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Old 01-22-2017, 12:50 AM   #1
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Upside down loan

We have a 2015 Sunseeker and have thought about trading it in and downsizing to a smaller class C, but being upside down on our loan is the biggest obstacle. I've seen many post from people trading in fairly new RV's for different (new/used) RV's and am wondering how they manage to get it done - be upside down, trade in and qualify for a new RV loan?
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Old 01-22-2017, 02:12 AM   #2
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Your upside down loan amount is added to the purchase price of the new unit.
It's a terrible idea, as most people never get out of being upside down. I would personally advise against it as you would be even more upside down in the new unit.

Here's how it works though.
Say the Msrp on the new unit is $50,000, but the "sale" price is $40,000.
And then say on your trade unit they offer you $30,000 but you still owe $40,000. Your $10,000 remaining balance is tacked on to your new unit price bringing it back up to $50,000.

Bad thing is, if not for the trade, you could probably get the new unit for about $35,000.
So when you go to get rid of it, you will have to compete with other units priced much lower as they dont have all the extra tied up in it. Also because of that, if you decided to trade again in 6 months, you might, maybe get offered $30,000 for trade on a unit you owe $49,000 on now.

Now most lenders will want about 10% down to help with their risk, but I'd advise more than that if possible. Also, try selling outright and pay off the balance. Then you can start fresh and shop around so you don't end up upside-down again.

Good luck!.
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Old 01-22-2017, 04:54 AM   #3
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wondering how they manage to get it done - be upside down, trade in and qualify for a new RV loan?
We traded a 2009 on a 2011, the 2011 on a 2013, and the 2013 on a 2017.

Although not upside down per se, still a money loser. Your never going to make money on one of these bought new, the depreciation rate is too fast.

The biggest thing is not to get hosed in the first place. Many many buyers pay way too much for the new RV than they needed to. Secondly they take the 120 month or longer financing which compounds the upsidedownedness.

I get what I consider a fair price, will only go to a max of 72 months but preferably 60 or less, and make sure i have at least 30% trade equity or if I don't I dig into my moldy wallet and cover it with cash. Then I throw a few bucks extra at the principal every month, and it does not have to be much to make a huge difference in 2 years unless you agreed to some ridiculously high interest rate. Even then if your changing rigs in two or three years and truly break even, you're doing good with RV's. Trading in is a money loser 99.9% of the time, selling privately as mentioned is the way to go. The last two times I have wrestled with just buying cash and getting it over with but I can make more with that cash in hand than what the financing costs. I don't mind forking out enough to try and keep the playing field level but think I'll ever buy one outright.

I learned my lesson in my early 20's buying vehicles and getting upsdie down....it sucks.
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Old 01-22-2017, 07:15 PM   #4
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<<<I dig into my moldy wallet and cover it with cash>>><<<will only go to a max of 72 months but preferably 60 or less>>>
Then you are not upside down after a few years because you've paid a boat load more money. You obviously have a lot more disposable income than OP.....not something to at him for.

To the OP.... nope. You're stuck. Either find cash or another asset with equity in it to trade or own it a lot longer and pay down the nut.

I do agree that paying a little extra every month if you can will help speed up the process dramatically.
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Old 01-22-2017, 11:08 PM   #5
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Originally Posted by twochicksandarv View Post
We have a 2015 Sunseeker and have thought about trading it in and downsizing to a smaller class C, but being upside down on our loan is the biggest obstacle. I've seen many post from people trading in fairly new RV's for different (new/used) RV's and am wondering how they manage to get it done - be upside down, trade in and qualify for a new RV loan?
Your best option is to put it up for sale and ask what you owe for it. Your trade in value is low book. Find out what your high book value is with your improvements.

I sold my old class C before ordering a new FR3. I received 20% more than I was offered by a dealer as trade in. I also paid to have it cleaned.

Good luck.
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Old 01-22-2017, 11:22 PM   #6
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Your best option is to put it up for sale and ask what you owe for it. Your trade in value is low book. Find out what your high book value is with your improvements.

I sold my old class C before ordering a new FR3. I received 20% more than I was offered by a dealer as trade in. I also paid to have it cleaned.

Good luck.
Yes, bring it into it's best presentable shape and market it until it sells will bring you the highest dollar.

Now IF this is enough to pay it off you can move on to the next one. If not, you'll have to hold on and enjoy it.
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Old 01-23-2017, 04:07 AM   #7
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Then you are not upside down after a few years because you've paid a boat load more money. You obviously have a lot more disposable income than OP.....not something to at him for.

First of I was not laughing at the OP.............I was trying to interject a little humor into what appears to be a not so ideal situation by the use of the word "upsidedownedness" which is not a word to begin with. One thing I've noticed on this forum is a distinct lack of sense of humor.

I did not pay any more money at all, in fact I paid less than most for a particular unit but its much more about "how" you paid for it, and not what you paid for it. Even if someone paid dealer cost but financed 100% and did so for some ridiculously long term, they're most likely going to be upside down, no way around that with an RV.
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Old 01-23-2017, 06:55 AM   #8
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I did not pay any more money at all, in fact I paid less than most for a particular unit
OK, I should have said "you laid out more cash".

There's nothing wrong with my sense of humor. However I don't think that I would be making funnies around a person who has maneuvered themselves into a crappy position. Is it smart to do that? No. Is it understandable that people will do things that may not be completely thought through to attain the enjoyment they desire? Yes.

I too am fortunate to have the means to play this game and keep it going. I don't rub it in.
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Old 01-23-2017, 07:34 AM   #9
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Rub it in?
Whatever, it that's how you took it fine. LOL

The OP asked........"and am wondering how they manage to get it done - be upside down, trade in and qualify for a new RV loan"

I simply stated my take on it. Laying out more cash as you put it is one method to not get in the situation to begin with. If the truth hurts so be it. If the OP takes it as you claim I fully apologize as that was not the intent and I'll leave it at that.

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Old 01-23-2017, 07:42 AM   #10
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Good grief guys...give it a break. Please...just drop it. Sounds like Junior High school here.
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Old 01-23-2017, 08:40 AM   #11
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The only way to not be upside in any loan, is to always owe less than the current worth. If the depreciation is 50%, then you couldn't borrow more than half the sales price or you'd be upside down from the start.

And then even if you did that, in a short time you'd be upside down again because it continues to depreciate.

It's sort of like my house. My neighborhood has gone downhill some, and my house was probably not worth what I could have sold it for, for a long time. But that affected me how???? I didn't care what it was 'worth' in dollars to someone else!! I still don't. It's worth is measured in whether the payments I make, and the dollars I spend for it, give me what I wanted when I bought it.

Same for a trailer. My fifth wheel is so upside down it's crazy. But why do I care? It's not for sale. I use it, and I'm paying for that use.

If you are going to trade them fairly often, don't finance them.
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Old 01-23-2017, 09:20 AM   #12
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Most folks just worry about their payment amount, not what the total loan is. they will trade if the payment is about the same. Im glad I don't have any payments
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Old 01-23-2017, 09:31 AM   #13
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Most folks just worry about their payment amount, not what the total loan is. they will trade if the payment is about the same. Im glad I don't have any payments
This is why salespeople will always tell you they can put you in a new unit for the same or lower payment than you currently have. What they are not telling you is that those payments will continue for the next 7 years instead of ending in 3 years.
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Old 01-23-2017, 09:39 AM   #14
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OP: you didn't mention your loan rate. Could it be possible to refinance your current loan at a better rate? Most dealers--car, RV, motorcycle, whatever--don't spend a ton of time looking for the best rate for you when they're doing their financing--they want the loan from the lender that is quick and painless for them, with low or no fees, and sometimes the rates are jacked up. Check out your own bank or CU and see what they'd do for your current loan. You might not wind up as upside down as you think if you can pay off a high rate loan and replace it with one that has a better rate. Good luck!
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Old 01-23-2017, 07:46 PM   #15
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OP: you didn't mention your loan rate. Could it be possible to refinance your current loan at a better rate?

Problem is, he would have to re apply and the new bank would look at the loan to value. Since he is upside down the new loan would probably not be enough to pay off the old one.
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Old 01-23-2017, 08:17 PM   #16
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Getting back on topic, your best bet would be to sell it privately ! Maybe even on the classified section here!
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Old 01-23-2017, 09:47 PM   #17
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Getting back on topic, your best bet would be to sell it privately ! Maybe even on the classified section here!
True, as long as he can sell it for enough so that he can pay off the nut.
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Old 01-23-2017, 09:57 PM   #18
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True, as long as he can sell it for enough so that he can pay off the nut.
Why do you keep calling a "note" a "nut"?? (Post 4 & 17)

Oh and...the OP is a female...
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Old 01-23-2017, 10:23 PM   #19
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Why do you keep calling a "note" a "nut"?? (Post 4 & 17)

Oh and...the OP is a female...
It's a colloquial expression. And, I was not aware OP was a lady. My apologies ma'am. Rest assure my use of the word had no meaning other than as a financial concept.
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Old 01-23-2017, 10:44 PM   #20
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One origin of the term "Nut"

A not too often used phrase but one with as much meaning today as it was long ago is Making Your Nut. Simply put it means that a person has the money that will be needed to pay the bills that are due. But where do terms or phrases like this come from? Here is the accepted version of the origin of this one:
Back in old England is the origin this phrase. There were gypsy circuses that would travel from county to county entertaining the townspeople. Before the city fathers would allow them to set up camp, they would come to an arrangement as to how much the circus would pay the city in taxes for the privilege of setting up. Once this amount was agreed upon, the city sheriff would take the large nut that secured one of the wagon wheels on the biggest circus wagon.
Until the circus was able to pay the amount, they would not get their nut back. This way the traveling entertainers could not sneak away at night without making payment.
Today this phrase is used when discussing whether or not there is enough cash coming in to pay your bills. As in ‘Because of too little work this month, it will be difficult to make our nut.’
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