Financing a trailer?

[ASRF1000]

So Daryl, I take it your against financing?....LOL

You are right, there are many who use that earmarked money for other things they shouldn't, but not everyone. It all depends on how structured you are.

The real BIG no no is financing a new motorhome.....talk about depreciation!!!!

That one bit me in the butt big time before. $100,000 motorhome that was worth about $40,000 3 years later. Ouch!

[Daryl DeArman]

So Daryl, I take it your against financing?....LOL

Ha! Ha! You are extremely perceptive. I do have a small mortgage...but I'm working on that.

The real BIG no no is financing a new motorhome.....talk about depreciation!!!!
That one bit me in the butt big time before. $100,000 motorhome that was worth about $40,000 3 years later. Ouch!

Agreed. In 2005 I bought a RV for $55K that the original owner paid just over $100K for in 2002. It had less than 10K miles on it.

[jnortonjr]

"I agree with Matt. If you can get 0% interest, then why not use someone else's money for free. Keep your money somewhere that can make you interest. I've bought furnature that way several times. Kept the money in my bank and always had it there for the purchase should times get tough. But, then again, its just like paying cash for it only you have control of its use."

If any company is offering 0%, even in this low interest environment, the cost of financing is included in the selling price. I'm not sure what loan terms are offered on trailers but it may be worthwhile to figure out the cash price (or estimate a cash price based on discounting the cost of financing) and then have your local bank write the loan.

When we got into racing, the economy was in a very different position than today. Used trailer supply was light and new trailer weren't that much more expense than used (commodity pricing as a gauge of production cost was much lower). Today, many people are going through hardship and that improves the supply of used trailers and good deals to be had. In addition, steel and aluminum cost has gone up which makes the cost of a new trailer higher (even with manufacturers being aggressive on pricing).

My suggestion is to look for a used trailer and if you need to finance it, have a good down payment. You will find the depreciation on a used trailer isn't that bad, especially if you maintain it properly.

Good luck!

John

[R.DeVoe]

Look at the trailer just posted in the General Classifieds...

[kc0stp]

Missing a few key points, 24' box, E-tracking (or L track), winch (except the 2 for the lift), 7 hours drive or less, and personally Id hate for a nice formula stacker like that to go to a door banger like me that could never use the stacker part (much rather it go to someone that could use it then have it be a "thats nice" feature)

[mousecatcher]

So Daryl, I take it your against financing?....LOL

You are right, there are many who use that earmarked money for other things they shouldn't, but not everyone. It all depends on how structured you are.

The real BIG no no is financing a new motorhome.....talk about depreciation!!!!

That one bit me in the butt big time before. $100,000 motorhome that was worth about $40,000 3 years later. Ouch!

Then again, you can get the mortgage deduction for a motorhome, can't you? If so you should finance as much as you think won't put you under water. Can't get cheaper money than the home mortgage deduction.

[TimH]

Then again, you can get the mortgage deduction for a motorhome, can't you? If so you should finance as much as you think won't put you under water. Can't get cheaper money than the home mortgage deduction.

Yeah, we financed a used motorhome once. But we could have paid off the $12k loan any time if necessary, and at that time a CD paid higher interest than the mortgage cost. Rarely true these days, and the depreciation hit had already happened.

[Daryl DeArman]

Then again, you can get the mortgage deduction for a motorhome, can't you? If so you should finance as much as you think won't put you under water. Can't get cheaper money than the home mortgage deduction.

Let's say you financed a $120K motorhome at 6% for 20 years; you're going to give the bank $86K in interest to keep from giving the IRS $24K ( a net loss of 62K out of pocket) Doesn't make much sense to me. Also consider any guaranteed interest rates you could earn on that $120K are going to be lower than that 6% and those earnings are going to be taxed. This is also assuming that mortgage interest is going to continue to be deductible in future years AND that 2nd homes are going to qualify AND that an RV is going to continue to meet the requirements of a 2nd home.

Logic and number crunching aside, the intangibles like the reduced stress of not owing anybody any money certainly has value too.

[PRS56]

I am going to offer perhaps an alternative to owning a trailer and tow vehicle.
When I first bought my car I knew I couldn't capitalize the cost of additional equipment and I decided to use a prep shop for cartage as well as on track service.
This was fine, but obviously very expensive.
I currently have a relationship with a national driver who gets me to the track and helps with the car.
Since it is not a business for him, I get a very economical price for what is basically arrive and drive.
He gets benefit of some money to subsidize his program and I get to go racing.
If you are staying within a certain radius of your home and doing a limited program then maybe a fellow racer might be up for taking you to the track.
Since it seems like you are wrenching yourself, take that part out of the negotiations.

[10rmotor]

While I'd always pay cash for something if I could, the first payment I ever had (other than a mortgage) was for the trailer we now have. Because it was a toybox type trailer that could be lived in, the interest on the loan was a write off since it was considered a second residence. You can't do this with an empty box trailer of course, but something to think of if you do go this route. You could probably find a similar RV type trailer in your price range.

[mousecatcher]

Let's say you financed a $120K motorhome at 6% for 20 years; you're going to give the bank $86K in interest to keep from giving the IRS $24K ( a net loss of 62K out of pocket) Doesn't make much sense to me. Also consider any guaranteed interest rates you could earn on that $120K are going to be lower than that 6% and those earnings are going to be taxed. This is also assuming that mortgage interest is going to continue to be deductible in future years AND that 2nd homes are going to qualify AND that an RV is going to continue to meet the requirements of a 2nd home.

Logic and number crunching aside, the intangibles like the reduced stress of not owing anybody any money certainly has value too.

First it has to be said, anyone planning on doing this has to consult their financial planner/advisor, not take information from a forum.

That said, if you financed $120k and could take the home mortgage deduction, you end up paying 4% (ok wild ass number but the true number doesn't matter). When mortgage rates are 6% you can always beat 4%. Sometimes it's not about using the money for investment, though. Sometimes it's about having cash flow, or buying a bigger house/motorhome then you could otherwise, or about putting money into a home improvement that you then hope to be returned to you on resale.

Current mortgage rates are around 3.5% for a 15 year fixed loan, not 6%. Of course TODAY if you had a 6% mortgage you'd be losing money for your trouble.

Of course it's different for a motorhome than a house. What are the maintenance costs? What are the insurance costs? What is going to happen to the insurance and resale value after an accident? I personally wouldn't finance $120k on a motorhome unless it were partial financing on a $400k motorhome (just as an example). That's why I qualified that you shouldn't finance more than would put you underwater.