How to get financing

[Patandlinda]

Originally Posted by cpaharley2008

I have always borrowed money for non residential items but always had enough in the bank to pay off the loan at any time. That way, other than my home which one can use life insurance to pay off, I'm using the bank's money. It forces me to pay off the loan quickly also. But this only works when your interest on your loan is low because there is no risk to the bank as it is fully collateralized. I remember when home equity loans first appeared back in 70's, people were losing their house over a car payment. Now that I'm retired, I no longer save and spend my pension every month, I no longer save money as my savings only earns low interest, so I spend it. My plan is when I pass thru the pearly gates, my check to pay the toll will bounce....

You are one of the lucky ones to have a pension . Being self employed , no pension . Pat

[steve dunham]

Originally Posted by cpaharley2008

I have always borrowed money for non residential items but always had enough in the bank to pay off the loan at any time. That way, other than my home which one can use life insurance to pay off, I'm using the bank's money. It forces me to pay off the loan quickly also. But this only works when your interest on your loan is low because there is no risk to the bank as it is fully collateralized. I remember when home equity loans first appeared back in 70's, people were losing their house over a car payment. Now that I'm retired, I no longer save and spend my pension every month, I no longer save money as my savings only earns low interest, so I spend it. My plan is when I pass thru the pearly gates, my check to pay the toll will bounce....

I have a hard time breaking old habits . When working I had money deducted out of my paycheck each week that went directly into savings at our credit union . Now that we are retired , we have the same deduction taken out of our pension check .
My mom lived 29 years after my father passed and my mother in law lived 25 years alone. I feel more comfortable knowing that when I pass that my wife will be taken care of.
We are not suffering or going without and I can't bring myself to spend it as fast as I get it.
Everyone has their own comfort level and my comments are not intended as passing judgement on others.

[Fox hunt]

I'm using a home equity loan for half of it and cash for the second half. that's what my money guy suggested and pay off the loan as quickly as i can. I want it payed off before I retire in five years or less. Saving would be better but i have horses so... And I also need a truck (used) but i will trade in my old truck so that will bring that cost down.

[kstock11]

There are so many choices when it comes to finances. Often the choice to borrow is not due to pure necessity but more convenience. While one can pay cash for a large purchase like this, it is often good to take a loan so that there is a buffer of cash available for other things in an emergency. With the cost of the trailer and the great resale value, a loan gives you flexibility that paying cash does not. Buying something that you can't afford is a whole other subject.

[frank_a]

I talked with the loan officer at our credit union outside Albany NY. He was aware of Escape Trailers in Chilliwack (he had them on some list) and they were authorized to lend money for them. The Canadian exchange was not a problem.

Frank

[apopj]

Remember when we were in school and anything over 25% was usary and illegal? Some money grabber at the bank came up with a novel way to figure interest so now you’re paying 33 to 70 percent interest. Trying telling your financial institution that if they loan you $10, 000 you’ll gladly pay the 5% interest and pay back $10,500. Watch their jaw hit the floor as they try to explain why it’s not really 5%....

[cpaharley2008]

Called the rule of the 78's https://en.wikipedia.org/wiki/Rule_of_78s

[apopj]

Right, should gave been called innovative ways to screw people!!!! I was simply saying that there will always be some one who will find a way to either change a law or find a way to circumvent it in order to make more money at our expense. You would think that since the RV manufacturer has already made their money before selling it to the dealer, they would offer either 0% interest or a very low simple interest rate to cover paperwork. But instead, the dealer buys the loan from the bank, and basically sells it to you at the highest interest rate they think you will accept. Anything over the rate they “purchased “ from the bank is more profit, along with “document” fees, “dealer prep” fees (even though most manufacturers pay thd dealer to do this), extended warranties, and all sorts of other added costs. And all of this to finance a poorly built RV that might last 10 years on a 20 year loan. And we do it over and over and iver, go figure

[Patandlinda]

Originally Posted by cpaharley2008

Called the rule of the 78's https://en.wikipedia.org/wiki/Rule_of_78s

Happened to us when we paid off a Toyota truck loan early and expecting interest refunded off pay off . Not happy and do not look at Toyota the same way even today . Did not happen with other loans after including trailer . Pat

[Brian B-P]

Originally Posted by apopj

You would think that since the RV manufacturer has already made their money before selling it to the dealer, they would offer either 0% interest or a very low simple interest rate to cover paperwork.

Some manufacturers offer low-interest financing to encourage sales, but the cost of it is just built into the selling price. Interest doesn't just "cover paperwork", and RV manufacturers (just like everyone else) don't have money just sitting around to be used by you.

If you don't like the financing terms at a dealership selling you anything (car, trailer, whatever), then don't borrow from them. If the bank has better terms, borrow the money from them.

[apopj]

Good point, but I was simply saying that the manufacturer has ALREADY made their profit prior to selling it to the dealer. Auto builders are getting on the bandwagon, lets hope RV dealers follow suit. Terms is relative. Since the banks havevthe money, their “terms” are mandetory not optional. I sold cars for a few years, you are trapped in the system, if you want an item, you take it or leave it. Since there are always plenty of other fish to catch, we as consumers are at a loss. But, I hope you get the point. We as consumers are at the very bottom of the “food” chain. That’s why things built so very poorly are still being bought, take it or leave it.

[rbryan4]

Originally Posted by apopj

Good point, but I was simply saying that the manufacturer has ALREADY made their profit prior to selling it to the dealer. Auto builders are getting on the bandwagon, lets hope RV dealers follow suit. Terms is relative. Since the banks havevthe money, their “terms” are mandetory not optional. I sold cars for a few years, you are trapped in the system, if you want an item, you take it or leave it. Since there are always plenty of other fish to catch, we as consumers are at a loss. But, I hope you get the point. We as consumers are at the very bottom of the “food” chain. That’s why things built so very poorly are still being bought, take it or leave it.

I sold cars too. Seems like a lifetime ago, thank God. With a qualified and educated customer, the dealer or the bank was not in the driver's seat - the customer was. There were customers who were barely qualified or unqualified of course, and in those cases it was a take or leave it scenario. But for the qualified customer, we had to bend over backwards to provide the best possible price and terms or the customer would simply go elsewhere.

The argument that consumers are "trapped" by the "system" has never held water with me. It smacks of victim mentality. Everything is negotiable, provided you have the leverage. Everything. I use that knowledge to my advantage and have never paid even close to sticker for any motor vehicle I've ever bought, nor have I ever paid the going rate. If the consumer has planned over the course of their financial life, and approaches any business dealing from a position of strength, the whole paradigm changes.

Additionally, if a manufacturer produces an inferior product, it may take awhile but the market will correct that. They'll either start building a better product or they'll be history. There are too many real world examples of that to mention.

Lastly, I'm under no illusion that the dealer or bank won't try to take advantage of you - they will, given the opportunity. The key is not to give them one.

[frank_a]

Originally Posted by cpaharley2008

Called the rule of the 78's https://en.wikipedia.org/wiki/Rule_of_78s

Except that... "the use of the Rule of 78s is prohibited in connection with mortgage refinancings and other consumer loans having a term exceeding 61 months."

[cpaharley2008]

most credit card companies still use it....

[frank_a]

Originally Posted by cpaharley2008

most credit card companies still use it....

So don't buy an Escape with a credit card. I could not imagine that anyways, though some folks would. Get a 72 month loan.

I believe when we buy our 5.0TA, it will be with cash. To a minor degree it depends on the dollar exchange and inflation at the time. We'll see.

Frank

[Brian B-P]

Originally Posted by cpaharley2008

most credit card companies still use it....

Certainly not in Canada, and I doubt that it is used anywhere in the U.S. for credit cards, either. This "rule" is simply a computation method for a pre-computed loan, and a credit card account is not a pre-computed loan. The card issuer charges interest each month, at an agreed and known rate (typically different rates for purchases and cash advances); you simply owe the interest which you allow to accumulate by not paying the outstanding balance. That interest rate is enormous, which is why it rarely makes sense to carry any outstanding balance for even one month.

In this century, a credit card company which reports how long it would take or what it would cost the consumer to pay off their balance while making only minimum payments is calculating it properly... because they use those new-fangled computers which did not exist when the Rule of 78s was devised.

[Vermilye]

Originally Posted by frank_a

So don't buy an Escape with a credit card. I could not imagine that anyways, though some folks would. Get a 72 month loan.

I believe when we buy our 5.0TA, it will be with cash. To a minor degree it depends on the dollar exchange and inflation at the time. We'll see.

Frank

Actually, it would have saved me some $ to use my credit card (assuming I paid it off before it started accumulating interest charges). Capitol One gives me 1.5% cash back, no transaction fee for Canadian purchases, and a good exchange rate. Unfortunately, Escape will only allow $2500.00 on a credit card towards the purchase price.

[Brian B-P]

Originally Posted by Vermilye

Actually, it would have saved me some $ to use my credit card (assuming I paid it off before it started accumulating interest charges). Capitol One gives me 1.5% cash back, no transaction fee for Canadian purchases, and a good exchange rate.

I know a couple who bought a (used) Jaguar on a credit card to get the points in a loyalty program.

Originally Posted by Vermilye

Unfortunately, Escape will only allow $2500.00 on a credit card towards the purchase price.

Right, because all of those credit card benefits come at the expense of the retailer, who pays a fee based on the purchase value. That's why no sane business would accept a credit card payment on the full value of a large purchase such as a trailer, at least without charging an extra fee for the privilege; the auto dealership that sold that Jaguar would certainly have negotiated to a lower price if not stuck with the massive card fee.

[Oldtimer]

Just an FYI Good Sams no longer will finance Escap trailers as they are not listed in the NADA book

[Vermilye]

Originally Posted by Brian B-P

I know a couple who bought a (used) Jaguar on a credit card to get the points in a loyalty program.


Right, because all of those credit card benefits come at the expense of the retailer, who pays a fee based on the purchase value. That's why no sane business would accept a credit card payment on the full value of a large purchase such as a trailer, at least without charging an extra fee for the privilege; the auto dealership that sold that Jaguar would certainly have negotiated to a lower price if not stuck with the massive card fee.

The dealer for my F 150 allowed $3000.00 on a card. (No change in the overall $)