How Much Will I Have to Pay to Trade RVs?
So you’ve owned your recreational vehicle for awhile and have decided to trade it for a different one.
This may sound like an easy thing to do, but it really is not.
The reason is simple: it can cost you a lot of money to make a trade, especially if you have only owned your current coach for a relatively short period of time.
However, if you are dead set on buying another unit, you need to be aware of the costs that will be involved and the losses that you will take.
You also need to educate yourself ahead of time so that you know what your RV is worth and what the value of the coach you wish to purchase.
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 old RV for a new one may not provide the relief people seek. In fact, doing so may create more problems than it solves!
It is also costly these days to buy a previously owned coach and, the truth is, that this is what most people will end up purchasing due to the lower expense of doing so.
No matter which choice you make, the sales price of what you plan to 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.
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.
Six years ago Joe bought an older motor home for which he paid $19,500. 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 $15,000, and this is based on the fact that the unit is in average condition.
If it shows a lot of wear and tear, it might only be worth around $12,000.
Joe does not really want to lose his $29,500 investment, and thinks he should be able to get at least $25,000.
After advertising his motor home 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 $8,000!
The dealer offers him that amount because, regardless of upgrades and condition, the unit is still 17 years old.
The dealer goes strictly by his “black book” of values which tells him he should only offer half of the NADA value.
He does this because he’ll be sending the coach to auction and knows that is probably the amount someone will bid to buy the motor home.
Thus, Joe’s dream of getting $25,000 to put towards a newer coach disappears.
He might be able to sell it himself and get $15,000, but that is the best he’ll be able to do!
More Bad News
This situation, of course, is just one side of the equation.
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.
This is 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.
In Joe’s case, he finds a nice motor home that books for $16,000. However, the dealer is asking $27,000 and refuses to budge on the price.
Since he is only offering Joe $8,000 for his unit and is charging $27,000 for the one Joe wants to buy, this means that Joe will take a financial loss of $18,000 if he makes the deal!
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 $1620. 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.
A Typical Situation
You may think, at this point, that this is an incredible situation, but the truth is that it is typical and represents what most people must go through when they try to trade units.
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.
$18,000 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.
Furthermore, if financing is involved, the interest on the debt will cause even more losses.
Are There Any Remedies?
To avoid getting stuck with a costly trade-in deal, there are several things people can do.
- Make sure that the original RV you buy suits your needs and will last. Important Things You Need to Think About When Buying RVs will show you how to do this.
- 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.
- Consider making your old coach roomier and more comfortable, so that you can keep it. There are many changes you can make: find some of them in How to Make Your RV More Livable and others by browsing videos about this topic on YouTube. Making some repairs and upgrades is much cheaper than trading for another RV.
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 will likely lose a great deal of money if you choose to trade up.
For this reason, you are better off to think long and hard before you decide to trade the unit you own for one that you like better.
Did you understand how much it could cost to trade RVs before reading this article?
© 2017 TIMETRAVELER2