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Old 10-04-2019, 04:25 PM   #1
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Cash vs Financing Question

Hello all,

Newbie here. Tomorrow we are going to look at Airstream trailers at our local dealer. My question is from a negotiation standpoint. We're capable of doing cash, but don't mind financing if the incentives are better. In your experience, is it better to negotiate as a cash buyer or go the financing route? Do they tend to offer better incentives one way or the other?

Thanks
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Old 10-04-2019, 04:37 PM   #2
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IMHO the old saying that cash is King has merit. Of course that depends upon how the cash is currently being used. Can you earn more with it that the cost of financing.

With that being said when we bought our 2018 GT it made no difference whether we had cash or financed. The dealer gave us the same discount.

Best wishes and also welcome to the forum!
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Old 10-04-2019, 04:49 PM   #3
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Quote:
Originally Posted by Rumple View Post
Hello all,

Newbie here. Tomorrow we are going to look at Airstream trailers at our local dealer. My question is from a negotiation standpoint. We're capable of doing cash, but don't mind financing if the incentives are better. In your experience, is it better to negotiate as a cash buyer or go the financing route? Do they tend to offer better incentives one way or the other?

Thanks
No special incentives. If there may be a small kicker commission on the loan origination for the dealer but they do not pass that along to the buyer typically (they generally pocket the profit dollars / commission).

Bottom line - negotiate the price on the trailer, then determine the best use of your capital. Best use of your capital very much depends on your particular circumstances and I'll leave it at that...

I self-finance many of my purchases where they make sense (rental properties, cars, airstream, etc..). it gets more interesting tax-wise when you are your own hard money lender and actually loan yourself the funds through... I generally speaking don't borrow money from a 3rd party unless it's < 3% on a commodity good such as a car or trailer or < 4.5% on real estate, unless there are special circumstances attached.

Now when a bank gives me money with very little interest overhead I will take it and use it every time. Car loans at or near 0% delivered by the financial arm of the manufacturer are a good example. I have a fantastic APR / loan on my TV for example, which frees up capital for other projects as there is little-to-no penalty for paying over time.

All that being said generally speaking on a trailer, you will rarely see an APR < 5% because (A) the lenders are not affiliated with the manufacture are are not part of the overall incentive program to help drive unit sales and (b) these trailers are considered recreational items that the market demands higher APR to begin with... vacation homes are in a similar category.

Hope this helps. oh, and I bought my airstream cash without question. worth every penny!
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Old 10-04-2019, 05:01 PM   #4
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Dealer gets a bit of kickback for setting up any financing, but don't expect to get any of it. Travel trailers may also quality as a residence, so your finance charges may be tax deductible. I'm not a CPA or tax attorney, so you'll need to figure this out with professional help. When I bought my trailer this year, I was offered a finance rate in the low 4s, which is lower than the opportunity cost of using my own hard-working cash. I guess it comes down to whether you prefer to use your own money or use somebody else's money; the trailer price is likely to be the same either way.
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Old 10-04-2019, 07:08 PM   #5
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First, I doubt that the Airstream dealer cares one way or the other. They get their money either way and I suspect their primary goal is to move their inventory.

Unless you’re looking at a very fancy Airstream and a huge cash outlay (and even then) I’d pay cash if you can. The standard game that people play—trying to make more with the money than the financing costs them—doesn’t often amount to much, if anything. When given the choice, I prefer greatly to not take on debt.

If you’re looking for incentives (in the broad sense) the best thing to do would be to pay cash a one-year old Airstream. You’d take the edge off depreciation, still have a warranty (most if not all 2019s come with 3 years) and in the right scenario, get a like-new trailer that is better than new because the owners will have found and have fixed all the typical new trailer problems. These trailers should be hitting the used market around this time of year, when new owners either decide they got the wrong trailer or that RV life is not for them.
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Old 10-04-2019, 09:02 PM   #6
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Cash is King

Cash is the way. When we buy anything, cars, vans, rv's, houses, we pay cash. If we can not pay cash, we do not buy it. Period.

We do have one credit card each. We only use it on certain items to maintain the account. Rental car for an example. We pay it off every month to avoid interest. If we can not pay cash, we do not buy it.

Many, many time in our lives we have been able to get some great deals by showing up with a bag of cash.

Not interested in paying $$$$$ in interest to a bank. Yes, I know many folks will disagree with me on this. Cost of money, how much your money is making invested vs. paying cash, etc. We do not want to be in debt in any way.

Bottom line, we do not go into debt. We save up until we can pay cash.
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Old 10-04-2019, 09:25 PM   #7
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The interest on an RV loan is tax deductible. That is why I financed and did not pay cash.
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Old 10-04-2019, 09:49 PM   #8
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There is no such thing as a 0% loan. You pay for it somehow. And you still have to carry full insurance on something you finance.

And check out what happens to the rate if you make a late payment. No thanks, I’ll pay cash.
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Old 10-05-2019, 04:55 AM   #9
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Thanks

Thanks everyone for the great answers. We won't move fast with the decision as there are lots of things to consider for sure.

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Old 10-05-2019, 10:54 AM   #10
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Dealers are in the business of making money period. Its true you have to move inventory to make money. Every transaction is a opportunity to do business.

If they finance the airstream that is a opportunity to make money. Just like if finance it at a bank or credit union, they to want to make money.

In my job we often evaluate the total deal, we will take a shorter deal if they finance with us or they have a trade we could turn to make money.

If you have the ability to pay cash that is great keep it to yourself until It is time to pay
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Old 10-05-2019, 11:35 AM   #11
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Don't get taken every time

I came across a book a long time ago. The title is Don't Get Taken Every Time, by Remar Sutton. (Still available on Amazon or probably your local library.) It's a car salesman's guide to car buying and is worth the time to read. There are a lot of good tips in it. The thing that has stuck with me is:

There are 3 parts to the purchase of a car (or AS):
1. Price (Don't let the salesman tell you they need the manager's approval on a sale price, they don't.)
2. Financing (Shop your own bank or FCU for a loan first and you're a cash buyer.)
3. Trade In (They sold it to you for retail and will buy it back for wholesale. A good deal for you?)

As long as you keep those three negotiations separate you will come out ahead. Never let a salesman mix up those 3 things or you will always lose. Get a price on the car that you can live with, shop banks and credit unions for a loan, sell your old car yourself (use Edmund's site for pricing).

I'm sure it applies to AS and anything else that is a major ticket item.
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Old 10-05-2019, 01:17 PM   #12
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My husband & I pay cash. On the "interest is tax-deductible" issue, I look at it this way:
1) Very simple example: If I pay, say, $1000 in interest over a year, and if I'm able to deduct it (only if I itemize, which may not be the best plan), and say I'm in the 30% tax bracket, I'd save $300 off my tax bill.

2) Problem is, I'd still be out the other $700 to the bank, over and above the cost of the AS. With cash, I'm only out the cost of the AS, nothing extra paid to bank.

You can take an equivalent tax deduction (if you itemize) by donating a large amount to charity (i believe up to 50% of your AGI in some cases) - no credit check, no lien on your property, no giving your SS# and financials to car dealer or finance company. Win-win.

As far as getting the loan in order to free up your own cash for investment, well, I just ask myself if I'd go take out a loan on my paid-for house or AS in order to go invest in the stock market (or whatever). The answer for me is always no. But that's just me......
I agree with above posters - dealer doesn't really care how I pay for it, just that they get their $$.
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Old 10-05-2019, 02:03 PM   #13
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Hi

A cash deal is a clean deal. There's less nonsense to go through on both sides. The dealer has both a kickback *and* more work to do. How that all washes out is very much a "that depends" sort of thing.

In addition, it is doubtful that the interest rate they will "help you find" is a very good one. Even if it is tax deductible, a 14% interest loan is still costing you a lot .....

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Old 10-05-2019, 02:32 PM   #14
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Cash is normally best. DO NOT get financing thru the dealer. It may be possible to join a credit union and get a very low rate then receive a better return investing your money elsewhere.
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Old 10-05-2019, 02:52 PM   #15
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FWIW you need to make a decision regarding best use of your cash.

However that being said when we bought our trailer in July we found the dealer had access to loan rates we did not and was able to provide a better rate for a longer term than I could get through my bank or credit union. You mileage may vary.
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Old 10-05-2019, 05:07 PM   #16
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Greetings, IMHO if you have the cash for a new AS, why would you buy a new one? As stated, you are a newbie (as we all have been) and in learning mode. Buying a slightly used model will save you money and help you learn what you want and don't want in an AS. If it is the "warranty" you worry about, usually most of the "bugs" in a used unit have been dealt with by the original owner. Take the money saved by buying used, put it in a bank account for future repairs on your purchase and you will most likely be way ahead if you decide to upgrade. Good luck and safe travels!!
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Old 10-05-2019, 09:28 PM   #17
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Respectfully, since you post prolifically. If a buyer is paying 14 percent interest they probably rethink buying any RV.
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Old 10-05-2019, 09:32 PM   #18
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You are leaving cash on the table by not using a cash back or rebate credit card at every opportunity. There are many additional benefits and protections of using a credit card. Debit cards not so much.
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Old 10-05-2019, 10:56 PM   #19
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Pay cash with a Rewards Credit Card and only insure for liability, uninsured motorist and comprehensive. In my 70 years trailering, my greatest loss was a $14,000 hail storm, and I had to fight the insurance company so as to not declaring it a total. I hate to think how much in insurance premiums I have paid.
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Old 10-06-2019, 07:03 PM   #20
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Quote:
Originally Posted by Gsmblue View Post
The interest on an RV loan is tax deductible. That is why I financed and did not pay cash.

These days with the standard deduction being so high most people can't deduct anything including interest real estate taxes and charitable donations
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