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Which comes first--the TT loan or the SUV loan?


MH Olson
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Hi, all. In the next 2-4 weeks, I'll be trading my compact car (2012 Hyundai Elantra, low miles) for a late-model used SUV with a tow package, as well as buying a late-model used travel trailer. Should I obtain the car loan first, and the RV loan second, or the other way around? 

My credit is excellent and I have no debt except my mortgage. I'll be putting down 33-40% on each (including my trade-in). My hope, of course, is to get the best possible rate on each loan. An RV dealer advised me to get the RV loan first, but I'm suspicious that that's simply self-serving on his part. What do you think? (Thanks in advance for your feedback and advice!)

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59 minutes ago, kurtsara said:

According to some on these forums, one should never finance a RV, we should all have enough cash to buy one. 

That's a really good point. I'd figured it made more sense to finance at 6% or so than to withdraw money from investments that have been earning 8-10%. But finance isn't my strong suit, so I'm going to look further into that trade-off. Putting down 35% or so would make it unlikely I'd ever be underwater on the loan, which I understand is a big concern for those who finance. Great food for thought, and I thank you for responding!

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LOL, someone must be hitting the sauce like me about now..... hehehe

I don't know your financial stats nor do I want to, but here's my 2.4 cents worth.  IF you buy the camper, then can't get financed for the tow vehicle, what then?  Personally, if I was tight and had to do a loan, I'd get the tow vehicle first.  Then forbid something stopping you from getting a camper loan, you will still have the newer vehicle to drive around.  Can't drive a travel trailer last I saw.  🙂

Note:  I bought my tow vehicle first, waiting til paid off to purchase a bigger/newer camper.    We're retired on limited budget so I'm not talking out my backside, just *my* experience/thoughts.

 

Another note, dealers are full of fertilizer.  They just want to make a sale.  IF they sold this one before you are ready, and I've heard it all before from them, there will be another one down the road when you are ready, maybe just not one that makes them $$ out of your pocket.  Good luck!

 

 

Edited by NDBirdman
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58 minutes ago, NDBirdman said:

I don't know your financial stats nor do I want to, but here's my 2.4 cents worth.  IF you buy the camper, then can't get financed for the tow vehicle, what then?  Personally, if I was tight and had to do a loan, I'd get the tow vehicle first.  Then forbid something stopping you from getting a camper loan, you will still have the newer vehicle to drive around.  Can't drive a travel trailer last I saw.  🙂

Note:  I bought my tow vehicle first, waiting til paid off to purchase a bigger/newer camper.    We're retired on limited budget so I'm not talking out my backside, just *my* experience/thoughts.

Another note, dealers are full of fertilizer.  They just want to make a sale.  IF they sold this one before you are ready, and I've heard it all before from them, there will be another one down the road when you are ready, maybe just not one that makes them $$ out of your pocket.  Good luck!

 

Thanks, ND. Thanks to your note on my other post string, I'm looking again at used Class C's that could tow my 4-cyl compact. And yes, I figured that RV dealer was a little full of it. I could already tell by the way he kept pointing out obvious things as we toured various trailers ("the dinette is a SOFA when you REMOVE the table!" "Just LOOK at all this STORAGE!" "The SHOWER has a TUB!") I just nodded my head and had a good laugh when I returned to my car!

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2 hours ago, MH Olson said:

That's a really good point. I'd figured it made more sense to finance at 6% or so than to withdraw money from investments that have been earning 8-10%.

If you can really do that, then you are probably right, but I highly doubt that you can finance a used RV for 6% and if you can, then you are probably right, assuming that your investments continue at the predicted rate. I strongly suggest that you shop loans first, both with the financial institution where you now do business and several others. If your credit is really as you say it should not matter what loan you do first unless you borrow too much for your ability to pay. But make sure what interest rate you can get before you choose to finance when you do not need to do so. 

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It is much easier to get an auto loan than an RV loan. I would get the smaller loan with the lower payment (probably the auto) first so as not to get your debt to income ratio out of wack. Let what ever financing institution you are planning to use know about your intentions and maybe you can get pre-approved for both loans at the same time. With a pre-approval it will be much easier to shop for both an auto and RV.

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I'm in the buy the trailer first group. My reasoning is, say you buy a standard size SUV, then spot a trailer that causes you to swoon-er, bear with me here, then discover the trailer is too much weight to tow with your SUV. What do you do now? You pass up the can't-live-without-in trailer or trade-in your new SUV for something large enough to safely tow the trailer.

When the time comes, this online travel trailer weight calculator will be handy. Note that it offers the 80% safety factor(optional) most full-timers recommend.

Edited by Ray,IN
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  • 4 weeks later...

Thanks again to everyone for your terrific advice! I just bought a 2016 Jeep Grand Cherokee Overland V-8, and financed a little over half of the cost. I shopped around in advance for a great rate (Alaska USA CU was the best that day of all the CUs I researched), and the dealer got a CA bank to match the rate. Next week, I'm buying the travel trailer with cash (thanks for the advice on that) since loan rates for RVs are nearly twice that of cars and trucks. Now I just have to get my house ready for sale ! 😉

Hope to meet some of you at my first Escapade in June!

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  • 3 weeks later...

Hi, TooGars. Thanks for writing. I wound up getting a great car loan (3.85%) on a used Jeep GC, and just yesterday paid cash for a used trailer ('17 Forest River Flagstaff 23'). People on this forum were enormously helpful. If there was to be a loan (and there definitely was!) it made sense from a bunch of angles to make it a car loan only.

Regards,

Madeline

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