Financing - Montana Owners Club

dsprik · 07-31-2005, 05:19 PM

I have not been able to find any threads on the in's and out's of financing these beauties. Iknow that 15 yrs is a standard term, but is there any companies that are better than others, or maybe financial company names are not allowed on these posts? Is there anything I need to watch out for. I want to have all the bases covered next year when I pull off the lot with my new 36xx Montana. Or did all you lucky guys pay cash for yours?

DHenry · 07-31-2005, 06:06 PM

We were lucky enough to pay cash for ours, but if I was to finance I would use the equity line on my home as it has a low interest rate.

richfaa · 08-01-2005, 04:08 AM

If you belong to a Credit union their rates are usually lower than banks. I would agree that the Home Equity loan line of credit is the bast way to go.We do have a equity line of credit as a source of $ should we need it and the interest rate is 4.75% We have been driving a schools bus and charter bus part time for 5 years since retirement(while waiting for Helen to retire) and was able to pay for the new truck and will have enough for the new 5th by spring..that is the best way...

BillyRay · 08-01-2005, 04:53 AM

we have always used credit unions for ours. that's only because they have had the best rates and longest terms.

Montana_2785 · 08-01-2005, 05:19 AM

In my Not-So-Humble-Opinion, it is crazy to finance anything for 15 years that depreciates. You will wind up with an upside down loan (owe more than it is worth) pretty quickly. Once you have an upside down loan, if you HAVE to sell for some unforseen reason, you will basically be screwed. If you do take the 15 year, pay it like it is a much shorter loan term....

How fast does an RV depreciate?

Well, we got our 2002 Montana when it was 3 years old. It retailed in the upper $40K's. We paid $24.5K. BTW: That was less than the previous owners still owed for it. I have no idea if they financed the entire thing or what they paid down for it...

I had a nice talk with my insurance agent and he told me that what I paid for it was basically the wholesale price.

Don't let anyone kid you, RV's depreciate just as rapidly as anything else....

My 2 cents worth.

Eric

richfaa · 08-01-2005, 05:50 AM

Eric is correct but here is the way to cheat the system.Finance for 15 years or as long as you can so the payments are as low as they can get, of course if you see the 15 years to term the interest is unreal..however Ballon those low payments.Make a extra 50.00 100.00 or more each month, when you get some extra $ like income tax refunds, etc, ballon the payment. You will be surprised at how that lowers the interest rate and how many years you can shave off the loan..Need to make sure yoy CAN ballon the payment..with a credit union or home equity loan you can do that..with some banks you can't. And in my humble opinion the Rv depreciates as fast or faster that a car/truck.

Parrothead · 08-01-2005, 06:16 AM

For those that are not so fortunate to be able to pay cash, just remember the interest you pay on the Montana is tax deductible. It is a second home. RV's qualify if they are fully self contained. Monty's are. This applies to Federal and California. Other states may have different rules.
Happy trails..................

tweir · 08-01-2005, 06:37 AM

Ahhh, the 'ol IRS regulation. This is true IF the RV meets the "test" and I would find it hard that any RV would not qualify (sleeping area, food prep/handling area & potty area) AND the RV is the collateral/security on the loan and is so named. For instance, a personal line of credit secured by your other savings instruments and is used to buy an RV, then the interest is NOT deductible on that line of credit used for the RV purchase.

SAndreasen · 08-01-2005, 08:03 AM

I realize that "paying cash" sounds like a great idea BUT why take some cash out of an investment that makning about 8% interest to save a 4% loan? Seem to me if you plan it correctly, with the tax advantages, differences in interest rates, etc you could make money using someones else $$.

sreigle · 08-01-2005, 08:56 AM

I agree with Sandreason on this one. You have to compare investment income to interest paid to make this decision, assuming you have the cash up front in the first place. Otherwise financing is the only option.

Our Highways magazine always comes wrapped in a flyer about refinancing your RV and Trailer Life usually has those card inserts about financing. I think it's Good Sam and/or Trailer Life's financing. You could start there. www.goodsamclub.com and www.trailerlife.com . Also, do a google search on 'rv financing' and see what pops up. I'm sure there are many options out there.

dsprik · 08-01-2005, 09:02 AM

Good point! Great input!

I am going to get humble myself for a moment (don't tell my wife ~ she'll think I'm off my medicine ~ or on the wrong medicine).

My credit is poor. I lost a house to foreclosure three years ago. A legal battle with a bank on a primary residence mortgage cost residual damage on a second home. Even though we won the battle (war) by quick claiming the primary house back to the bank plus a small cash settlement (the bank took a $220,000 loss), we were financially devastated and could not save the second home before we could sell it. Our attorneys took steps to prevent any negative credit of the primary mortgage holder, but the foreclosure issue on the other house was unavoidable. Over the two year legal battle, we went through all of our savings and I had to cash out my entire stock portfolio.

We are currently renting. We do have a GMAC loan on my wife's blazer, but that was obtained prior to our credit scores taking a nose dive. We have a couple of small consumer loans that we are paying off (We had five weddings in five years. Fortunately only three of them were daughters, even though we did help our sons out a little), but the bank there told me last week that they would not go more than 7 years on a new RV and 3~5 yrs on a used one. They like high payments ~ I don't.

This year I have had a unusual year. I am a teacher and I had an assignment switch after 17 years. It turned out to be a nightmare adjusting. On top of that, I had three shoulder surgeries on my rt shoulder trying to repair a rotator cuff (after the first one I developed an infection and slept on the couch in an upright position for 3 months). They have now determined that it is unrepairable and I'll have to learn to live with the limited motion in that arm (I'm right handed). My left shoulder is due for surgery Sept 8. This spring, one week after my 3rd surgery in 11 months, I developed alot of internal bruising down my rt arm and rt side of my chest. Before I could get into the doc's office, I developed fluid in my lungs, which I have never had in my life. During the second of three ER visits in four days, they did a CAT scan of my lungs and found a mass on my rt kidney.

Now up to this point in my 53 years, I had been doing great. Going to teach until I'm 62!.

Not now. My Dad retired from teaching at 62. My Mom (also a retired teacher) had already begun the early stages of dementia. She is still alive, but my Dad had tears in his eyes this past weekend when he started telling me all the things he and mom had planned to do after retirement and now will never be able to do them. My wife's Dad retired from GM after 40 years and his wife suffered a debilitating stroke within a year and ended up in a medical care facility until her death in 2000. He passed away three weeks before her in the same facility. No retirement days.

I don't think I need to be struck by a bolt of lightning here. I will retire at 55. I don't know how yet, but it WILL happen. We are doing research and saving money. We are moving to a smaller house to save money on the rent. My wife and I are in good health right now. I can also be a workamper as needed. I could substitute teach a couple days a week (after taking whatever state's test I need to) and my wife, who manages a small resturaunt could wait tables part time if necessary.

Any suggestions, comments, help is much appreciated.

Thanks,
Dave

richfaa · 08-01-2005, 01:15 PM

sandreason has a good point..You need to crunch the numbers.My dad always said always use someone elses money any time you can. If you are earning or 8% somewhere and you can get a 5% loan you still have the original investment and are 3% up..Balloon a few payments and you are further ahead. Look at a loan amortization schedule sometime and see how much interest you save by making an additional principle payment.dsprik.. hang in there..If you want something bad enough you will find a way to make it happen.We started our retirement planning 10 years ago and are now in year #9 and on schedule. Our health is very good but at our age anything can happen.Understand what you are talking about. My dad retired at age 59(his own business) he and My Mom traveled the world into their 8O's..When the phone rang we never knew where they might be calling from. He developed Alzheimers and died at age 92 3 years ago.. Mother went at age 91 two years ago.But they enjoyed life..they had their time..go after yours....

SAndreasen · 08-01-2005, 05:05 PM

Another item that can be to YOUR advantage in a loan situation is the number of payments made. By making biweekly payments instead of monthly payments will also decrease the effective interest rate BIG time. Not only does biweekly payments decrease the principle amount faster by stair stepping more often BUT in one year you will make a 13the monthly payment that comes straight off the principle. Also, consider making payments in advance instead of payments in arears. That will not change the amount you pay each pay period BUT will change the distribution between interest(less) and applied to principle(more) that a traditional loan. All of this is why there is a Truth in Lending law. Also, these features will make the effective interest rate about 30% less than the stated interest rate. If you are in the 30% tax bracket and use the RV as you "second home" will make the effective interest less yet! Therefore, if your interest rate on your loan was 6% your effective interest rate on your loan with biweekly payments, payments in advance and tax bracket considerations, your effective interest rate will be about 3%! Now if your cash is returning 8% that is a net 5% gain for you by using someone else's $$. Now at the end of the loan you still have your money plus a good chuck of + interest AND the RV! Sometimes paying cash is NOT the way to go! You lose your asset (cash) that is gaining interest and end up with less $$ and a worn out RV. GOT TO CHECK ALL OF THE NUMBERS! and combinations

vickir · 08-01-2005, 06:41 PM

Dave ... last winter we met a couple who winter on Tybee Island, Georgia and substitute teach during their 3 months there. So, that is a very definite possibility as a source of income. As you said, work-camping is also a good idea.

Good luck with your future plans.

dsprik · 08-01-2005, 07:35 PM

Thanks, Vicki!

richfaa · 08-02-2005, 02:04 AM

My sister is now a sub teacher and has no problem sub-ing around the country.Since my retirement I have been , among other things) driving a school bus.I keep my certifications up to date because you can get a school bus driving job ANYWHERE in the country a perfect money maker when Long timing, and the pay is not bad. Did not know we had so many finanicial experts on the forum..There are of course a lot of experts on the forum,,lot to learn here.

dsprik · 08-02-2005, 02:13 AM

This has sure been a great thread for me! South Dakota comes up alot also. Are there quite a few fulltimers who use S.D. residency? Is this mostly something for people who have a lot of assets to protect? I am curious.

dsprik · 08-02-2005, 02:23 AM

The subbing sounds like a good idea for retired teachers. Probably wouldn't want to do it more than 2 or 3 days a week, though. I am going down tomorrow to Lansing to sit down with the state retirement office and see just where I stand. I want to early retire, but I am concerned about keeping my insurance for Cheryl and I. Is there any other specialized insurance out there for fulltimers that doesn't cost $1,135/mo (Mich state retirement BX/BS premiums for teachers at the moment). Fully retired MI teachers are paying only ~$130 of this. I may not be so lucky and I may need to look elsewhere if I early retire.

sreigle · 08-02-2005, 08:58 AM

Dsprik, the South Dakota residency has to do with saving taxes. SD has no state income tax, no property tax on vehicles, only a 3% excise tax on trade difference when trading vehicles, including RV's, and the 4th lowest vehicle insurance rates in the nation. They also have a couple of mail forwarding services who provide you with a SD address and forward your mail, for a small fee. And the people in the courthouse there understand we are fulltimers who have never lived in SD and have been excellent to work with. When we traded trucks we handled the registration change by mail and internet. They called me when I screwed up the forms and got it fixed over the phone. I recently called and renewed our annual registrations by phone. I could have done that on the internet but had a question since we had traded trucks since the last renewal. We had to go to South Dakota for the picture for our drivers license.

I know Texas and Florida are also used by a lot of fulltimers.

dsprik · 08-02-2005, 04:01 PM

I am talking to Openroadfinancial.com right now. Could someone please email on this company ~ good, bad, indifferent? Remember, my credit is poor.

dsprik@charter.net

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