Motorhome Buying cash vs finance

[dustman_stx]

Originally Posted by DKRITTER

The interest charged is based on current balance X interest rate. That is why you pay more $$ in interest at the beginning of the loan.


This is another reason why not to borrow money, you pay mostly interest early in the loan and very little principle, i.e. your money goes to the bankers.

There are lots of reasons not to borrow money. Also lots of reasons not to go to work. Unfortunately, most of us find it necessary to do both. I know that for me personally, if I opted to pay cash for everything, I'd never get anywhere. Renting an apartment, repairing and fueling older, more inefficient vehicles, and so on, would absorb all of the money I use for payments. At what I spend on my camper payment, I'd be able to purchase a camper that meets both mine and my wife's condition and cleanliness expectations in about 10 years- if there were no inflation, which we know won't happen. My kids would be 10-16 by then. We fore-go extras that most consider "necessities", such as satellite TV, data plans on cell phones, home Internet, etc. I'll gladly sign that camper note and use that money for something that brings my family together rather than on a bunch of tech gadgets for them to bury their faces in and ignore each other any day. Hijack over- carry on.

[Rockwoodjoe]

When I bought my new F-150 the dealer and I were about $3000 apart from a deal. We were paying cash. I walked and got a call two hours later. They would meet my price if I financed with Ford Motor Credit. Three months later I called for a payoff on the loan. The lesson I learned is not to let emotions get in the way of large purchases and learn to walk away. I saved about $2500.


I am willing to bet the RV dealers work the same way and get some kind of financing credits through their banks.

[bclemens]

That is correct. Normally they shop the rates and get a small kick back from the lending company (this is now limited by the government). Plus you can always pay more if you want (no prepayment penalty)...but if you want to conserve cash, you can pay less for a while.

No one cares if you are paying cash these days. That is not the "deal getter" that it was back in the day. They either get your cash or the banks cash.

[rockfordroo]

I have a different outlook. My father in law purchased an expensive car and shortly after died. Instead of making the large payments, and his wife didn't drive any more, called the bank and told them he died and to come and pick up the car which they did (no more payments). If we should ever upgrade to an expensive motor home that is what I will also do.

If you are upside down on the loan, just calling the bank and telling them to come get it won't help you. If they repossess it and then sell it for less than what's outstanding on the loan, you (or in this case, your estate) are still liable for the difference. Unless you have a life insurance policy tied to your loan to cover it.

[smggsm]

Originally Posted by bclemens

That is correct. Normally they shop the rates and get a small kick back from the lending company (this is now limited by the government). Plus you can always pay more if you want (no prepayment penalty)...but if you want to conserve cash, you can pay less for a while.

No one cares if you are paying cash these days. That is not the "deal getter" that it was back in the day. They either get your cash or the banks cash.

Thank you guys Realy appreciate your oboist,,
My question ,,,does it its make different on the interest rate? If u pay cash no interst rate ? I know you were can't lease motor home you have to buy it 10 years 5% that's a lot.. Or maybe not,, is it worth saving the interest rate?

[mjones12]

Originally Posted by jwedell

I have a different outlook. My father in law purchased an expensive car and shortly after died. Instead of making the large payments, and his wife didn't drive any more, called the bank and told them he died and to come and pick up the car which they did (no more payments). If we should ever upgrade to an expensive motor home that is what I will also do.

No more payments, but the bank is going to auction off the vehicle for far less than it's worth, subtract the auction proceeds from the balance on the loan and then require you to pay what's left on the loan balance, which is known as a deficiency balance. You are legally obligated to pay the balance in full, and lenders will take you to court to get it. They are not going to walk away from money they are owed, nor should they. And there's going to be a repossession on your credit report. Doesn't matter if it's a voluntary repossession or not.

[mjones12]

Originally Posted by rockfordroo

If you are upside down on the loan, just calling the bank and telling them to come get it won't help you. If they repossess it and then sell it for less than what's outstanding on the loan, you (or in this case, your estate) are still liable for the difference. Unless you have a life insurance policy tied to your loan to cover it.

That's exactly right. Sorry, I answered this before seeing your excellent answer.

[dustman_stx]

Originally Posted by mjones12

No more payments, but the bank is going to auction off the vehicle for far less than it's worth, subtract the auction proceeds from the balance on the loan and then require you to pay what's left on the loan balance, which is known as a deficiency balance. You are legally obligated to pay the balance in full, and lenders will take you to court to get it. They are not going to walk away from money they are owed, nor should they. And there's going to be a repossession on your credit report. Doesn't matter if it's a voluntary repossession or not.

Actually, I do see a problem with this practice. The banks charge higher interest rates for more risky buyers for a reason. If they can repossess and then sue you for the balance, where is the risk? The only way they will lose is if you file for bankruptcy. If they are charging a higher rate because you are a risk, they should be assuming that risk, IMHO. I guess another way to say it is that the bank is in a way "insuring" themselves from you defaulting by charging the higher interest- isn't that the whole point of credit scores in the first place? When they also sue to get the money I see it as double dipping.

[Phinias]

you can't judge by interest on car loan. The dealer can take extra discount money that the buyer knows nothing about, use that money to buy down the loan. that makes it look like no interest or super low interest when actually the buyer paid the interest up font out of discounts that he had coming.

There is no such thing as a free lunch

Finance it for 20, due to inflation index, you are not paying anything for the money. Of course that's if it's around 4.5% the day that you sign the deal

[Phinias]

it's not always the bank that ups the interest. the dealer buys the a paper at discount. every point over they keep for themselves. bad credit is an opportunity to bully the buyer. the buyer enters the ring at a disadvantage. many deals are made with the finance being the only profit made