Escapees May June 2015 Demo

RV Personal and Financial C onsiderations When Buying an By Shawn R Loring, Esq #76442; CM #13

when deciding whether and how to purchase an RV. Finance or Pay-in-Full Deciding to finance or pay for the RV outright requires research. Paying for the RV outright has its appeal, partic- ularly for those who derive a sense of fulfillment from living debt free; and, if paying for the RV does not strain the budget, perhaps that is the more prudent option. On the other hand, financing an RV has some benefits, as the RV could be paid in smaller amounts over the course of years. When making a down payment, it’s important to calculate how much capital should be invested in an illiquid, depreciating asset. It’s possible that the down payment may not be recouped. Interest Rate It should also be contemplated wheth- er the terms of the financing provide for a level, or fixed, interest rate, or whether that interest rate is variable. There is current speculation to suggest that the Federal Reserve will raise interest rates in the future. An increase in interest rates has the potential to cause the interest rates charged on RV loans to increase. This could cause the total cost of the RV purchase to increase substantially. Moreover, when the terms of the RV loan are variable, meaning they can increase or decrease, it may

The decision to acquire an RV is a weighty one, as the RV, for some, is a replacement for a brick-and-mortar home. The purchase requires significant thought, as it not only requires economic considerations but also personal notions of comfort.

T he best way to not only know the ins and outs of the RV lifestyle, but to also understand what kind of an RV works for that potential lifestyle, is to do extensive research on purchasing an RV before ever stepping foot on a dealer’s lot. Salespeople are moti- vated by moving their inventory, not necessarily by moving their customers into RVs that are best suited to their

Depreciation Beyond deciding on the ideal RV, consider how to finance the purchase of it. An RV, which may play the role of a full-time home, is, with few ex- ceptions, a depreciating asset—it loses considerable value almost immediate- ly after it is driven off a dealer’s lot. For financial planning purposes, an RVer might engage in a straight-line

“…whether an RV is financed or purchased outright, contemplate buying an extended warranty protection plan which could aid in reducing the costs of RV repairs.”

depreciation of the RV, which would allow for the depreciation of an RV in equal amounts over 10 years. Other options include taking a more signif- icant rate of depreciation early on in the lifespan of the RV or shortening the number of years over which the depreciation occurs. Factors that would help determine the appropriate rate of depreciation include where the RVer is domiciled and whether the RV is used as a residence or for business. The advice of a financial planner and an accountant could be invaluable

lifestyle. So, before the excitement of living on the road overtakes the reason needed to secure the right RV, spend some time in an RV. Go on an RV road trip with a friend, or rent an RV before purchasing it. The experi- ence of living for a short time on the road in a smaller space will provide data needed to choose the ideal RV. If spending days in an RV is not an option, visit an RV tradeshow, peruse RV manufacturers’Websites and read RV-centric magazines where specs and photos are available.

18 . ESCAPEES | May/June 2015 | www.escapees.com