RV financing is one place where we are definitely struggling! And you don’t even have to worry when you aren’t looking at a class A diesel pusher, like the one in the picture here.
We’ve been looking at some of the larger 5th wheel units and there you can easily spend $100,000 putting together a 5th wheel and a good truck to pull it.
I know that rv financing is somewhere between like debt on a car and a mortgage on a house. You see, you can always get better rates if you have good equity to back the loan. It just simply offers much better security to a financial institution in case you default on your loan.
But with an RV rig, it’s easy to head for the hills and it will be a lot tougher to track you and your RV down. Hence, the higher interest rates. So, let’s just think about financing for a moment. If you are looking for rv financing, you can expect to pay higher then prime rate interest rates.
For example, it wouldn’t be too far fetched in today’s economy to pay 5% of that $100,000 loan.
We would be looking at payment of $791.00 per month and we would pay close to $42,334 in interest in a 15 year period.
So, this is one serious expense. Not for the light hearted or the weekend or very occasional RV warrior. RV financing is like taking out a mortgage on a second house!
We haven’t equated the cost of a pad per month to sit our RV on either. And i feel that it’s wize to consider around $500 per month for that alone. Together, we are now looking at $1291.00. Sounds definitely like owning that 2nd house!
It would be idea to be able to sell your current home to reduce the amount of rv financing that you’d require, especially if you are looking at full time rv living. But there’s one more fly in the ointment, so to speak.
Whereas your home will continue to appreciate in value, your RV will depreciate! I’ve been studying the values on RV units across the board and it’s not unusual for a new RV to depreciate by 25% in the first year and around 10 to 15% there after. Thus after even 10 years, your $100,000 investment is probably worth maybe $15,000! Ouch.
RV Financing – Real World Example
To give you a real example, if you don’t believe me, I just took a look at a 2005 diesel pusher that sold for around $350,000 in 2005 is up for sale at $150,000. It’s literally worth less then half it’s original value in little over 5 to 6 years. Meanwhile, the rv financing on the unit has to be costing way more then $350,000 at this point.
In comparison, 5th wheel units that are two or three years old are also only worth about 1/2 their original sales cost. That could be great for us, but when we get it, we too will feel the continued depreciation.
So I think it all comes down to considering your rv financing very carefully. Make sure that you understand the pitfalls of the unit you’ll be purchasing. It’s easy to get lulled into a unit that is very expensive because it’s so nice looking and heck, you’ll be full time rving! So, it’s got to be good!
RV Financing – Wrapping it Up!
But you do have to remember that this is a depreciating asset and your rv financing must reflect that. Best of luck and be sure to tell me if you agree, disagree or have a better idea below in our comments section. Thanks for reading this article on rv financing.
Just a tidbit for U.S. citizens who buy an RV: An RV can be considered a first or second home for purposes of the mortgage loan interest deduction. This means that if you have sufficient deductions to itemize in excess of the standard deduction, you can use the RV loan interest as an itemized deduction that will save you some taxes.
That is very interesting! Thank you for your comment!