Zero down financing.

MarkyB · 07-14-2015, 05:21 PM

So we're looking at buying a travel trailer. I did some basic research and determined that we wanted something about 30ft and about 6000 lbs based on our tow vehicle ('13 Ford Expedition), and number of campers (4 to 6). With no other preconceptions we went shopping.
The first dealer showed us something made by Cruiser RV and told us it was a "special deal" because he picked it up from another dealer that went out of business. MSRP of $35k but he was selling it for $19.5k. He also said that he would write the deal up at $25.5k with a "$6000 down payment" so we could get it for zero down. We told him we would talk about it and kept shopping.
At the next place we found a Wildwood X-Lite that we like better. ( Which is why I'm here.) There I noticed the MSRP was $27k and the posted sale price was $18.9k. This dealer only offered to throw in an "anti-sway" hitch worth about $375.
1. Is there usually that large of a difference in MSRP vs deal price?
2. Anybody seen a "phantom" down payment like that before?
Is it hard to get a zero down deal without being dishonest?

The x-lite model we're looking at is the 281QBXL.

**Herk7769** · 07-14-2015, 05:28 PM

Most trailers will be sold between 25 and 35% off MSRP.
Motor homes a bit more.

Deals vary based on financing options, trade ins, and dealer "glitz" (like stupid paint protection, stupid extended warranties, and other PURE money makers for the dealership.)

Not unheard of to get 40% or more off MSRP.

Yes Virginia, there is a lot of "fluff" in dealer prices.

Rrickim63 · 07-14-2015, 05:36 PM

Please determine what you can safely tow before buying anything.

dan-nickie · 07-14-2015, 05:43 PM

Yes, the difference in MSRP and actual selling price can vary that much and you should expect it.

As for the ''phantom' down payment, I have done that a long time ago on a car deal.
I had my own bank financing and I had them write it up that way so I would not have a down payment. The only catch to it is that the bank has to have a loan value high enough in their book.

davel1971 · 07-14-2015, 05:50 PM

1/3 off is common. NOTHING is free. You are paying for it somehow, it's all smoke and mirrors. They are in it to make money, even though they want you to think they are losing money.

MarkyB · 07-14-2015, 06:08 PM

Quote:

Originally Posted by Rrickim63

Please determine what you can safely tow before buying anything.

We have a 2013 Ford Expedition 4X4, 5.4L V8, and tow package. It has the integrated brake controller from the factory.
Ford says it will tow 9200lbs, so I figure a max dry weight of 6000lbs is a comfortable margin.

PolarisGuy · 07-14-2015, 06:12 PM

Our recent purchase was sort of like this. Dealer called me and said something like, "Yay congrats you're all approved, here's the terms, etc etc... just bring your 4,000 down and we'll get it going." Ummmm, excuse me? LOL

So we went to our credit union, financed it for a shorter term (for around the same payment) and paid no money down on our 38,600 OTD stealth. If you have access to a credit union definitely look into that option.

I personally get the extended warranty and yes we have had to use them so it's worth it to me.

thetanu539 · 07-15-2015, 10:37 AM

Quote:

Originally Posted by MarkyB

We have a 2013 Ford Expedition 4X4, 5.4L V8, and tow package. It has the integrated brake controller from the factory.
Ford says it will tow 9200lbs, so I figure a max dry weight of 6000lbs is a comfortable margin.

Just as important is your maximum payload. I used to tow with an Expedition and ignored that because my tow cap was 8900. Well lets just say my transmission did not care that my TT was only 6200 lbs fully loaded. It went out after three years and I was stuck footing the bill. My guess is that if you will have 4 people in your Expedition plus the tongue weight of the TT you will exceed your payload. SUVs are heavier with the extra weight from the cab and tend to have lower payload cap. The 2013 may be beefier than the 2008 I had but I also had the max tow package on mine and was still over max payload despite being under the tow cap.

TexasFamily · 07-15-2015, 10:52 AM

Our recent order is over $65k with zero down financing if that helps. We ordered from Lori Carte at RV Wholesalers in Ohio and added a 4-year warranty, hitch and sales tax into the deal. Plan is to accelerate the payoff to 4 years. I only say that because we did not want to take a lot of cash out of the bank for down payment and taxes. We also did not have a trade. I know Ohio is a drive from Alabama, but may be worth a call to compare prices.

SilverbackMel · 07-21-2015, 05:04 PM

A lot of loan flexibility is based on your credit score and STABILITY!
Lenders want loans repaid, not repos.
Remember, these are DEPRECIATING ASSET TOYS and when you need to get a bigger unit, likely you will be significantly upside down. Rolling negative equity is not as easy as years past. So, buy your unit and try to stay in a wholesale value balance position ASAP as you WILL want to trade again! ( Soon ).

Good luck and travel safe!

wanderingbob · 07-21-2015, 09:16 PM

Zero down is a sucker bet . You will forever owe a lot more than the trailer is worth , no equity !

TexasFamily · 07-21-2015, 09:28 PM

Quote:

Originally Posted by wanderingbob

Zero down is a sucker bet . You will forever owe a lot more than the trailer is worth , no equity !

Not if you triple the payment.

MarkyB · 07-23-2015, 04:27 PM

Main reason we're looking at financing is the tax deduction.

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fx2 · 07-24-2015, 05:18 PM

Quote:

Originally Posted by MarkyB

Main reason we're looking at financing is the tax deduction.

Sent from my iPhone using Tapatalk

Not a great way to look at it. If you get a 40% tax deduction (probably on the high side as most people pay less than 20%) you are still paying the bank $.60 on each dollar you pay in interest.

We financed ours because we were getting much higher returns in brokerage accounts (and still are) that the interest was significantly less than what we are making on the money. Now if that money was sitting in a CD making less than 1% and I was paying 5% interest than I'd definitely had paid cash for the unit.

SilverbackMel · 07-24-2015, 05:21 PM

Fx2 x2

**Herk7769** · 07-24-2015, 05:56 PM

Quote:

Originally Posted by fx2

Not a great way to look at it. If you get a 40% tax deduction (probably on the high side as most people pay less than 20%) you are still paying the bank $.60 on each dollar you pay in interest.

We financed ours because we were getting much higher returns in brokerage accounts (and still are) that the interest was significantly less than what we are making on the money. Now if that money was sitting in a CD making less than 1% and I was paying 5% interest than I'd definitely had paid cash for the unit.

Glad someone brought this up; a whopping 70% of American households do not itemize at all so the mortgage interest deduction is useless to them. They will pay 100% of their mortgage interest.

Of the remaining 30%:

4% are in the Zero Percent tax bracket and write off 100% of their mortgage interest because after topline deductions (Oil Rig write downs, etc), they have very little taxable income left to tax.

8.8% are in the 10% tax rate and can write off 10 cents on the dollar of interest.

39.6% (of the 30%) can write off 15 cents on every dollar in interest.

32,7% (of the 30%) can write off a quarter (25 cents on the dollar of interest).

IF you do itemize, AND you MUST finance your home and/or your RV, a 10 to 25% assist from the government (meaning the rest of the taxpayers). is better than a poke in the eye.

Only the top 5% of Americans REALLY benefit from this deduction (35% of a million dollars in interest for example). For most of us, if we can get a clip of a few hundred bucks; its a big deal.

If you own your own home free and clear, have it more than 25% paid off (after 25% your payment is mostly principle), or rent, financing "to write off interest" is a big mistake, IMO.

Who Itemizes Deductions? | Urban Institute

In fact, it is even worse than that, because you still don't make a dime until your total deductions exceed the standard deduction ($6,300 Single or $12,600 Married filing jointly). Since due to the deduction "floors", most of us only HAVE interest and Real Estate taxes to deduct. So you would only get the benefit of the part of interest that exceeds that "floor" (you would have gotten the rest and the taxes anyway in the standard deduction).

IE (Married Joint Return) You pay $2,000 in Taxes and your Home Interest is $6,000, your RV's interest is $1,000; You can write off NOTHING as you take the standard.

Same situation:

You pay $3,000 in Taxes and your Home Interest is $8,000, your RV's interest is $2,000; You can write off $13,000 MINUS the Standard ($12,600) leaving 400 bucks of deductions "to the good"

If you are in the 20% tax bracket, you "get back" 80 bucks refund BUT you paid 2 GRAND in interest on your RV.

MarkyB · 07-24-2015, 08:12 PM

My wife has an accounting degree, she is a stickler about deductions. We do itemize and we would benefit from the deduction. So for us, putting $20k in the brokerage, financing the RV, and deducting the interest makes sense for us..... well, it does to my wife...

**Herk7769** · 07-25-2015, 05:49 AM

Quote:

Originally Posted by MarkyB

My wife has an accounting degree, she is a stickler about deductions. We do itemize and we would benefit from the deduction. So for us, putting $20k in the brokerage, financing the RV, and deducting the interest makes sense for us..... well, it does to my wife...

As mentioned before, if you are getting returns on the money higher than the finance charges and can guarantee that will be so for the life of the loan, it can make sense to finance.

BUT consider this:

Interest rates will be predictable for the life of the loan (unless you were unfortunate enough to be talked into a variable rate; interest rates can only go UP from here) and must be paid every month regardless of how your money situation is.

Market returns, while the highest that they have been in decades, are NOT predictable and we could be seeing the end of the current bull market. If so, market returns could be negative over the remaining life of your loan.

Even a short market downturn could wipe out any possible advantage of using "the bank's money" to finance your RV.

"Must Pays" are the mill stones we place on our own necks.

Obviously, I have strong opinions regarding debt and its place in the home financial picture. While debt was attractive in the past, it lead to the crash of '08. "Rules of Thumb" do change. Lecture over ...

RSchleder · 07-25-2015, 06:18 AM

One point that I don't believe has been brought up is the amount of State sales tax that will need to be paid. In Iowa, we pay sales tax of 6% when we initially register our RV's. This tax is based on the amount paid for the RV minus any trade in value. So if the dealer artificially inflates the price paid for the RV, we would pay tax on the inflated price shown on the bill of sale. If this ends up being inflated several thousand dollars, the tax bill could end up being several hundred dollars higher! Not the best way to do business IMHO!

**Herk7769** · 07-25-2015, 06:41 AM

Quote:

Originally Posted by RSchleder

One point that I don't believe has been brought up is the amount of State sales tax that will need to be paid. In Iowa, we pay sales tax of 6% when we initially register our RV's. This tax is based on the amount paid for the RV minus any trade in value. So if the dealer artificially inflates the price paid for the RV, we would pay tax on the inflated price shown on the bill of sale. If this ends up being inflated several thousand dollars, the tax bill could end up being several hundred dollars higher! Not the best way to do business IMHO!

LOL, yea; but THAT will be "deductible" in the year paid regardless, provided you itemize!

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