The Case For Buying A Used Motorhome (With Hard Numbers)
It’s funny. When we booked a site at Crossing Creeks RV Resort (in Blairsville), we ran up against a little asterisk in the booking process…
If your rig is older than 10 years, you had to send them a photo of it for approval. Basically, they wanted to make sure it wasn’t ugly. 😉
Our rig is a 2002. Of course, it also looks pretty good so it wasn’t a big deal. We sent in a photo and it was approved without hassle.
But, this RV resort is full of mostly new rigs. In fact, as you travel around, you see quite a few new rigs out there.
I am a FIRM believer, though, that it is a colossal waste of money to buy a new (or even almost new) motorhome.
I bought a 2002. I paid about $30,000 for it. Cash money. No debt.
Could I afford a fancier one? Sure. I could have gotten a loan and made payments. But… why? A “new rig smell”?
Why You’re Just Burning Cash When You Buy A New Motorhome
New motorhomes depreciate like a falling rock. Even almost new rigs do, too.
The moment you take a new rig off the dealer lot, you just kissed about 30% of your money goodbye (when compared to MSRP). Of course, most likely you’re not paying full MSRP at the dealer, but the loss of capital when you drive it off is still pretty substantial.
But, it continues to depreciate quickly. It loses about 18% of it’s value in the first year. In fact, here’s a sample depreciation schedule, as proposed by RVersOnline.
After the rig is 5 year old, you’ve lost about half your value.
My rig was worth about $120,000 back in 2002 when it was brand new. I bought it for $30k. That’s only 25% of what it went for when new. Same exact motorhome.
Class A motorhomes depreciate faster because they are more expensive to begin with. Both Class A’s and Class C’s fall in value quickly, but since the Class A starts higher, the percentage drop in value is more pronounced. Once the rigs gets pretty old (say 20 years), they tend to even out. In the end, if an old rig runs, it still has value. An old Class A and an old Class C will not have major differences in value.
But, Isn’t It Just About The Monthly Payments?
For some, that’s how they look at it. But, think about it…
Does it make any real sense to pay high monthly payments on an asset which is losing value that quickly?
Answer = NO.
Not only are you paying retail for a motorhome, but you’re paying interest on top of it. And those payments won’t auto-adjust as the value of your rig free falls. This isn’t like a house where the value will remain much more constant or even increase over time. The value of your motorhome is guaranteed to drop like a rock.
RV loans these days go for around 5-5.5% and for terms around 15 years. Some go longer. Some go shorter.
But, let’s take a mythical loan and use the Omni RV Loan Calculator. Let’s say we bought a $120,000 brand new, decked out motorhome. We put down $10,000 and finance at 5% for a term of 15 year.
Our payment is $869 per month and we end up paying over $156,000! And, if this rig is anything like mine, it’ll be worth around $30,000 by year 15.
Some loan providers will even charge you a pre-payment penalty if you try to pay off the loan early. You’re literally get screwed even worse for trying to save money on interest.
Do New Rigs Break Less Than Older Ones?
One potential draw to a new RV is that it is supposedly supposed to break less. More trouble free. Right?
There are numerous tails of people with brand new rigs having problem after problem. Spending a lot of time dealing with their dealer for warranty work. And while it is nice that it is covered under warranty, it doesn’t make it any less annoying. Many times, the dealer will end up keeping your rig for WEEKS to handle even the simplest problems.
Truth is, quality control at the RV manufacturer can be lackluster. That shiny new RV has never really been exposed to life on the road. Get it out there running and vibrating down the road and issues WILL arise. It is inevitable.
Older motorhomes – especially the ones which have been cared for well – have “been there and done that”. The manufacturer issues have been addressed. Defects have already been addressed.
Sure, an older rig also has the potential for more issues due to it’s age. But, it isn’t necessarily worse than a newer one. If the rig was cared for, then you shouldn’t have too many issues (at least more than normal). Sure, equipment can break due to age and use, but that’s life.
But, I’ll tell you one thing…
You can afford to make quite a few repair and you’ll still be WAY financially ahead than buying a newer rig. Look at those numbers up above… and compare that even to having to drop $5,000 into repairs. You’re still way ahead of the game.
Are The New Rigs Really Much Better?
Of course, the new rigs are sexy. But, are they really that much better?
It all depend. New rigs have some conveniences that older ones often don’t. For instance, many of the newer Class A’s have the retractable bunk over the driver area. Quite convenient, but you rarely see that in the older Class A’s. Also, you’re beginning to see more motorhomes with king beds whereas that can be hard to find in an older one.
But, for the most part, the new rigs have that new STYLE, but functionally it is the same.
When I look at my 2002 Vacationer, there’s really nothing missing that a new rig of the same caliber would have. I mean, it’s got pretty much every luxury. It’s just that the styling is a bit dated. It has brass fixtures whereas stainless is more modern. It has some older fabric on the furniture rather than plush leather. But, it’s all STYLE.
Plus, there’s very little we couldn’t modify in this rig if we wanted to. I could recarpet it or put hardwood floors in. I could change out the brass stuff for stainless. We could reupholster the furniture.
Perhaps we will at some point. 🙂
And we’d still be WAY ahead financially than somebody who paid six figures for it.
You just have to look at the functionality of it all. While somebody in a brand new rig across the road might have something that looks a little more modern in the decorations, that guy and me are camping in style just the same. And I have every convenience that he does.
Motorhome Travel Is Much More Affordable Than People Think
People who are unfamiliar think these things cost much more than they do.
Plus, there’s that American need to keep up and put forth a fancy image. People like new houses, new cars. And, yes… they like the fancy new motorhomes.
But, once you realize just how STUPID it is to buy one and look into the used market, you realize you can get a lot of RV for your cash.
My first RV was only $12,500.
Of course, if the rig is over 10 year old, you’re going to have a tough time getting financing. And I do understand that paying cash can be hard even for these older motorhomes.
But, if you can muster up the cash, that IS the way to go.
The Bullet Point Summary
Let’s wrap this up with some of the big points to remember…
- There is literally ZERO rational financial argument in favor of buying a new motorhome. It makes no sense. Zero. Zilch. Nada. The only reason to buy a new motorhome is emotional.
- If you still want a new-ish motorhome, then your financial “sweet spot” is to buy a rig which is at least over 5 years old. By that time, about half of your depreciation will have taken place.
- If you’re willing to buy a rig which is older than 10 years, you will get your best deals. You will also find it much more difficult to get financing, however. Best bet is to simply pay cash.
- Depreciation is a factor of age, not miles on the odometer. Even if you find a low-miles older rig, that doesn’t mean it is worth more.
- Other than looks, there isn’t a whole lot of functional difference between a new motorhome and one which is 10 years old. You’ll have almost all the same amenities and conveniences. It is mainly just that the newer rig looks newer.
- New rigs are not exempt from mechanical problems. In fact, sometimes the new ones break down more often than the older ones because you’re still debugging factory defects.
In the end, a motorhome is basically a TOY. Unless you plan to full-time in it, it is a toy. To blow cash on a brand new one is just plain stupid. It’s that simple.
The only way I could see a justification for it is if you choose to rent your rig out on RVShare or something. At least you stand a chance of recouping some of your monthly payment. But, even then you’re still paying WAY more than you should. And a 5 year old rig isn’t going to rent out for less than a new one.
Save your money and buy used. If you can, avoid the use of debt to buy.
Your enjoyment factor while traveling is not going to be affected because your rig is newer.
When I sit in campgrounds having a drink and look around at those new rigs… sure, they look nice. But, I’m thinking…
I have more cash to do fun things with. I have no debt. And in the end, I have all the same luxuries.
Give it a few more years, I’ll buy their beautiful rig for pennies on the dollar when it is time for me to upgrade. 😉