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Old 10-14-2016, 09:49 PM   #1
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Financing a leftover unit

I was interested in purchasing a leftover '16 at Colonial and wanted to put down 10% and finance the rest for 8 years, was told that they only do 15 year loans. There is no way I would finance a trailer for that long (even if they have no prepayment penalty), anyone get a shorter term than that from them? This is the only thing keeping me from buying a trailer for them. Wanted to go older, but then I need more money down because the banks won't lend to much on a 2012 unit compared to the selling price. I probably should loan shop but I like one stop shopping.
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Old 10-14-2016, 09:53 PM   #2
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Check with your bank or credit union.
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Old 10-14-2016, 10:24 PM   #3
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Finance it for 15 (better interest rate) and write off the interest as 2nd mortgage. (trailer qualifies).

Pay it off in 7. These are simple interest loans with no pre-payment penalties.

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Old 10-14-2016, 10:24 PM   #4
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SCBarber, check on those borrowing facts yourself. I borrowed initially on mine and it was a six year-old model. They set it up for 12 years but I paid it off in a year- just had to shuffle money. A 2012 is only four years old. It may be that their lender may not go that old or they do not want to sell it as much as they do a new one. You may have to put down more though.
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Old 10-15-2016, 01:10 PM   #5
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I agree with djarret. Take the 15 year financing, make one principle plus interest payment per month, and an additional monthly principal-only payment of the same amount (or less, when convenient). You will have it paid off within 7 years.
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Old 10-15-2016, 01:59 PM   #6
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Term is determined by amount financed, used to be anything over 25k would finance for 15 Yrs. Take the term Erie off interest as second home, pay off after 7-8 years when payment becomes mostly principal.
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Old 10-15-2016, 02:19 PM   #7
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Quote:
Originally Posted by phann View Post
I agree with djarret. Take the 15 year financing, make one principle plus interest payment per month, and an additional monthly principal-only payment of the same amount (or less, when convenient). You will have it paid off within 7 years.
I agree with djarret & phann. You can also simply make the payment that amortizes (google amortization calculator) it for 8 years or any term you wish, assuming it is simple interest and you need to confirm. Historically dealers/banks have used paper that front loads interest so an early payoff balance is a surprise. Google rule of 78's.

Also the dealer probably sells the paper to the bank and term may be part of the value of that paper. Also as awchief said....check around, especially credit unions.

Bob
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Old 10-15-2016, 02:35 PM   #8
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Yep, TurboTax agrees that if you itemize and other deductions don't reduce / eliminate the value of your interest deduction by pushing you near or over the maximum deduction amount, mortgage interest deduction on an RV as second home is fine as long at it has sleeping, cooking and toilet facilities.

https://ttlc.intuit.com/questions/18...ct-my-mortgage

https://ttlc.intuit.com/questions/19...tax-deductible

https://ttlc.intuit.com/questions/29...d-property-tax (check the paragraph under "It's not equal")

Still seems a good idea to pay off the loan faster, even though that would reduce the interest you pay along with the associated potential deduction.

BTW, I'm no tax accountant - if your return is complex, get professional help. In any case, check & verify what I said above before you start spending money.
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Old 10-15-2016, 04:40 PM   #9
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Re: Rule of 78s

See links for explanation of "rule of 78s" pre-computed loan interest:

The "rule of 78s" is illegal in 16 states, but the others still allow loan issuers to take advantage of borrowers using this interest calculation method.

If loan interest is computed in this way, there is no savings in paying off a loan early.
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Old 10-15-2016, 05:34 PM   #10
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Do the math and send in the payment to payoff on your desired schedule/time frame. There should not be a prepayment penalty, at least not any I have financed and paid off early.


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Old 10-15-2016, 05:42 PM   #11
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Buy it and pay it off early.
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