
This is a floor plan of the trailer we've found. It's not the official plan since I couldn't find that on-line. When you're buying a used model, it's often not possible to dig up the diagrams -- the manufacturer and dealerships are providing this information for the current model year. It's not worth it to display this info for items they won't have in stock. I hacked up this year's model to look like the 2006.
I wanted to post about financial matters since this blog is about how we make ends meet. I know there are a few folks who read that like to camp and might some day want to own a trailer. Maybe others can learn from our experience/mistakes.
The first trailer was purchased at 12% interest -- and that was the best rate for someone with an excellent credit score. At the time, there were no signs of the economy tanking and no reason to believe rates would go lower. The interest is written off each year on our taxes, so that was one reason we decided to go for it. Also, the interest could be whittled down by paying extra. And it was also less than what we'd be paying if we'd had to hand over property tax on a vacation home. The payment and space rental where we are is still much less than one typically pays for a week long rental in the community where we spend our free time. In fact, our totally yearly cost is less than most beach front owners pay on property taxes alone.
An RV depreciates immediately. One doesn't buy a trailer as an investment. It's a quality of life purchase. We have always owed more than what we had in principal. When we first wanted to move up to a larger trailer, it didn't make sense. The interest rates were still high and a new unit would cost more -- meaning higher payments. We had planned to haul the trailer, so we wanted a small light-weight model. Our needs and expectations changed when we realized leasing seasonally would be cheaper and more enjoyable.
We have purchased a trailer that offers twice as much space. We are financing about 2K for the buy-out. But what we spend on that, is the equivalent of what we save with the new lower interest rate (8%). Trailer loans can't be re-financed. The only way to lower our interest rate was to buy again. But we decided to buy sensibly -- meaning get more space but are not spending much above what we were paying all along. It comes up to an extra 8 bucks per week.
The dealer is now shopping for the best loan. He shopped one bank and the kid he was dealing with told him we needed to go with a shorter loan and higher payments -- because we didn't already have enough debt and should be able to take on more. That wasn't his call, and we declined. Years ago, we'd qualified for a mortgage that would be twice the amount of the home we bought. We didn't take that as a suggestion for what to spend -- and can afford life and to save because of it. That's why we want a 12 year loan rather than 10. We still plan to pay extra -- but will have breathing room if things get tight.
Financing is an important consideration when purchasing an RV. The cost of using it also needs to be taken into account. Buying/trading up can make sense -- but it pays to factor in the depreciation/buy out and what will be gained when moving to a more desirable unit. Keeping in mind an affordable monthly payment (along with the cost of how the unit will be used) is a must. And it's important to stick to it! Tax-write offs of interest and perks such as this year's stimulus deal that allows us to write off the sales tax are worth considering too. We just figured now was the time. Our current trailer would continue to depreciate and we didn't think interest would be going down much further. We could afford an upgrade now. I think it will be worth it.
After all, how can you enjoy your time off if you're forever worrying how to pay for it?