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Old 12-14-2014, 08:43 PM   #1
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Motorhome Buying cash vs finance

I'm in the market to buy new solera .. Which option better way to save money ? pay cash upfront or monthly payments ,, can we write off the interest rate , is this gonna save money 10 15 30 years?

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Old 12-14-2014, 11:44 PM   #2
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It's best to talk to an accountant about the tax write offs. It really depends on your individual situation. But yes there are avenues out there for tax breaks.

For me, it was better to trade in what I had on my motorhome and pay monthly notes. Again this will depend on your situation. I don't like just giving up all that cash on something that depreciates.

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Old 12-15-2014, 07:11 AM   #3
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Personally, I chose the payment option. I did this because my interest rate was lower than the rate of return on the money if it were invested. So, let's say my rate of return is 7% and my interest rate on a loan is 5%. I make 2% on the money rather than paying it out in a lump. Clear as mud?
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Old 12-15-2014, 07:27 AM   #4
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I have always paid cash in the past, in todays current mix of social and economic conditions and uncertainties I believe I would lean more towards using other peoples money and finance the RV.

But as another has pointed out, what would work the better for me may not be the best avenue for you to ride down.
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Old 12-15-2014, 07:42 AM   #5
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I did some of each:

after looking over the 24S for some hours,
told them I would give a 10K check pending their review of my old unit, if they upped offer

took a couple of days to empty my old unit & put in ( not remount all the items I had stripped off the old unit: wheel covers, step, TV & antenna )

went in & closed the deal with a second 10K check, taking their 4.99 % finance plan since it paid off the remainder of my 5.25 % financing @ USAA

a month later I talked to USAA, the refinanced the unit @ 4.25 % 15 year

paying off @ $ 1000.- per month reduces the total interest from 25K to 11K

see: Time Payments Calculator ( my mortgage repayment calc )
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Old 12-15-2014, 10:19 AM   #6
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ask your tax guy but unless you itemize it's not likely the interest will be much of a deduction.
What interest rate are they charging vs where you have your money now? I have passbook savings in 3 pays 1.5% the rest under .5 %...but if you have the money in something paying 5% or better and can get a loan at 3% or less it's worth getting the loan.

My car loan is at 1.23%..not worth pulling money out of a decent interest bearing account to pay cash for it.
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Old 12-15-2014, 11:39 AM   #7
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Paying cash is usually your cheapest option. Your personal finance requirement should dictate how much cash you need in reserve. That is your personal decision. You may be able to take a deduction for the MH as a second home, but this is a very small deduction. The question you should ask yourself is if you finance what will I do with the cash I do not use? I would assume a loan interest rate of perhaps 6%, but you may have resources to beat that, and what can you invest the cash in that is better than 6%. If you are in the stock market you have seen 20 + % earnings rates the last few years. But this will not last. The bank will pay maybe 1%. You should beat the 6% rate by at least 2%.
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Old 12-15-2014, 05:54 PM   #8
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Renting somebody else's money, really.

Say you have a perfectly good car sitting in the driveway and you call Avis to rent a car to go to the store.

Tax deductions, really!

So you buy something and pay say $10,000.00 a year in interest which you get to write off. If you are in a 35% tax bracket you get to write off $3,500.00 right. So you paid the bank $10,000.00 to write off get back $3,500.00 in taxes, really.
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Old 12-15-2014, 06:13 PM   #9
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We bought in July 2013. We had CD’s maturing that were paying 3.2%. The best loan we could find at that time was 4.5% even though automobile loans at the time were under 3%. We were told by several banks that loans for RV’s and Boats are higher because “they lose value quicker”. Never bought a boat and never owned an RV so we had no actual experience on RV/Boat depreciation – but several of those in the loan business we got quotes from had the identical story. And when you calculate in the interest you pay, the actual value of the loan (total money paid back) made the effective interest rate closer to 6%. In most cases, I believe if you can pay in cash you’re better off than borrowing.
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Old 12-15-2014, 06:16 PM   #10
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The tax laws change so much it seems every year that the only person to advise you would be an accountant or tax attorney. We got to the point that it's not really even worth us doing long forum anymore. As far as a deduction for a second home that would be very sticky. I know I had a boat that we lived on full time for 5 years. We were able to write the interest off on that but then again that was late 90's early 2000.

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