I have had a great deal of experience both buying and selling RVs and think people should understand the mechanics of doing these things.
Wherever big money is involved, greed is sure to reside.
Unfortunately, this has become the case when it comes to RV dealerships and the methods many of them have developed to cheat you out of huge sums of money.
The one thing they never want you to know is how much they have invested in any travel trailer, camper, or motor home because if you knew what this amount was, you would never, ever pay the amount they charge.
This is because the profits are so huge as to be obscene.
Worse yet is the fact that they not only get you on the selling price, they earn huge amounts on the financing, warranty scams, and contract tricks.
You, the buyer, never know what has happened until it is too late. You have been duped into spending far more than necessary and, as a result, learn the hard way that you are stuck in a situation that leaves you owning a unit you cannot use, cannot afford to keep, and cannot sell.
The information I’m about to share with you comes directly from a man who spent years working in a few of of Florida’s largest RV dealerships, so you should pay close attention to what is written here.
What Dealers Actually Pay for a New Coach
Many buyers wonder just how much it costs a dealership to keep a coach on its lot.
Most will assume that there is a markup of, perhaps, $10,000 in order to give the dealership room to negotiate. Since people realize that these places have the right to earn a profit, they generally accept the cost differentials.
However, what they think is far from reality.
If you take the actual MSRP sticker price from the manufacturer and divide it by 1.5, you get a pretty good idea of the actual amount the dealer pays for any new unit on his lot.
Thus, that motor home you’re going to pay $200,000 for has actually only cost the dealer $133,300 in terms of how much he must give back to the manufacturer once he sells you the coach. This means you are paying him $66,700 more than he owes for that vehicle! The remainder is used to pay overhead, which still leaves plenty for profit!
If a unit sits on his lot for more than a year, the manufacturer gives him an additional $1000 to help cover his floor plan cost. If he buys a few more of that same coach that have been sitting at the manufacturer’s warehouse, he gets an even bigger discount. However, you still pay plenty.
Another thing dealerships do is to offer salesmen an extra $100 if they sell a coach at costline.
Dealerships make it sound like the asking price is their cost for the unit when it is actually the Spader costline system of what the bottom line is the salesmen is required to sell the RV for to get a big profit.
A salesman will show you this costline and state that “The government makes 7% so we need to make a profit on the unit so we can see if the Sales Manager will let it go for the cost plus 7%." A closer will come back asking $3000 to $5000 or more if they know they can get it out of you.
Thus if a $200,000 motor home costs them $133,300 the costline might be $173,300 with 7% added ($12,481) or a total of $185,781. You think the salesman is saving you $14,219.00 off of MSRP, when in reality the dealership made a home run by making a profit on the deal of $52,481.00!
No matter the pricing method, it’s easy to see that buyers are paying far more for new RVs than they realize while the seller is making a killing.
However, that’s not enough for him. He wants more, and in many cases, will likely get it!
Every dealer wants you to finance your purchase because getting you to do this adds millions of extra dollars to their profits. For example, a seventy unit per month sales dealership makes over 2 million dollars a year in finance charges alone.
Bear in mind that not 1 unit on the dealers lot is owned by the dealership. It's all floor planned by the bank at 1.5%! So, a coach for which you pay $200,000 actually only costs them $2,000 if it sits on their lot for a year. They pay the manufacturer $135,300 and you pay them that amount plus somewhere between $52,481 and $67,700!
The larger the figures, the more they make!
Insurance, Contracts and Warranties
But wait, there’s more! It isn’t enough that they have robbed you blind; they now want to talk you into buying extended warranties and RV Insurance. If you do fall into this trap, you make even more money (millions more) for a dealership.
They also play games with contracts. How to Avoid RV Contract and Warranty Problems provides good information about this.
The bottom line is that the products they offer generally are not as good as those you can get from your own insurance company, and the contracts and warranties are rarely what they seem.
In all instances that have been mentioned here, dealerships use closers. These are highly experienced and manipulative sales people who will use a variety of techniques to push you into agreeing to a deal.
Most people are not psychologically prepared to handle them, so many agree to things they may not even understand let alone be able to afford.
When a closer shows up, and he will, it’s time to back away and give your deal some thought. If you don’t, once he’s finished, you might also be finished as well.
How to Keep From Making the Worst RV Buying Mistake Ever will show you what can happen if you don’t take control of your situation and will tell you what you can do to protect yourself.
The Bottom Line
Most people start out simply wanting to buy a travel unit they can afford and enjoy.
They view RV salesmen as fellow enthusiasts but don’t realize that the great majority of them are no different than car salesmen. Confessions of an RV Salesman will explain more things about dealing with these people.
If you want to protect your financial interests, there are several things you can and should do:
- Accept what has been written here as fact.
- Never buy a unit the day you look at it.
- Make sure you can afford the vehicle you want to purchase.
- Negotiate hard. Dealers have plenty of wiggle room in their prices.
- Have an attorney read your sales papers and explain them to you before you sign them.
- Consider buying from a credible individual rather than a dealership.
- Examine any unit you purchase from top to bottom.
- Comparison shop.
Finally, remember that once you sign on the dotted line, you are encumbering yourself with a great deal of responsibility and debt that cannot easily be undone.
The scams perpetrated by RV dealerships are shocking. You should not have to use protective methods in order to purchase a travel unit. However, these days, if you do not do this, it could cost you big time.
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: I purchased a small camper in North Carolina. After the salesman worked with me, he took me to the "closer." I made a big mistake by not taking much more time to read the warrant agreements. If I had, I would have noticed that the "paint - finish" warranty was non-cancellable. The dealer is refusing to refund the $1995 paid for this warranty. I think the price should be refunded. Any ideas?
Answer: Warranties usually cost nothing, but since yours did, and you went ahead and paid for it,the best you'll be able to do is use it for any problems that don't include "paint". You agreed to the terms of the contract when you signed it, which makes you legally bound to honor it.
© 2018 Sondra Rochelle
Sondra Rochelle (author) from USA on August 19, 2019:
They can offer you anything but you don't have to accept it.
Michael Mallery on August 03, 2019:
Is it illegal for anRV Dealership to offer you a selling price at one number, say $41K, then seek to get loan approvals at other amounts? Real examples, $59K, $67K. Why would they do this other than to disqualify you, or get you into a high interest rate, and Reserve Percentage works in their to make huge profits. Is this legal. Albany RV, RVone. Strolling family. Seems very deceptive.
Sondra Rochelle (author) from USA on August 27, 2018:
LizWestwood: Yes, this is because they make so much more money if they can finance the deal!
Liz Westwood from UK on August 27, 2018:
It used to be the case that you could strike a deal for a car or camper van in the UK if you paid in cash. Now dealers aren't interested in cash buyers. They prefer people buying on finance deals.
Sondra Rochelle (author) from USA on August 27, 2018:
WheelScene: Glad you liked it and hope it will help you in the future.
WheelScene from U.S.A. on August 27, 2018:
great article, thanks for sharing