Financing Downpayment

GregOnTheGo · April 29, 2019

Hi All,

I am in the process of selling my house and will use the proceeds to make a down payment on my full time RV. I would like to seek some advice. I currently have a payment on a Jeep and that is the only debt I will have after the sale of the house. From the finance/bank perspective is it better to use some of the down payment and pay off the jeep so I am debt free going in to buying the RV or is it better to have a little debt and put a larger down payment on the RV? If I pay off the Jeep I will have a little over 10% for a down payment and if I don't it will be closer to 25%.

Thanks,

Greg

Randyretired · April 29, 2019

Many times a larger down payment can mean a lower interest rate. That might be something to check.

sandsys · April 29, 2019

48 minutes ago, rm.w/aview said:

It's easier to secure a loan as a homeowner as well so look at this possibility for you financially. Basically get the loan or be prepared to, put the minimum down, then satisfy all or either loans with the house sale later.

We did this. We were lucky to have enough equity in our house to take a loan against it to buy the rig. When we then sold the house we paid off everything so as to start out debt free. I'm glad we were able to pull that off.

Linda

FL-JOE · April 29, 2019

I wouldn't begin to know how to answer this. First off, are you purchasing a new RV and getting 25% to 30% off MSRP? If not then just putting down 10% will put you upside down on money owed vs value within the first year or two. Even if purchasing new and getting a huge discount I would tend to put as much down as possible.

You can not predict the future and it would be better to always be in a position to be able to get out from under the RV if you absolutely had to IMHO.

Now if purchasing something used then that could change the situation depending on what you are buying and for how much.

Kirk W · April 30, 2019

Are you still shopping for a super C? I'm not sure that it makes a great difference if it is new or used for the question that you ask but in general, you do get a better interest rate on a new RV. When my wife was a loan officer she would have advised you to pay off the Jeep before you buy the RV.

On 4/29/2019 at 2:14 PM, GregOnTheGo said:

If I pay off the Jeep I will have a little over 10% for a down payment and if I don't it will be closer to 25%.

If the remaining loan balance for the Jeep is 15% of the amount you expect to pay for the RV, then you would not only benefit from a better credit standing by paying it off but you would also have more ability to meed the RV payments with only 1 payment to make. My opinion is that you should pay off the Jeep.

GregOnTheGo · May 1, 2019

Thanks to everyone for all of the great suggestions and information.

Matthew · May 21, 2019

I would pay off the Jeep and then sale it. Buy a reliable clunker (if transportation was need for employment).

Sale the house. Take the equity from the house sale and the money from the Jeep sale to purchase (down payment) on a used RV. Leave some money in the bank as an "emergency fund". Then sale the clunker.

Above is my assumption from your OP that you wanted to purchase a motor-home.