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Buying an RV? Understand Terms Dealers Use

Don has been an avid traveler and motorhome owner for most of his life and he shares his experiences along with valuable tips for RV owners.

RVs on a typical dealers lot waiting for the next buyer to show up.

RVs on a typical dealers lot waiting for the next buyer to show up.

Understanding RV Financial Terms

Most of you would never buy an automobile without knowing exactly what it will cost them. A conscientious potential car buyer will sit down with the dealer and ask them for information such as:

  1. the loan amount
  2. the down payment required
  3. the period over which the car will be financed
  4. the monthly payment
  5. what the warranty on the car covers

The average potential RV buyer will ask for much more information than this, on the vehicle they are considering, making sure that they understand exactly what they are purchasing and how long it will last them.

People that are new to the world of RVs, who are considering buying a recreation vehicle will often commit to tens, even hundreds, of thousands of dollars of debt for an RV without a real understanding of what they are getting into financially.

With this much of your money at stake, it is to your advantage to go into your RV search already knowing certain terms and sources of information about campers.

Common RV Financial Terms

Every industry has its own language that includes the terms and definitions that are used as they go about their tasks of making a product sale.

Probably the first thing you need to understand are the financial terms that are used within the world of RV dealerships and how they conduct their business, so here goes.

NADA (National Automobile Dealers Association)

NADA is the acronym for National Automobile Dealers Association. This membership company provides values of automobiles, RVs and other popular vehicle types. To be a member, you must be a licensed dealer and pay the annual fee for membership.

Non-members can also go to the NADA web site (NADA.com) and check on the so-called “NADA values” for a car or RV, though they cannot see some of the numbers that are available only to members.

These values are updated monthly for the dealers and they also vary in different areas of the country using your zip code.

KBB (Kelly Bluebook)

KBB (Kelly Bluebook) is another company that provides the values of vehicles, including RVs; and of course, their definitions of their values are slightly different from NADA.

KBB is a good quick reference for the estimated value of your vehicle for sale or trade-in, as well as the projected retail average sale price’s value for a vehicle you might want to sell yourself.

List Price

List Price is a mystery number that is more commonly referred to as the MSRP (Manufacturers Suggested Retail Price) for automobiles. This number is set by the RV manufacturers and as the name says, it is a “suggested” price for their product, yet it never changes over the life of the RV.

Depreciated Value

This is not an official term used by either NADA or KBB, but as a potential buyer you should understand that as soon as you purchase an RV it has a used value that is significantly lower than the original listed NEW value.

Once a new RV is titlef to an individual the actual value will typically drop by an average of 10% to 20%.

Once the next year’s model is on the market, this already reduced value of your “new” RV can drop by another 10% to 20%. Every potential RV owner should expect these early reductions in their “new” RV’s value.

Because of these predictable drops in value, the potential RV buyer should try to negotiate some level of discounts off of the sale price to soften the financial blow.

High Retail Value

This is the generalized value NADA puts on a used RV that is in excellent condition and has low mileage on it. This number is often the amount a dealer can ask for an RV and still make a profit when selling it.

Low Retail Value

This is typically the value that is listed as the average value placed on a used RV, assuming that the used RV is not in top condition and/or has high mileage on it.

Trade-In Value

This number is what a dealer will often pay or allow for your RV when you are trading your old RV in for a new(er) one. This number can be the Low Retail Value but is often even lower. A good negotiator can sometimes get the dealership to raise their offered trade-in price.

Wholesale Value

This is a mystery number for a non-member of NADA. A wholesale value for an RV will often be 20% (or more) below the Low Retail Value.

The actual number used is driven by such things as inventory on hand, the economy, and quite honestly, what the dealers are actually getting away with offering for your old RV.

Annual Depreciation

One other thing a potential RV buyer needs to understand is the fact that every year (month actually) your RV’s value number mentioned above will drop; always. Some years, the value will drop by a larger or smaller percentage of the old value simply because of several variables such as; the economic conditions, the popularity of each brand and model with buyers, available bank loan rates, and more.

Once an RV owner understands all of these terms and how they can affect their potential RV purchase or sale, then the more prepared they will be to make the best deal possible.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Don Bobbitt

Comments

Don Bobbitt (author) from Ruskin Florida on September 11, 2020:

Liz - So you have seen the reality of Rv values over time, personally. This inevitable decrease in value comes as a surprise to so many newbie Rv owners, but that's the way the system works.

Thanks for the comment,

DON

Liz Westwood from UK on September 11, 2020:

My father used to have a small RV/camper van. He always assured me each time he bought a new one, that it was an investment and that it would increase in value. I was dubious. When he died, unfortunately I was proved right, as we sold his RV of less than 2 years old for several thousand pounds less than the purchase price.