By Chuck Woodbury
More than 3.4 million Americans could not make their home mortgage payments in April. That’s about 6.4 percent of all mortgages.
It made me wonder how many RVers couldn’t afford to make payments on their RVs. Here’s a letter I received from RV Travel reader James Swickard that got me thinking:
I had an interesting discussion with my wife recently. She had commented on all the people who are now without jobs (or even worse, without food), and wondering how many have RVs which were financed, and who will now not be able to make the payments. Is this where your criticism of long-term to financing comes back to bite many of them in the butt? Those with 20 year loans were likely under water from day one. Now their RV gets repossessed, and they still owe a bundle. They’ve got no way to pay, and any funds they have are needed for necessities. You and I know they made dumb choices, but my heart goes out to them regardless. I’m sure Mr. Lemonis (CEO of Camping World, which pushed long-term loans) won’t be helping them. And will the market soon be flooded with under-priced repossessed RVs?
I wrote James back said, yes, I expect a lot of RVs will be repossessed and put back on the market at giveaway prices. Many RVers are now in financial trouble. When they realize they can’t make their payments and must sell their RV, they will get a huge unpleasant surprise! The price they can get from the sale of their RV will be far less than what they owe on its loan, forcing them to come up with thousands, even tens of thousands of dollars to pay it off. Many of them will just turn the keys over to their bank and walk away.
Twenty six million people are already out of work, and that’s not the end of it. There’s a lot of RVers in that crowd, I suspect, and millions more to come.
I tried my best to “preach” to RVers to avoid 20-year loans. Many of them knew what they were getting into, but others passed on my advice as bogus — they’d have no problem paying.
I gain no satisfaction in saying “I told you so.” But I, for one, did my best to have buyers at least consider the idea that 20 years is a long time to pay off a loan on a depreciating asset. That’s two decades when it’s almost certain at least one significant recession will occur, much less what’s shaping up now as a major depression!
I wonder how many of those buyers wished they had put more down money, borrowed less, and limited their loan to 10 years or less? Or maybe wished they didn’t buy something they couldn’t afford in the first place? They could at least break even now. As is, they’re in a heap of trouble.
Read my article “What does financing an RV for 20 years really mean? It first appeared in October 2018, and has been promoted every week in our Saturday newsletter since then.