How Long to Finance?

[1cericks1]

Buying used is good. If you buy new and do 100% you can expect to be underwater for the first several years (if you didn't like it, you would sell it for less than the loan amount and need a couple thousand to pay the bank the differnce).

I'll take a slightly differnt stance to the only use cash and say "Only use cash unless you have a lot of cash, in which case consider financing and go for 15 years." Borrowing at 7% and taking the tax deduction and investing the cash at a 7% return should put you ahead in the long run.

But since investment returns are not guaranteed, some people who follow this strategy will end up worse off (not every 15 year period of the market generated above 7% annualized returns)

[ata3001]

Yes, I too could pay cash if I wanted to quit camping for the next 10 years & just save for a camper & pay cash. The question was for how long do you finance for & I think you'll find most people opt for 10 yrs.

[poems&songs]

I don't know. That's why my post is so vague. I'm trying to find out everything from financing to what kind of trailer hitch. I think I've decided on financing the tow vehicle fairly soon. I figured I'd better start driving the truck at least to get used to it before hooking on a trailer. Yet the tax benefit would come from the interest on the trailer. As for "other" benefits--I'm wondering whether the "first time buyer" credit ("up to 8,000" applies: a new or second home when you haven't bought a home in x number of years (don't remember the number). It's part of the stimulus package. If you get that, would you not have that as one benefit and another of deducting the interest? Let me know whether you find out anything. Nice to meet you, and thanks for responding. Paul

[Mikethefixit]

Paul
I'm fer payin CASH. Reduce you expectations. NEW is NOT BETTER.There are older units out there is Excellent operating condition which would require no attention for several years of living in full-time. Trust me they are out there. Just be patient and do your home work.
We,because of our age opted to buy a older AS,it has a few issues which all can be overcome. We own it, we pay no one.Its a great feeling. Save the interest for other things.
Good Luck with your search.
Roger

[mok]

Remember that you may be able to deduct interest as second home if you meet the IRS time limits.

[HowieE]

A good rule of thumb that most have forgotten or never learned is "Never Finance A Depreciating Asset".

The fact that too many ignored that is what caused the current world banking problems. Yes the banks offer insanity but also the public bought it.

Cash is King

[fmr.capt.evi]

HowieE makes a good point: there is plenty of blame to go around.

[lylesgl]

It was an emotional purchase for me and I figured at 35 years old I'd have the thing paid for by 40...long before retirement. Since the Airstreams are fabled to last a couple generations at least, with attentive maintenance, I decided to take the plunge. Currently at 38 years old, I don't regret my decision. I'm on schedule to payoff at 40 and the tax benefit claim of a second home is sweet!

[Splitrock]

I don't borrow money to buy depreciating assets. I don't mortgage my home to buy toys either. I pay cash or I don't buy. I started that in my 30's. It's worked well.

Gary

[dkottum]

For the thrifty, get ahead of the credit game as soon as you can. That is, buy no toy you cannot pay for with cash.

For most that would mean a used or smaller camper; best is one that can be towed by your everyday transportation.

You will soon have the freedom of being your own banker.

Doug K

[Streamer Dan]

I would have loved to buy a new 28' international, but I brought what I could afford to pay cash for. It needed a little work, some I could do myself, some I couldn't, like having it re-clearcoated. When I pick it up next weekend after having the clearcoat redone it will be exactly how I want it, and there's no way I would swap it for that new trailer now. I can understand wanting the new shiny one, but one you put your own stamp on is far more satisfying in the long run and once the honeymoon period is over, you don't have any payments.

[LawChick]

Sometimes there is a tax advantage in financing. Especially if most of one has tax deferred investments. However, both financing and adequate insurance can be hard to get when we know what these babies are worth, but Nada, etc., does not agree. To them and the financial institutions, it's just an "old trailer."
There's always an option to buy a new one. They LOVE to finance those! But who wants a big ole payment - not me!

[Hansom-Man]

Finance nothing & buy with cash. I second the idea of no loans on depreciating things. The only debt worth having is your home, and even that is questionable these days.

You will enjoy it more when there is no payment on it, especially when something breaks on it.

Be patient, the right one will come along.

Good luck.

[xonvldz]

if you can lock in a low interest rate on a long term basis and can afford the payments or have the cash to pay the loan off this will keep your finances flexible.of course you need excellent credit to get the lowest rates.once inflation kicks in,which is inevitable your decision going long will look like shear genious.as another poster mentioned lots of variables to consider when making financial decisions.with great credit you can get under 6 percent on an rv loan.depending on your tax rate after deducting the interest, not too bad.cash is king and i like to have a fall back position with some in reserve.

[Nightwatch]

I find the majority of posts on this thread very interesting. Either Airstream owners are more financially responsible than 90% of the US, the people posting here own older airstreams, the people that own airstreams are of the older set and have therefore saved up cash over time, or Airstream owners tend to have mored disposable wealth than the typical RV trailer owner.

A lot of people chimed in here to say "Pay cash". Ok that is of course great advice. That would be equally advisable to someone who wants to buy a house. But how many of you bought your house with cash? How many of you actually saved up $50k in cash for a late model 25 to 30 ft airstream?

Now before I get a lecture on "if you don't have the cash you can't afford it" - let me give you some background. I'm 37, I earn a solid income (I have for 10 years - and though I wont quote #'s solid means solid), I have no credit card debt, I have some decent equity in my house (amazing considering the economy), I have quite a bit saved in 401k, pension, and other investments, and am fairly responsible with my money. With that said, I want a late model 23 ft airstream to work out of and to vacation in. I don't have 50k in liquid assets lying around to pay for it, and I don't want to wait a couple of years to save it up. So I plan to pay 20% down and take out a 10 yr loan on the rest. Is that the best decision - well no. I could lose my job, have a health problem, get hit by a bus etc. any of which would put me in a bad situation with the trailer payments. But if I wait, in the meantime I have lost out on 2 years of enjoying the trailer.

It's like people that save everything for retirement - thinking "when I get to 65 then I'm going to have fun". Let me tell you, I know of many people that have had life changing events (especially with the economy) that meant they were not able to enjoy their retirement. Some lost life savings, some had health problems that meant they couldn't do much of anything. I bet now they wish they had taken that trip, earned that pilot's license, or bought that boat.

Am I suggesting that people go up an run up their credit now while there is still time? Obviously that is a bad idea. But I do think there is a balance to the suggestion "Pay Cash only". I plan to continue to invest in my retirement and be responsible with my debts, but I also want to enjoy my life while I am still young and able to enjoy it.

Just my 2 cents. If you are doing other things right with your finances, I see no reason that you can't take out a loan to buy an airstream.

By the way - if I lose my job or get hit by a bus (and survive it) I'll come back here and post that I was wrong and you shouldn't listen to me.

[Splitrock]

I'm a banker so I like it when people borrow money to buy depreciating assets:-) Go!

[blmitch5]

Originally Posted by Nightwatch

I find the majority of posts on this thread very interesting. Either Airstream owners are more financially responsible than 90% of the US, the people posting here own older airstreams, the people that own airstreams are of the older set and have therefore saved up cash over time, or Airstream owners tend to have mored disposable wealth than the typical RV trailer owner.

A lot of people chimed in here to say "Pay cash". Ok that is of course great advice. That would be equally advisable to someone who wants to buy a house. But how many of you bought your house with cash? How many of you actually saved up $50k in cash for a late model 25 to 30 ft airstream?

Now before I get a lecture on "if you don't have the cash you can't afford it" - let me give you some background. I'm 37, I earn a solid income (I have for 10 years - and though I wont quote #'s solid means solid), I have no credit card debt, I have some decent equity in my house (amazing considering the economy), I have quite a bit saved in 401k, pension, and other investments, and am fairly responsible with my money. With that said, I want a late model 23 ft airstream to work out of and to vacation in. I don't have 50k in liquid assets lying around to pay for it, and I don't want to wait a couple of years to save it up. So I plan to pay 20% down and take out a 10 yr loan on the rest. Is that the best decision - well no. I could lose my job, have a health problem, get hit by a bus etc. any of which would put me in a bad situation with the trailer payments. But if I wait, in the meantime I have lost out on 2 years of enjoying the trailer.

It's like people that save everything for retirement - thinking "when I get to 65 then I'm going to have fun". Let me tell you, I know of many people that have had life changing events (especially with the economy) that meant they were not able to enjoy their retirement. Some lost life savings, some had health problems that meant they couldn't do much of anything. I bet now they wish they had taken that trip, earned that pilot's license, or bought that boat.

Am I suggesting that people go up an run up their credit now while there is still time? Obviously that is a bad idea. But I do think there is a balance to the suggestion "Pay Cash only". I plan to continue to invest in my retirement and be responsible with my debts, but I also want to enjoy my life while I am still young and able to enjoy it.

Just my 2 cents. If you are doing other things right with your finances, I see no reason that you can't take out a loan to buy an airstream.

By the way - if I lose my job or get hit by a bus (and survive it) I'll come back here and post that I was wrong and you shouldn't listen to me.

Ok I get the finance part but if you buy used you could save a ton of cash and depreciation. 50 K seems high for a used unit I bought a 06 CCD Bambi and paid cash (40 at the time) and we love it. I wanted newer with the brown wenge but I didn't want to pay interest etc. Have you considered borrowing against a CD? It's lots cheaper on interest. Financing is an option and I agree Life's to short not to have fun while your young and able. search long and hard for the right unit at the best price and financing options. Keep us posted on what you get.

[Bird's Nest]

One problem with financing a late model Airstream..."Book Value" is nowhere near actual market value with an AS. We found this to be true when we purchased and sold our CCD. I have seen others post on the forum who have found this to be the case as well. I have never seen the opposite opinion.
You can check this out by choosing a model, checking book value and then comparing it to the asking prices on RV Trader, the AS forums classifieds and any other source you may find. Don't be surprised if you find that the average asking price of the model you want is as much as twice the book value.
This can certainly put a hitch in your financing giddy up.
We didn't finance but quickly realized in our initial hunt not to put any stock in the book value. We had a couple potential purchasers who where shocked when they contacted their finance companies.
And yes, we have paid cash for a home. 5 bedrooms, 3 baths, both formals, brick in upscale neighborhood with amenities, less than 2 years old. I was 40 at the time.

[Nightwatch]

Good replies - thanks. Fantastic that you bought your home with cash. I have no doubt there are other that have as well. I'm just saying that the vast majority of people in the US don't (and can't). Even those with relatively high paying jobs. To buy a 5 bedroom home in a upscale market (or at all for that matter) at 40 is quite an accomplishment. I'm not there, but I can honestly say I'm in good shape for my age bracket financially and I'm proud of that fact as I was not handed anything. (Well that's actually not true at all -I had the benefit of a great upbringing with a solid education which many don't have the benefit of and for which I am truly grateful. But I wasn't handed any money or a job etc.)

Anyway I don't want to get into too big of a derail here. I just wanted to provide a balance to those who were saying cash is the only answer. Regardless of precautions, we all risk financial ruin every day - as we risk getting hit by a bus, getting cancer, or seeing our 401k evaporate due to over zealous bankers. You never know what life will bring, and while it pays to be prudent and take some precautions, it's also important to take some risks in life. I moved twice across the country with no job and landed on my feet with an upward movement in my career. Many warned me to "stick with what I was doing - this was the safe bet" but if that were the case I'd not be where I am today.

To the banker who responded - you are welcome. I am sure you have never financed a car, because it would be foolish to finance a depreciating asset.

[Splitrock]

Originally Posted by Nightwatch

To the banker who responded - you are welcome. I am sure you have never financed a car, because it would be foolish to finance a depreciating asset.

Hahaha! Funny post. Thanks for the laughs. Hope you have a happy, healthy, new year:-)

Gary