A friend of mine was regaling me with this morning with his new purchase over the weekend. A shiny new 17' camper for him and his wife to drag around the region and "camp".
He was pleased that his payment on this $10,600 piece of luxury was just $108 per month. FOR 12 YEARS!! A little calculating shows this is over $5,000 in interest on a toy. I just smiled and wished him luck with it.
Ouch. On a 10k camper?!
6.8% sounds like an okay rate until you do the math and see that over the life of your loan you're paing nearly 50% more than the purchase price. At least your friend has the option to pay extra each month toward his principal balance to reduce that penalty.
PS - If $5,000 in interest scares you, don't look at the amortization schedule for your mortgage!
nderwater wrote: PS - If $5,000 in interest scares you, don't look at the amortization schedule for your mortgage!
Was just going to say, RVs tend to get financed more like houses than cars.
nderwater wrote: 6.8% sounds like an okay rate until you do the math and see that over the life of your loan you're paing nearly 50% more than the purchase price. At least your friend has the option to pay extra each month toward his principal balance to reduce that penalty. PS - If $5,000 in interest scares you, don't look at the amortization schedule for your mortgage!
Oh, I'm well aware of it. But I have to have a place to live, I don't have to have an aluminum box to drag around the campsites and pretend to camp in.
That interest is tax deductible, at least under the current rules, so maybe he's not so dumb.
Tax deductable interest is better than non tax deductable interest, but you're still paying someone $1 so someone else can give you $0.25 back.
Houses are also GENERALLY not depreciating assets.
nderwater wrote: 6.8% sounds like an okay rate until you do the math and see that over the life of your loan you're paing nearly 50% more than the purchase price. At least your friend has the option to pay extra each month toward his principal balance to reduce that penalty. PS - If $5,000 in interest scares you, don't look at the amortization schedule for your mortgage!
We have. But at our current payment rate (extra grand in principle each month) we're going to save $36k and have it paid off in 12 years total.
I realize this thread is about the interest paid on a quickly depreciating asset, so I'm not really staying on topic, but oh well. I don't get camping. Thats not true. I understand having a camper to stay in if you race or offroad or something like that, also heading out into the woods for a few days, but just pulling it to a campground to spend the weekend, I don't get it. I have a lot of relatives that do that. They tow it to the lake on thursday, then spend friday and saturday night there, then come home. This is in a really crowded campground, not heading out into the wild for silence and solitude. What is the appeal in that? The only thing I can come up with is if they drank at home the way they do while camping they would be labeled as alcoholics.
That's nothing. My brother in law paid about $30,000 for a used Accent by the time he paid it off.
The original mortgage on my first home was 13.5% back in the early 80's, ya those good old days!
In reply to Wall-e: If it was a cool European accent that might be worth it (the ladies love Italian), but if that was for a crappy Slavic or Middle eastern accent it's more likely to get him landed on a watch list.
In reply to KyAllroad:
Worse. It was a Hyundai that was refinanced twice and repo'd once.
I knew a guy who refinanced his 5 year old Isuzu Rodeo, which wasn't paid off yet, for 5 more years just to reduce his monthly payment by $50 - so he could buy a house.
I've been trying to find a bank to re-finance the balance on my car loan, in order to increase the term and reduce the payment.
Problem is, the balance is $238.46. I should be able to get the payments down to $4.46/month for 60 months. 
In reply to EvanR:
I'll do it but I have a $250 application fee
I'll waive my usual application feel but there is a $250 charge for paying it off early and all of the increased paperwork that an early payoff brings.
KyAllroad wrote: He was pleased that his payment on this $10,600 piece of luxury was just $108 per month. FOR 12 YEARS!! A little calculating shows this is over $5,000 in interest on a toy. I just smiled and wished him luck with it.
Maybe his money is invested somewhere where it will earn him $15k in that time frame.
ProDarwin wrote:KyAllroad wrote: He was pleased that his payment on this $10,600 piece of luxury was just $108 per month. FOR 12 YEARS!! A little calculating shows this is over $5,000 in interest on a toy. I just smiled and wished him luck with it.Maybe his money is invested somewhere where it will HOPEFULLY earn him $15k in that time frame.
FTFY. The interest on the RV is guaranteed. Investment earnings are not.
Wall-e wrote: My brother in law paid about $30,000 for a used Accent by the time he paid it off...It was refinanced twice and repo'd once.
STM317 wrote:ProDarwin wrote:FTFY. The interest on the RV is guaranteed. Investment earnings are not.KyAllroad wrote: He was pleased that his payment on this $10,600 piece of luxury was just $108 per month. FOR 12 YEARS!! A little calculating shows this is over $5,000 in interest on a toy. I just smiled and wished him luck with it.Maybe his money is invested somewhere where it will HOPEFULLY earn him $15k in that time frame.
First part is true. Second part - it may be guaranteed (unlikely), but I don't know his financial situation.
I do agree that RVs are silly.
ONE payment $1200
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