Financing new Scamp

[Bob Miller]

About NADA RV Prices:

I have heard that the reason that NADA prices are so skewed, both high and low, is twofold.

Because so few RV's over 5 years old are taken in as trades, (dealers don't want to have to deal with higher warrantee costs associated with older rigs) most are sold in private party transactions.

In many (most?) cases this results in the buyer reporting a somewhat "adjusted" purchase price to reduce the sales tax due when registering. Last year, when I sold my 1989 Toyota Sunrader pop-up motor home for a bit under $12000, the buyer reported a purchase price of $3000 (and saved about $750 in sales tax.) This lower number goes into the public record and is what NADA uses, in part, to determine value.

In the case of newer trailers, dealers do resell them and point to the MSRP of new trailers (a price at which they are almost never sold) when the buyer asks about price. Hence, dealer resale prices are much higher than private sales and are reported at 100% of sales price, pushing those prices up, at least for the first few years.

How much of the forgoing is accurate? Who knows, but it does seem to reflect what is happening in the marketplace.

[Carol H]

Originally Posted by Alf S.

Hi: All... Up here in "The great white north" you only need to prove to a lending institution that you don't need their money to qualify. Interest rates are so low there's only one way for them to go...UP!!!
Alf S. North shore of Lake Erie

Thats true Alf but the key to that as you say is "you only need to prove to a leading institution that you don't need their money". ie they will give you a personal loan or an equity loan based on what you already own and paid for or what you have in your investment/savings accounts with them or another bank. In that case they will issue you a personal line of credit or an equity loan and sometimes if your asking for high amounts they will use that other equity as the security.

It doesn't work that way if you are going for a traditional car/rv loan - you need to have a down payment as they are using the item your purchasing as the security and they do depreciate. On RV's they often require down payment of 10 to 35% down. Also if you only have 10% down you will pay a higher interest rates to cover the loan insurance they will make sure they put on the loan to protect them from your low down payment. Also the poorer your credit rating & the fewer other assets you have the higher the rate you will pay.

Yes some car deals will sometimes offer nothing down and a low interest rate but the truth is the cost of the car has all the extra default insurance and higher interest rates you would have paid if you borrowed directly from a bank already built into it. The dealer through your purchase price will pay those items to the leading institute they are dealing with on your behalf. You the purchaser are going to pay a much higher sales price for the car or RV than had you walked in with cash in hand or borrowed directly from the bank yourself.

On a conventional mortgage, home buyers are required to put down at least 20% of the purchase price or appraised value (whichever is less) as a down payment- that's the legal standard requirement for a down payment in Canada for a traditional mortgage. If you don't have the 20% down payment, you can can get a high-ratio mortgage and put as little as 5% down (legally no less) but the lower you go on the down payment ratio the higher the points go on the mortgage rate and add to that the cost of the legally need to have default insurance built into your mortgage rate it will push your interest rate/payments up through the roof. The end result is that not a lot of people buy homes with only 5% down as they cant afford to make the much higher mortgage payments - same with high ratio car/rv loans. Its the big reason that few people in Canada would walk away from their homes if their was a down swing in property values as we all have to much of our own money invested in them to start with - better to just wait out the down swing.

I am with the others, when it comes to items such an RV/Boat or car your way better off in the long run financially to save up and just pay cash for them or buy one that isnt the one of your dreams but works well enough to get you through to when you can afford to pay cash for the one of your dreams.

[Francesca Knowles]

Originally Posted by Donna D.

Maybe get a personal loan rather than a loan against the asset.

Bingo!

They're only going to lend up to the value of the collateral and since in this case the collateral is the trailer itself that means what it may be worth if/when a borrower defaults.

If interest rates are higher for a personal loan, you might consider "splitting" the amount- borrow as much as you can on the trailer and take out a personal for the balance.

Better still (and interest-free!) would be saving up 'til you have enough of a down payment that the lending limit is a non-issue.

Francesca