Purchasing & Financing

[DzlToy]

I'm sure this has been covered somewhere before, but I searched a bit and didn't really find anything useful. Out of curiosity, how do the large overland trucks get purchased? I would "assume" that someone who can afford an Action Mobil or Unicat could pay cash for it, but what about the domestic stuff like Earthroamer and GXV (200k - 300k), or even the less expensive brands like Sportsmobile (100k - 150k?) or a ER Jeep?

Does the manufacturer offer financing? Will a bank finance one of these things as an RV, just as if you were buying a Featherlite or Monaco?

If one were to finance $300,000 at 6% interest for 72 months, the payments would be about $5,000 a month.

If one were to finance $300,000 at 6% interest for 20 years, the payments would be about $2,100 a month and if you stretched it out to 30 years, it would drop to $1,800 per month.

Not trying to pry into anyone's financial affairs, just curious how these things get bought and sold. What do you do for a second hand purchase?

 

[LoRoad]

I think that's a great question DzlToy. Have you thought about giving those guys a call and asking them? From the horses mouth and all.

 

[Kaiser Soze]

I bought my Earthroamer second-hand, and saved a little over 10% off of a new one without having to wait for the build. I was going to pay cash for it, but found financing through Good Sam. (Very easy to work with!) I put 25% down and ended up with a 20 year loan at 3.99% on the rest. Given that I can write off the interest on the loan as a second home, the functional interest rate is less than 3%, so I'd rather keep the cash and let it work for me.
I don't believe the guys at ER do their own financing-

 

[NeverEnough]

You can finance most new and used RV purchases through traditional consumer and business lending sources (banks and credit unions) and according to standard credit practices. Higher ticket items like boats and RVs qualify for longer amortizations, and it's not uncommon to see 12-15 year terms. And most RV's qualify as a "second home" and the associated tax benefits. In theory, you could finance a custom build if you ran the deal through an established "upfitter" of commercial vehicles. And I've found that small, community banks and credit unions are sometimes willing to finance all sorts of weird stuff if you've got a strong history or a very large down payment. Another thought: a lot of new RV and boat buyers go instantly upside down due to the huge depreciation hit the minute they close on the deal. If you have to unload, it can mean bringing a fat check to closing. There's a lot of "toxic" RVs and boats out there!

 

[zelatore]

Working in the yacht industry I've seen more upside down loans than you can shake a stick at recently. Over the last 4-6 years the market was completely flooded with repos and the like but it's finally starting to level out again.

Typically any boat (and I would assume RV) over $100K would be able to finance at 15-20 years. Just like the home mortgage market, during the bubble there was a lot of easy credit with very low down payments and adjustable/teaser rates, etc. It was fairly common to finance a $500K (and finance the tax as well) boat at 10--15% down with say an 18 month 3.99% rate and a balance at 6.99% And just like the home mortgage boom, many people got in quickly over there heads. Some banks were even writing 25 and 30 year terms. Anything to make those payments lower!

Immediately following the bust, credit pretty much disappeared. The banks were ultra-gun shy as they were suddenly the owners of a lot of boats they didn't really want that were all very upside down. Now you needed 30-50% down and a 12-15-20 year term on that same $500K boat - if you could get anything at all. Your rate was likely to be around 7-8%

Today things are closer to normal. 20% down is common on a 15-20 year loan. I haven't checked rates in a while since I'm out of the sales side of the industry, but I would expect around 6-7%.

Most of the big marine lenders also play in the RV world. Some of the guys we used a lot were/are Bank of the West, Deutche Bank, Key Bank, SunTrust, etc. There are also plenty of specialist brokers who work with many other banks. I've had mixed results dealing with small personal banks and credit unions, at least on yachts. They usually come down to your personal relationship with them. For me, they often were out of their depth and simply didn't understand what they were getting into; they were more accustomed to thinking about a $50K trailer boat instead of a $500K yacht. I don't know how many times I had a small credit union loan officer ask me questions like 'what hp is it rated for' or 'how many people is it rated to carry' or trying to explain to them that the boat isn't registered at the state level but is federally documented. Sometimes they come through with a good loan; sometimes they just get confused and decline. Specialist lenders are typically easier to deal with since they do it regularly, but may not be as friendly to work with as your home-town credit union.

As was pointed out, these loans are usually mortgages and qualify as for a second home deduction. Typically if it has a bedroom, bathroom, and galley it can qualify.

 

[Howard70]

We had a long term plan that revolved around paying off existing mortgages on our primary home and a rental house. The original plan was to sell the rental and use those funds to purchase the expedition vehicle. When it came time to make the actual vehicle purchase we ran some scenarios and decided to take out a new mortgage on the primary house (it was paid off) and use those funds to finance the vehicle and a garage / shop. By setting up the loan's duration and interest rate we can make the basic payment with the rent we get from the rental - but it would take 30 years to pay it off.... So we add $1,500 "principal only" each month which effectively takes it down to a 10 year loan. If we're successful we'll end up with the expedition vehicle and the rental. If we run into hard times and find that we'd be better off without a loan then we can sell the rental per our original plan - so we don't feel like we have a lot of risk.

A few things that figured into our plan:

1. Interest rates and loan-associated costs were much lower when we based the loan on the collateral of a house rather than the expedition vehicle. Our credit union sees any vehicle as a greater risk than a house and they charge higher interest to cover that risk. Plus we don't have to worry about whether or not the expedition vehicle qualifies as a 2nd home to use the interest to reduce our taxable income. Another plus was that we didn't need any extra cash as a down payment - the house provides the collateral. So we've left that money invested and right now it's easily covering the extra interest we're paying by borrowing more money.

2. We could have based the loan on the collateral of the rental rather than our primary residence, but again the interest rates and loan-associated costs were considerably lower for the primary residence than for the rental. We don't feel that our primary residence is at risk because the rental would be a much easier house to sell (location and price) than our relatively specialized primary residence.

3. Some of the loan costs and possibly the interest might have been slightly lower if we'd simply set the loan up as a a 10 year loan rather than a thirty year loan that we'll pay off in 10 years. That extra cost was very small and we felt it was definitely worth it so that our basic payment was very low. If we have a short-term problem we only have to make the small payment (which can be covered by the rent from the rental) and our loan is secure. If the loan was an actual 10 year loan then the base payment would be nearly twice as much and we wouldn't be able to change that without refinancing.

I don't mean to suggest this is a strategy that would work for others, but it's working for us - so far anyway!

Howard

 

[MBurzon]

I'm interested in purchasing a pre-owned 2007 or 2008 Earthroamer, however am having a hard time with financing because a NADA value has not been established. Does anyone have a suggestion for a work around? I'm also creating a short list of lenders that have a track record of financing these vehicles - please let me know if you have any insight! So far I have Good Sam - but I think used financing starts at the 2009 year. I've tried Chesapeak Financial but they gave me the NADA guide issue listed above.

 

[DzlToy]

Call Earthroamer and ask them.

Higher end RV's and Boats can often be purchased as second homes. Ask your lender.

 

[gregmchugh]

Incredible Bank is where we got financing for our GXV. They have specialized in financing high end motor coaches on Prevost bus chassis but are expanding into financing for expedition vehicles. Incredible Bank is part of River Valley Bank, Wausau WI. Very good experience with them, smaller customer focused bank compared to the bigger guys...

https://www.incrediblebank.com

 

[MBurzon]

I spoke with Brad at Incredible Bank. Friendly guy, very knowledgeable, and overall a helpful referral - thank you.

 

[gregmchugh]

I spoke with Brad at Incredible Bank. Friendly guy, very knowledgeable, and overall a helpful referral - thank you.

Hope it works out for you, Brad was great to work with. We also had an approval for financing our GXV build from a loan broker who collects a fee for finding a lender but the loan from Brad was a better deal with no broker fee.

 

[kevindhamilton]

We ended up paying cash for our truck but USAA said they would have financed it. If you have the ability to use them you should check them out.

 

[RangerRocket]

Used USAA for our 2008 Unicat TC54 too (if you qualify as a member - Retired military, Vet, Family member). Loan is now paid off. Think it was originally 15-20 years at 4.25%.

 

[wordofbabb]

Just responding to this to bring it to the top. I am having a hard time finding a lender that will do a loan for an Earthroamer. I was curious if maybe any current owners might respond or DM me with who they might have worked with recently. I am interested in purchasing an LTi and have most of the cash needed for it but would prefer finance a portion of it.

Thank you!

 

[pugslyyy]

I'm hearing that Covid has made underwriters more wary on stationary second home loans, so loans for mobile second homes may also be suffering.

In addition to direct loans, I find that folks will tap a line of credit against investments, where the loan is secured by the underlying securities and not the asset being purchased.