purchase.
    Take some time to soak in your choice. Take a break and go back to it. I changed models and brands many times. While taking your time, you also will come across new info that you should have considered. I’m grateful to have the luxury of time and thanks to all the valuable advice. So far I am happy with my purchase with no loan to linger on for years.

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