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Is It a Good Idea for You to Trade in Your RV?

I have had a great deal of experience both buying and selling RVs and think people should understand the mechanics of doing these things.

Find out the pros and cons of trading your current recreational vehicle for another one.

Find out the pros and cons of trading your current recreational vehicle for another one.

RV Trade-In Pros and Cons

If you are thinking of trading in your current camper, travel trailer or motor home for a different RV, you need to consider the pros and cons of doing so. In some cases, doing this may be a good idea, but in others, not so much.

The great majority of people who do this lose money, and sometimes the losses can be substantial. However, if your current unit needs a lot of work, what you save in repair and upgrade costs might balance out any losses you might take.

Each situation is different, so you should give a lot of thought to yours to make sure a trade is the best thing for you to do financially as well as emotionally.

Learn the pros and cons of exchanging your older RV for a newer or bigger one.

Learn the pros and cons of exchanging your older RV for a newer or bigger one.

Do Well-Maintained Units Trade Better?

You may think that if you have done a good job of maintaining your unit and detail it beautifully before taking it in, it will increase the amount you will get for it in a trade, but in most cases, doing these things won't help much. Dealers generally go by black-book prices and pay little more than the values that are listed in them.

For example, a few years back my husband and I tried to trade for our 1999 motor home, It was in mint condition and had low miles. The average book price on it at the time was around $15,000. The salesman raved about how beautiful it was for its age, and then offered us $8,000!

This little story should give you some idea about how RV dealers think when taking in trades.

Even if you have only owned your coach for a short period of time, the chances of your getting a fair trade in price for it from a dealer will be minimal. In fact, they will be worse because new vehicle depreciation is likely to make your coach worth much less to them than what you paid.

New Vs. Used

Most people who trade do so with the intent of buying a new RV because they are either tired of paying for repairs or have decided that there is something they don't like about their current unit. What few realize is that the cost of buying new is very high and that there is no guarantee that a new coach won't also need repairs. Furthermore, there is no one coach out there that will meet all needs.

Thus, trading in an older RV for a newer one may not provide the relief you seek. In fact, doing so may create more problems than it solves!

Most people end up purchasing previously owned recreational vehicles because it costs less than buying new. However, whether you decide to trade for a new or used unit, the sales price of what you buy minus the amount of money a dealer gives you on trade will be what you pay.

This is why it is so important to take the time to research values before trying to negotiate a deal. The best way to do this is to check to find out what various coaches cost new and what their current average and low retail prices are.

Determining Value

How to Know What an RV Is Worth provides specific directions to help you determine the real value of any recreational vehicle. I say “real” value because the term value is relative.

For instance, you may think that the money you have invested in your unit is what it is worth. You may even assume that someone will be willing to pay you that amount for it. However, what you think and what the truth is are always going to be two entirely different things.

Find out how much an RV is worth before you negotiate any deals.

Find out how much an RV is worth before you negotiate any deals.

An Example

Six years ago, Joe bought an older motor home for which he paid $35,000. Since that time, he has put another $10,000 into it for upgrades, repairs, storage and other expenses.

The NADA value on this coach currently is around $17,000. This value is based on the fact that it is in average condition. If it shows lots of wear and tear, it might only be worth around $12,000. Joe does not really want to lose his $45,000 investment. He thinks he should be able to get at least $30,000 for his RV.

After advertising it for six months with no buyers, he decides to take it to a dealer to see how much he will give him for it if he trades it in on a newer vehicle. He is shocked to learn that the dealer only offers him $9,000!

The dealer offers him that amount because, regardless of upgrades and condition, the unit was still quite old, and he knew he'd be sending the coach to auction where he'd likely to only get that amount for it.

Thus, Joe’s dream of getting $30,000 to put towards a newer coach disappears. He might be able to sell it himself and get $20,000, but that is the best he’ll be able to do! However, selling a unit yourself requires time, effort and know-how, and many people are intimidated by the thought of doing so.

The people who traded for this coach just spent $20,000 for engine repairs.  They might have done better to keep the unit they originally owned!

The people who traded for this coach just spent $20,000 for engine repairs. They might have done better to keep the unit they originally owned!

More Bad News

What Joe doesn’t realize is that prices have risen significantly during the six years that he has owned his RV. Even if he trades for a used coach, he’s going to pay far more than the NADA listed value because there is a great deal of competition for recreational vehicles these days, and dealers know it.

If they have a unit that is older but in good shape, they know they can ask what they want, and someone will always be available to buy. (The less they pay Joe for his coach, the more money they will make if they decide to sell it to another buyer rather than taking it to auction.)

Joe finds a nice motor home that books for $16,000. However, the dealer is asking $27,000 and refuses to budge on the price. The seller is only offering Joe $9,000 for his unit but is asking $27,000 for the one Joe wants to buy. So if Joe does buy this coach, he will take an up front financial loss of $17,000 if he makes the deal! (He'll lose $6,000 on his trade and $11,000 on his purchase).

These figures do not include the extra costs Joe will have to pay for sales tax and registration fees, which on a $27,000 coach comes to an additional $1,620. Furthermore, the coach he is negotiating on needs new tires and has body damage on one side. Therefore, he can add another $6,000 to his costs.

  • If he has to finance the basic cost of his new coach, the news is even worse because now he'll have to pay interest on top of the other costs he has incurred.
  • If he has to pay 6% for 10 years on the balance it will cost him an additional $33,307.

He'll only have a monthly payment of $277.56, which seems reasonable, but the long term amounts are budget breakers, especially since he's already taken a $17,000 loss up front!

Over the 10 years of the loan, he'll end up paying more than $50,000 for an RV he thought he was getting for $18,000!

Worse yet is that after the ten years are up, he'll be stuck with an old RV he likely will want to trade in again. If he follows through, he'll go through the same cycle again and lose even more money!

While this example seems scary, the truth is that it is typical. For this reason, people need to decide whether the heavy financial losses they might take to do a trade are worth the discomfort or repair costs they'll have if they just hang onto their current RV.

Worse News

The really bad news is that the loss Joe will take is minimal compared to the one other people take who have purchased more costly coaches.

$17,000 doesn’t even cover the first year’s depreciation on a $100,000 coach, let alone the financial losses people who bought them will take if they try to trade them in. If people could understand the potential consequences of buying the wrong coach or purchasing one they really can't afford, they might be more careful at the point of sale.

Trades can be painful, but trying to sell a unit on the street can be brutal financially.

Trading for a newer RV can cost much more than you might have thought.

Trading for a newer RV can cost much more than you might have thought.

Are There Any Remedies?

To avoid getting stuck with a costly trade-in deal, there are several things people can do.

  1. Make sure that the original RV you buy suits your needs and will last.
  2. Pay as little as possible for a coach at the point of sale. Learn all you can about values, and do intense research about what you want to buy and what you want to trade before you ever enter negotiations.
  3. Consider making your old coach roomier and more comfortable, so that you can keep it. Putting some thought into organizing your coach well and making some repairs and upgrades is much cheaper than trading for another RV.

Joe decided to remedy his situation by taking a pass on the deal he was offered.

He sold his coach himself for $15,000 and used the money for a down payment on one he found for sale by a private owner for $30,000. His basic cost for the coach he bought was then $14,500 (his upfront loss) plus $15,000 (his down payment) plus $19,985 ( financed costs at 6% for ten years) or a total of $49,485.

By doing this, he dropped his monthly payment to $166.54 and saved $1,822.

However, he could have saved even more if he had chosen to

  • find a less expensive coach to buy,
  • look for cheaper financing,
  • finance his deal for a shorter period of time or
  • take money out of his savings to pay cash for the new coach.

The Bottom Line

The most important thing for you to remember, if you are thinking about trading your old RV in for another one, is that it is the market—not you—that will determine the cost of making such a deal. It will never be cheap, and you will likely lose a great deal of money if you choose to trade up.

On the other hand, getting a unit that is more comfortable and easier to drive might be worth any losses you might take. As I said earlier, each person's situation is different. Whether it's a good idea to trade one RV for another depends entirely on what you feel you want to have and how much you are willing to pay to get it.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Questions & Answers

Question: Is it common for an RV dealership to get a trade allowance then roll it back into the total cost if it is line itemized as a lien payoff?

Answer: If I understand you correctly, you are trading in a coach, and the dealer is paying off your balance due on it as part of the deal. If that is the case, then yes, he should be adding that amount to your total costs.

Question: We owe 40k on a 2014 5th wheel. It easily needs 10k worth of work due to a leak and we want to sell it to get away from the 500$ monthly payment. Would it be a good idea to trade it in for a newer, cheaper RV? Would it be better to consign with a dealership or sell private?

Answer: The trade in value will be about half of the NADA RV Guide's low retail book value. It would likely be much less than that with such a big leak. A "newer, cheaper RV" is not going to cost less than your trade in value and, in fact, will cost much more. The best thing you can do is to fix the leak, make sure there is no mold or mildew in the coach and then try to sell it. However, to do this you'll have to have enough money to pay off your loan before selling as it's the only way you will get a clear title. No matter what you do, you'll likely take a huge financial loss, so perhaps your best bet is to do the repairs and use the coach until it is paid off. You might be able to renegotiate the loan so that you'll be paying less, but that will depend on your credit, etc. Sorry to give you such bad news, but you're dealing with a tough financial situation here.

Question: I am looking to trade in a 2013 5th wheel for a 2015 class A. Do you have any advice?

Answer: Before you do this understand the differences in how you travel in a class A and how much it can cost. Do you have the driving ability to handle one of these units? How are your mechanical abilities? They need much more care than a fifth wheel, so make sure this is right for you before you act.

© 2017 Sondra Rochelle