By Chuck Woodbury
I discovered this posting on a social media site. It hit one of my hot buttons — how incredibly easy it is to convince someone to make a bad decision about buying an RV. Oh, not intentionally, just the opposite — a dumb mistake expertly promoted by an RV salesman.
Here’s the comment:
“Hi, I’m 27 year old female and I moved to El Paso from Houston Texas. I financed an RV from Camping World for work since I work in road construction and move all over New Mexico. Now my life has taken a turn that I have to move back to Houston due to my father declining health: he got diagnosed with COPD and I have to go there and live with him in his apartment. I have no use for this RV and I’m lost on what to do. I have thought about voluntary repo but worrying so much about the deficiency balance. I know I made a stupid mistake but I just need to know all my options.”
Stupid mistake?
Yes, she’s right. She bought from Camping World, which is led by Marcus Lemonis, a guy who could sell an air conditioner in December in Nome, Alaska.
In a recent appearance before RV industry leaders Lemonis said, “We [Camping World] always maintain $99, $199, $299, $399 [payments] … all the way up. I never think about it as price, I think about it in terms of payment. That’s how we advertise, that’s how we stock inventory, that’s how we train our sales people, that’s how we buy new inventory.”
And so, what happens, is that people buy based on their present financial condition.
Note in the attached graphic below from the original posting: This woman is paying nearly $400 a month in interest alone on her loan!
What should she do — just walk away from from the RV, keep paying for it even if she doesn’t want or need it, or sell it, which means writing a sizable check to pay off the upside down loan? Here are a few of the comments from her posting:
• “You signed up for what you signed up for. You know your options, you probably just don’t like them. You’ll have to keep it and continue to pay monthly, sell it and probably have to take a loss, or have it repossessed.”
• “There’s new ones selling for $20,000. I would imagine she’s looking at [coming up with] $15,000 if she decides to sell it.”
And finally:
“You can sell the RV, and you’ll need to cut a check to the bank to pay for the difference between what you can sell the RV for versus what you still owe on it. This preserves your credit. If you turn the RV back in, they will sell it, and they won’t get a good price for it. You’ll still owe the difference between what you still owe and the wholesale price that they sell it for at auction. This option will destroy your credit, and you’ll still get harassed until you file for bankruptcy.
“Or you can keep making the payments. This is likely the easiest way to preserve your credit, unless you can afford to sell it and pay the difference. If you can put extra in on it, you’ll be out from under it faster. The downside is you’ll still need to pay the insurance, maintenance, and carry costs as well, including storage. If you can put enough money per down to get the RV to be worth more than you owe, you can sell it.”
##RVT1176
Rent the RV out to make the payments. Then sell later.
This is an opportunity for her. Rent it out. See what a comparable unit is renting for, and do it for slightly less. All you need to cover is what you’re paying for it, and maybe it will be a second source of income. There are several RV renting sites. If you had bought a sticks and bricks, you would be in the same boat.
I tend to agree, but her loan, and certainly any insurance she has on the RV may not make this an easy option. Banks do consumer loans and business loans. Consumer loans can contain restrictions on non-owner occupied use. For sure, insurance will. And the bank will insist that she maintain insurance. And maintain their collateral. An equally tough road might be to offer the bank a collateral swap, e.g. her father may have a Certificate of Deposit. Then sell the RV and use whatever equity to pay down the loan.
It sounds like she won’t have a place to store it, so what does she do with it when it’s not being rented? And then there’s the winter season.
Having been in the automobile business for nearly 40 years, the same metrics can play out for any vehicle purchased by loan and trying to get rid of it early in the loan term.
I have never purchased anything from camping world but from what I see their sales techniques are a lot more common in the RV industry than you may think. The constant berating of Mr.Lemonis is childish at this point. The cliche “Let the buyer beware” was not written just for Camping World. It’s important to understand your loan terms before signing on the dotted line. Almost as important as a pre-sale inspection, find a qualified person who has the knowledge to decipher all the legal mumble jumble.
100% agree…. you can’t fix stupid or maybe the correct term is ignorance. All kids graduating high school should be taught skills how to purchase something, banking, some idea of budgeting, simple finance. If you don’t know, you don’t know and this is how you learn the hard way.
Who is going to teach them…the stupid teachers?
Their parents could teach them maybe? Just a thought. Two of my children are educators. Each have multiple Master’s degrees. They are anything but stupid. It’s a parent’s job to teach their children (by example) how to manage their finances.
That was my first thought as well…schools should teach financial literacy skills.
But then as I thought more about the generally poor reading comprehension in the U.S., I wondered how much financial literacy would be understood and used.
According to a Snopes accuracy review of the well-known statements that more than 1/2 of U.S. residents read at less than a 6th grade level and that the U.S. ranks 125th in literacy, they found those stats were substantially correct! This certainly doesn’t help in teaching other needed life skills dependent on reading contracts.
As is told “there’s a sucker born every minute”.
ANY loan or mortgage implies a certain belief about what your future will be. Therefore, there is risk involved. The thing about risk is that sometimes the bad thing happens. In this case, at 27 years old, her (probably unconscious) risk assessment was that nothing was likely to go wrong. In her case, an entirely unforeseen, low-probability, event happened.
There is, of course, the question of the wisdom of getting into payments that will likely have more than doubled the price of her RV, and left her upside-down for an extended time…
Move dad in with her. Paying rent on an apartment just to be homeless, jobless and with bad credit when Dad dies makes no sense. If she’s planning on staying employed, him living in a smaller structure isn’t going to worsen his situation nor his health.
If you can’t pay cash for an RV, you have no business owning one. That doesn’t mean you shouldn’t finance the RV. Just be certain you have the reserve funds needed to pay it off immediately if things go South. Negative net worth has become the norm, and buyers are far too comfortable with it. In this case she should devote every available dollar to paying it off. Then she will be free to sell it, keep it, give it away, or whatever she wants to do. Debt is the new slavery. If you can’t afford it, don’t buy it.
Debt has always been slavery!
If advising this person, I would parrot Dave Ramsey. Sell and take out a personal loan for the shortfall. Rice and beans and then beans and rice until the personal loan is paid off. After that save your money until you can pay cash in the future.
Never, never finance through Camping World, or any other large RV sales outfit. And never finance for more than 10 years.
Ask what the total amount will be at the end of the finance period including interest and hidden finance charges. Plus, any added charge if you pay the loan off early.
Most finance companies want the total interest even if paid off sooner.
Find out how much of your monthly payment is toward the interest and how much towards the principal.
Also, be ready for a long discussion from the salesperson if you are paying cash. They will make up excuses that it is better to finance.
The dealers also make a commission from the finance company.
“She bought from Camping World…” nuff said.
There is absolutely nothing she can do if she doesn’t have the money to satisfy the debt. I suggest she should turn it in, make sure the loan is adjusted for the remainder, then stop paying. Default and take the hickey from the BK. Life goes on, time passes. She’ll recover.
She has options! Victim is not the answer! She has made a mistake and she will learn far more from dealing with it in a positive manner than truly suffering trashed credit for many, many years!
What options Ramona? She’s going to live in an apartment with her ill Father. She claims she has no use for it. Can she afford to store it? Pay the insurance? Pay the maintenence? Doubt it. She can rent it out but that’s inconsistent at best, and when it’s not being rented, where does she store it?
That interest… yikes.
You should always try to get pre-approval from your bank or credit union first – the rates and terms are usually far better.
Also, avoid Camping World at all costs.
I don’t suppose she knows of someone in need of renting it? Set up at a park and earn some income?
“Stupid teachers”..??
Those types of comments have nothing to do with the subject and should be removed by the moderators…
To the young lady who’s upside down on her RV she no longer needs:
This might not be permitted by the finance company, but surely there’s someone else on that road building crew who would be willing to “sublet” her RV from her for an amount equal to her payment + insurance. This might be able to get her through another year or so, and by then maybe her personal situation may have changed.
She could refinance it with a credit union. Many have lower rates and ways to join even if your not in one of their SEG’s.
Thank you, Chuck! 🙂 I agree with the last comment. That is, make the payments until she can afford to pay the balance she owes, net of what she receives for selling it. Her choices are bad, but this is the least worst one, presuming her credit worthiness matters to her. Have a great week, safe travels, and safe stays! 🙂
Call them. Tell them you can not make the payments anymore. They hear this story 100 times a day. Learning is expensive.
RV Dealers sell financing attached to junky defective products.
Rvshare to rent it out. It is amazing the nice RVs people rent out because they are occasional weekend warriors. We rented one for three days while our RV was being serviced. We needed it delivered (didn’t want that because it is expensive) or a gooseneck like our own. We found a gooseneck one. It was an easy transaction.
If she rented it out once a month probably would cover her payment. Rent it out more often and she can pay it off sooner to sell it.
That is a great solution! We have seen owners bring several out to campgrounds, set them up for renters, then come back and remove them after the rental. They also charge additional fees to clean the rig and dump tanks. It could become a good side hustle.
Lemons into lemonade. Sure beats doing nothing about it and feeling victimized.
Maybe she could rent it to pay off and cover storage. Then she would have it to camp in when her father no longer needs her assistance.
Avoid camping world at all costs!
Personally, if I could keep making the payments, and cover storage fees. I’d hold on to the RV a year or two and see how my ailing parent does.
RV share and outdoorsy are the solution. They handle all the details, provide insurance and yet you still have the control over who rents. You live in a part of the country that you can camp all year so the rental market is not seasonal.
Good luck, Lesson learned : never buy from camping world
She could list it on a Subject To group on Facebook and someone would probably take over her debt on it to have an RV. It’s not without risk, but it’s an option.
Our neighbor had a class A that they were upside down in and couldn’t sell for what they owed. They had already purchased a new Diesel Pusher and didn’t know what to do with their used A-class. They signed up with one of the rental apps and were actually making good money until an electrical short caused the rental A-class to catch fire one year into renting it out. Both their insurance and the rental apps insurance paid the coach off fully.
Though they were glad that they didn’t have to come up with an.
First I commend the young lady for setting aside her career to take care of her parent. Evaluating her Dad’s medical evaluation would be to be considered for future plans. Refinancing is possible the first option with a credit score rating effecting this outcome. Renting the RV is very risky with it getting trashed.
Many options are available but only she feels best which to choose. Best of luck to her and Dad.
Did anyone see that interest???? I calculated her loan interest at 20.0% Camping World should be avoided!
Hi, Nick. Sooo sorry for the delay in your comment being published. I just now noticed it’s been sitting in the Spam folder since last night.😱 I have no idea why our sometimes-overzealous spam filter even put it in there. My apologies. Have a great day. 😀 –Diane at RVtravel.com
COPD is a condition many people live with for a long time. There are too many unknowns in this instance. Does she have siblings? How severe is her father’s condition? Does her father have access to medical or financial assistance? Is her father a Veteran, on Medicare or Medicaid? Does she have a financial planner or is she looking for a fast resolution so she can jump into another hot mess? As a fulltime RVer and a retired RN, she needs to look at the bigger picture.
It’s too bad when people get caught up in the moment and make an emotional decision without thinking things through. An RV (canvas popup to million dollar motorhomes) is a depreciation asset. I can’t tell you how many times a salesman (car/rv…) is starting to work us and we come right out and say we are not making any decisions here today, period. We are here educating ourselves today. If you are spending thousands of dollars take your time to make a decisions. There is always another deal tomorrow. Can you really afford this xx item? Are you going to use it enough to justify this cost? Maybe it would make more sense to rent? Take the emotions out of your decisions.
This situation has NOTHING to do with Camping World and everything to do with the article getting looks. Shame on the publisher.
True. These things happen every day. Cars, houses, etc,
To a point, yes. However, Camping World charging 20% interest on an RV Loan, plus whatever additional warranties etc. and the add-on’s that add NO Value. Camping World is about maximum profits and not about building lifetime relationships with its buyers. It is truly sad.
How about renting it out to help make extra money towards the payments?
Where would she store it when not being rented?
Way easier said than done. My son rents his out.. not so easy
If repossessed make sure you get every sheet of paperwork. They will lie about everything including resale price, storage fees, etc
Just diagnosed with COPD and your Dad needs you to live with him? Not the usual case. Who will be with him when you are working? Sell the RV and pay the bank the difference between what you owe and sale price.
Simple… park it at COPD dad’s house… it is your casita getaway… you will need it…✨🎊✨🎉✨🥳✨
The problem isn’t so much Camping World than it is with gross financial illiteracy in America. CW can only put prople in this situation because millions of people mindlessly walk into it. From housing to cars to appliances, vacations, etc, people think of purchasing in terms of payments instead of economics. Shame on our educational establishment for not doing better to prevent these nightmares.
Rent the RV.