Is it possible to finance a $23K trailer for 180 months?

[SlothHorn]

I've noticed that my credit union only extends out to 8 years or so. I just clicked on the GoodSam financing table. The max for a $23K trailer is 12 years @ 8.49%.

Note: We have near-perfect credit and can put $ down if that makes a difference.

I understand that financing works differently with an RV due to its designation as a luxury item; however, it's surprising that I'm not seeing any options.

[APT]

$23k loan @8.49% for 12 years will be $255/mo.
$23k loan @8.49% for 15 years will be $226/mo.

If that $30/mo impacts your budget, I recommend not getting a TT or much less expensive one, maybe used. TTs depreciate about the same rate as vehicles. Maybe not quite as quickly as posted above, but it will be worth about half in 5 years (assuming well maintained) while the loan balance would be about 75% of the original loan. I recommend 5yr loan max for RVs.

What is your goal for the longer term?

[DownTheAvenue]

Raife wrote:
We just purchased our travel trailer and got a much better rate than that. We shopped around for a couple lenders, got preapproved through our bank and the dealer was able to get a another .25% off. We financed for 144 months to get the interest rate (longer term = lower rate), put a sizable down payment, and will be sending in almost double the scheduled payment amount. We will end up paying the loan off in ~5 years as opposed to 12 years.

Check your contract with the bank regarding early pay offs, and discuss with the bank how to handle extra payments. Without care on your part, those extra payments will be applied to future monthly due payments, and although you pay the loan off early, you will pay all the interest as if you paid for the whole term. Sometimes it is just better to make the minimum monthly payment and save up extra money to make a one time large payment to pay off the loan. You can cost yourself many thousands of dollars if you don't do this right.

[wanderingbob]

We all have done foolish things , when you do a 15 year loan on a travel trailer you will move this to the top of your list .

[elwood58]

Whatever you decide, if you are not already writing off a second home, the RV interest is deductible so long as it has a galley and bathroom.

[BurbMan]

8.49% is high, interest rates are at an all time low. You might be better with a home equity loan and pay cash for the trailer, your carrying costs will be a lot less.

An RV is a depreciating asset just like a vehicle, the fact that it will be worth less as it ages is not a reason not to finance. If you put 20% down, chances are good that you'll never be upside down on the loan, or, put $0 down and if you have to sell early pony up the difference then.

[Grit_dog]

Learn a lot about people on this forum.
This thread is very telling.
God help us....lol

[RobWNY]

SlothHorn, don't just accept their rates if you have excellent credit. There's room to get a better rate. Rates are negotiable just like the RV price. There isn't a lot of wiggle room on a recreation type loan but there's some. In April, I was able to negotiate a rate down 1.75%. If a bank or credit union wants your business bad enough, they'll move on the rate.

[Gdetrailer]

SlothHorn wrote:
FWIW, we have personal reasons for wanting a longer termed loan. None of it has to do with affordability, cash flow, bad credit, lack of a down payment, etc... The idea was to time the loan so that it'd be paid off right around the time our mortgage is paid + the time frame at which our youngest would be heading off on his own.

Looks like we'll need to readjust our thinking. Thanks for all the help.

My DD is in college right now, House is paid off going on 15 yrs ago, last vehicle I had a loan on was back in 2013, my RV never had a loan, it was a old well used 20 yr old one when I bought it.

Not really sure why anyone would want to intentionally stretch out a loan on any non-appreciating asset in order to have the payoff happen when the mortgage is done and you have one offspring heading to college.

You can buy and payoff the RV quickly then the money in interest you would be handing over to the bank can now be stock piled for the college.

Or you could apply the savings in interest towards paying off your mortgage ahead of schedule.. Then you have even more money to stockpile for the college..

I never found much tax advantage to keeping a mortgage, instead I found extra money that I didn't hand over to the bank when I paid it off early..

Each time I ditched a loan or credit I just kept adding more money to my stockpile at a faster rate.. After a while it starts stacking pretty fast when done correctly.

There is no laws that state one must always carry a loan and loan interest is money that you cannot use but the banker uses to pay for their lavish lifestyles.. I have never run across a poor banker.. Folks are more than willing to hand them gobs of money.

[dodge_guy]

Gdetrailer wrote:
Why?

You do realize that $23K trailer in one year will be worth $11K on it's best day?

In 5 yrs maybe $6K

In 8 yrs maybe $3K

and if in the case of severe water damage absolutely nothing in a hurry.

It is a depreciating asset, loses value the second you sign the paper work.

8.49% interest for 12yrs on an asset which loses value every second you own it and is highway robbery.

So, a loan of 23K for 12 yrs at 8.49% means your "purchase" price once you get done paying the loan off is $36,747!!!

Interest paid is $13,747 which is one heck of a lot of interest and cost for a RV worth pretty much zero at the end of the 12yrs.

The payment is $255.18 per month for 12 yrs.

For 8 yrs the same loan and same interest you only pay $8,766 for a grand total cost of $31,766 and the loan payment would be $330.90..

I would highly recommend you play with an amortization calculator to see how loan length and interest rate affects how much interest you pay and what your payments will be..

AMORTIZATION CALCULATOR

That 8.49% interest is way too high, I would recommend you talk to your own local banks, sometimes you can also get slightly better interest rates when purchasing through the RV dealer.

According to US NEWS a credit score of 600 or higher should get you an average of 4.83% which is nearly half of what you are talking about!

Shop around, lower interest rate WILL drop your payments considerably.

Additionally, put as LARGE of amount of cash down you can comfortably afford in order to reduce the amount you need to borrow, that WILL make for a considerably lower monthly payment..

Never fall for those what do you want the payment to be sales come ons, they bury you in interest debt by making the loan term longer!

I agree with you on everything but what the trailer is worth at 1, 5 and 8 years. I traded in a TT we bought for a bigger one almost 1 1/2 years later. It only cost me $2000 to use it for that time. They gave me a very good trade in and a very good deal on the trailer I was buying.
No doubt they lose value, but not like you state.

[Gulfcoast]

Buy a two year old RV for 1/2 price.... I did.

[Raife]

We just purchased our travel trailer and got a much better rate than that. We shopped around for a couple lenders, got preapproved through our bank and the dealer was able to get a another .25% off. We financed for 144 months to get the interest rate (longer term = lower rate), put a sizable down payment, and will be sending in almost double the scheduled payment amount. We will end up paying the loan off in ~5 years as opposed to 12 years.

[Lwiddis]

Your plans are a huge financial mistake.

[time2roll]

lane hog wrote:
The only RV's I've ever seen with a 15 year note is a motorhome, and they also offer 20 year notes on the bigger units. Bad idea given how quickly depreciation hits and how long you'll be underwater.

If you retain the down payment you are never underwater. You just pony up at the end instead of the beginning. Virtually any RV loan can be accelerated at any time.

Of course if the person barely has two nickles to rub together it can present an issue.

[lane_hog]

The only RV's I've ever seen with a 15 year note are motorhomes, and they also offer 20 year notes on the bigger units. Bad idea given how quickly depreciation hits and how long you'll be underwater.

[SlothHorn]

FWIW, we have personal reasons for wanting a longer termed loan. None of it has to do with affordability, cash flow, bad credit, lack of a down payment, etc... The idea was to time the loan so that it'd be paid off right around the time our mortgage is paid + the time frame at which our youngest would be heading off on his own.

Looks like we'll need to readjust our thinking. Thanks for all the help.