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5 Questions To Ask Before Financing an RV

These summer memory makers can set you back big bucks, so it pays to ask yourself a few questions before you purchase.

Don Milne Jul 10, 2019

You may have fond memories of your childhood summers riding bicycles, camping in tents, and canoeing. But why settle for old memories when you can make new ones?

Even better, your grownup budget could help you upgrade a bicycle to a motorcycle, a tent to an RV, and a canoe to a boat.

These summer memory makers can set you back big bucks, though, so unless you just won a windfall on Jeopardy or some other gameshow, you should ask yourself a few questions first.

RV Readiness Question #1: Am I saving enough for retirement?

There is a good chance you are going to experience 10, 20 or even 30 summers during retirement. If you are not saving enough for retirement, making a sizeable purchase for an RV may create later regrets.

Money invested for retirement grows like a rolling snowball thanks to compound interest. Meanwhile the longer you own an RV, the less valuable it gets. It will cost you money to maintain each year and eventually it will only be worth a fraction of what you paid.

There is nothing wrong with buying an RV, just make sure you are first saving 10-15% of your income each year for retirement. More than one financial expert has made the case that it’s not the lattes people buy for $5 that keep them from meeting their retirement goals, it is spending too much on big-ticket items.

RV Readiness Question #2: Do you have consumer debt to pay off?

All debt is a tradeoff between current you and future you. Current you got something (a car, an education, a vacation) and future you has to pay it back, leaving less money for future you.

Debt also comes with interest, so you pay extra for current you to get what you want now.  Buying big ticket items, when you already have debt payments, will mean you will be in debt longer. If you have future you goals — like paying for your child’s college, retirement or travel — it could make sense for current you to postpone a motorcycle purchase until your consumer debts are paid off.

As a bonus, you may get a better deal if you save up and pay cash instead of taking on another payment.

RV Readiness Question #3: Are there rental options?

In the age of Uber and Airbnb, there is good chance that most any recreational vehicle you use can be rented. A pair of jet skis that get used a few times each summer and spend the rest of the year taking up space in your driveway or garage may give you more pain than pleasure. Renting can also save you the potential expense of winter RV storage or adding a new cement pad to your yard.

RV Readiness Question #4: Does used make more sense than new?

No doubt a new boat is going to give you a big smile, but there is something else big that comes with a new boat beside the price tag — it’s called depreciation. 

Find out what a one- or two-year-old version of the same boat costs. You may be surprised at the premium you have to pay in order to be the first owner. You may find a used purchase on Craig’s List or KSL Classifieds can give you the same amount of fun for a fraction of the cost of buying new.

RV Readiness Question #5: If my ducks are all in a row, what are the purchasing options?

What if you are already saving enough for retirement and you have paid off your consumer debts? Go buy that RV! Paying cash would save you interest but buying it with a bank loan means your savings won’t take a big hit all at once.

The key is to make sure your remaining loan balance each month stays below the vehicle value. When a vehicle’s value is less than the loan balance, it is referred to as being “underwater.” And no one wants an underwater boat.

Of course, the late Idaho outdoor humorist Patrick McManus may have had the best idea of all when it comes to big ticket summer vacation items when he said:

“There is nothing better than to be headed into the mountains on a clean fresh day with the sun rising through the trees and good company and good talk and the sense of ease that comes from the knowledge that you are in somebody else's car and it is not your transmission that is going to get torn out on a big rock.”

Make the most of the open road, water, or dunes with a Zions Bank RV loan. Enjoy the great outdoors with fixed-rate financing on a new or used RV, motor home, travel trailer, boat, ATV, motorcycle, or snowmobile. Apply for an RV loan online or visit a Zions Bank branch near you to learn more.

Loans subject to credit approval. Terms and conditions apply.

Don Milne is Financial Literacy manager for Zions Bank.

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