Newbie Buyer’s Remorse

[jodyminn]

Hubs and I are 4 years from retirement and, thinking we may want to be snowbirds, we thought buying a travel trailer as a tryout was a good idea before investing in a big 5th wheel. We were looking for two queen beds (he snores, I thrash), and after MUCH searching I came across a new 2016 Grey Wolf that fit the bill. Long story short, we have it on a seasonal site, and there is more and more I don’t like about it, from the furniture to the u-shaped dinette, etc.

Instead of asking DH to move a wall or take out a section of the dinette, I wondered if it would just be easier to trade it for a used model that has more of what we want. FINALLY, here’s my question: The whole depreciation thing confuses me! Our TT is brand new, but a 2016 model. Does it depreciate from the time it was driven off the lot by us, or has it already had depreciation because it’s a 2016 model?

[jaherbst]

It starts depreciating from the day it leaves the Factory. When Banks or dealers check price it will be two years old no matter when purchased.

Jack

[valleyduo]

Originally Posted by jaherbst

It starts depreciating from the day it leaves the Factory. When Banks or dealers check price it will be two years old no matter when purchased.

Jack

Jack's absolutely right. Best you could probably do is shop around and get some offers. Hopefully you got a pretty good deal on it being an older model. Check prices on craigslist and RV trader for same/similar models that are used. Worst case, list it yourself as a private seller. Can sometimes get a bit more for it that way.

[67L48]

Depreciation is an official financial instrument used in accounting to offset the loss of value of capital assets for a business. However, that's not really the angle people are taking when discussing depreciation in this context. For RVs and other things we individuals buy/sell, depreciation ends up being an extremely subjective phenomenon. There are various rules of thumb out there to help people consider the financial consequences to certain transactions. Too often, people apply these rules of thumb way too rigorously and arrive at silly conclusions.

For example, let's assume that the rule of thumb is 20% in year 1. Let's also assume that you and I, living in the same town, buy the same exact RV with the same exact options. However, you're a much better negotiator than I am -- you pay $20,000 and I pay $28,000. But, we both encounter some combination of life events that render us unable to really use our RVs and we each sell them a year later.

When we go to sell them, is my trailer worth more than yours? $28,000 less 20% is $22,400 and $20,000 less 20% is $16,000. Is my identically equipped and identically worn trailer suddenly worth $6,000+ more than yours simply because I paid more on the front end? Of course not! That's just stupid. They are worth about the same -- same trailer, same options, same condition, same market. This illustrates why these depreciation percentages are broad-brush generalizations that are directional and quickly break down in specific situations.

So, how do we figure depreciation? As stated above by another response, you have to ignore the concept of depreciation and just look at the used market. What is the fair market value in your location for a used trailer?

Let's extend the example above. In hindsight, I got a terrible deal and overpaid. You got an absolutely smoking deal. The average person would have paid around $24,000 for that trailer. It also happens to be a highly sought-after floorplan. So, used trailers end up selling for around $19,500 (about 19% off the average new price). I assess this by looking at various ads in and around my community ... factoring in that advertised prices give some negotiating room. I see most ads in the $20-22K range and assume that the final price is somewhere in the $19-20K range. So, I pick $19,500 as the market value.

So, you get out of your trailer pretty easy. Due to your awesome negotiating skills, you see little depreciation and get out for $500 (plus whatever you paid in sales taxes and registration). 2.5% depreciation. I, on the other hand, take a bath and see more than 30% depreciation and lose $8,500.

Back to the real world and your specific situation: you have a 2016 model year RV. The low use and condition of the trailer makes yours easier to sell than someone who had been using his trailer for 3 years solid. However, the price will be dictated by the used market for a 3-year old trailer. Your RV is 3 years old (2019 models are now out), regardless of when it rolled off the dealer's lot.

Check the used market for your trailer and you'll find basic information for what it's worth. The depreciation rate is merely a reactive mathematical measure that compares the current market value of your RV to whatever you paid for it.

Good luck.

[jaherbst]

What'd he say? What's that in "Dog Years"?

Jack

[Witch Doctor]

Or what NADA says it is worth, no matter what you paid.

[LegacyFB38]

To me, it is worth what someone will write you a check. What you paid and/or possibly owe on it is basically irrelevant. The question now becomes will you be happier enough with something else that it is worth the cost to make the change?

In our case, we just upgraded from an older, low end travel trailer to a new, larger, higher quality 5th wheel. To us it was worth the cost. To someone else, maybe not.

[67L48]

Originally Posted by Witch Doctor

Or what NADA says it is worth, no matter what you paid.

Maybe. NADA has nothing to do with fair market value around here. If you can get a used trailer at NADA price in CO, then you just got an absolute steal of a deal. I'd scour the actual ads for a market price. Guides are just that ... a guide. Ads are real-time indications of value.

[Witch Doctor]

I know of nobody who doesn't check there price for a unit first just even to get a value, what I think my trailer is worth means nothing, it's what the market will bear in private sales, and NADA is pretty close in what people will pay.

[lcv800]

Trade or sell and be happy. You don't want to spend the next couple of years talking about how unhappy you are in your current unit. My opinion is it takes several RV's before you get the "perfect" one. There are things in every unit you'll love and hate. By the time you retire, you'll know pretty much exactly what you want. Move now, as it only depreciates more.
Rusty

[67L48]

Originally Posted by Witch Doctor

[...] NADA is pretty close in what people will pay.

Maybe. NADA has nothing to do with fair market value around here. If you can get a used trailer at NADA price in CO, then you just got an absolute steal of a deal.

[JohnD10]

If you don't like the 'U' shaped dinette...then you will absolutely despise the non-'U' shaped dinette.

Wish I still had mine...

It is so small that it is hard to squeeze into it (and I'm a skinny 145 pounds) and the seat cushions are the absolute worst ever!

Every time you stand up the cushions come out with you!