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.
The RV Trade-In Process Is Complicated
Buy Low, Sell High - the Buyers Plan?
This old adage has been the financial operating standard for all people who buy and sell pretty much anything to the public.
And, my friend, this is definitely the operating standard of all RV dealers and their sales people, and their attack on your wallet begins whenever anyone walks onto their lot looking to either buy or trade for a newer camper.
You, the happy shopper, should be prepared to deal with these professional deal-makers by knowing certain basic things about the world of trading RVs.
Selecting an RV Dealer to Trade With
Before you go to any dealership that you might want to trade your RV with, there are a number of other things you need to consider other than the potential deal itself.
Quality Service Is a Must
One of the things you need to check into is their Service Center.
Ask to be taken there and then be shown what special service functions they have, such as body work, paint repair, parts department, certified engine mechanics, dealer certified maintenance technicians, and even RV security in case you might need to leave your RV there while waiting for parts.
You never want to get stuck with RV problems and have a dealership that doesn’t have the manpower or proper training to repair your RV quickly and efficiently.
So, inspect their facilities, ask lots of questions, and then decide whether you want to purchase an RV from them.
Maintenance labor rates in RV service shops will run from $120 and up per hour, so you should expect them to have well-designed service areas. Here are some of the things I look for in Service Centers:
- Clean and well-lit work areas
- Clean workers in neat uniforms
- Lots of warning signs about potential dangers, such as electrical, hoses, moving vehicles, etcetera
- Computer terminals at work stations, so workers have access to manufacturers' trouble-shooting guidelines right in front of them
- A well-organized parts area with knowledgeable clerks manning the counter
Which Is Better: Small Dealers or Big Dealers?
Small used RV dealers are those dealers who have maybe five to ten acres of land with anywhere from a dozen to several dozen used RVs that they are trying to sell. These dealers will usually have a small sales office building with only one or two desks in it, and a two- or three-bay service section in the rear.
The average sized RV dealers, those with a hundred or so new and used RVs for sale, will often sell new products for maybe one or two of the RV manufacturers. These dealers will usually have a nice office building with several desks for sales people and somewhere on their property they will have a service building with maybe a half-dozen or more sales offices. And, the sales people will usually be wearing uniform clothes.
The larger RV super-sellers will often have over a thousand RVs on their lots ready for you to check out and purchase, and they will often have new units from a half dozen of more of the popular RV manufacturers.
These guys turn over a lot of RVs, and they will have large luxurious office areas with dozens of sales people, plus sitting and waiting areas in their different sections for your comfort. Many will even have a cafeteria, a good-sized parts sales area or building, and separate service buildings with dozens (even up to a hundred) of service and repair bays, ready to take care of your RV when a problem occurs.
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What Are the Small Dealer Limitations?
If you’re looking to trade for another used RV that’s only a few years newer than the one you now own, but not a new one, then these small dealers will often accept a smaller profit margin between the RV you are interested in and the one you are trading.
But be aware that at the end of the day, they also have to make enough money on each deal they close to keep themselves in business. The good thing is, if your RV is a popular model and in good shape, they will know that they can resell yours relatively quickly and for a good price.
Owning a popular RV that’s in good condition always helps you make a better deal (with any dealer, regardless of their size, actually) than if your RV is not a popular model or has some serious cosmetic or mechanical problems. But again, if you have read the first two parts of this series, you already know what your RV is actually worth for a trade.
RV Loans and Dealer Leverage
You should realize though that if you’re looking to trade your RV, and rather than paying cash, you will need to get a loan on your new(er) RV, these very small dealers are probably not the ones you want to deal with.
If you think about it, these small dealers who sell maybe an RV a week, just don’t have the leverage with as many banks and other loan companies to get you the best interest rate.
The larger dealers will probably be able to get you that extra 1/2% to 1% lower loan rate, simply because they have a “higher dollar relationship” with loan officers who are giving out loans on RVs.
In an effort to explain you should consider this, if you’re a small dealer, who contacts a bank loan officer who specializes in RV loans once ever week or so, to get a loan for your potential customer, they’re going to do all of the things they're supposed to do, like; check the person’s credit, look at the NADA value of the RV in question, look at how much money he still has on hand to meet his budgeted goal, and then this loan officer has to make his decision.
Remember the old saying; “with all things being equal, we can assume, blah, blah, blah.”
Well, all things are not equal, at all. First of all, that loan officer has his bucket of money to loan out, but you should remember: he is in the business of making money, not giving it away, so he wants to get as high an interest rate on a loan as possible, for his company.
So, if he has two people with equivalent credit, trading equivalent RVs for equivalent newer RVs, then here’s the real situation.
The loan officer knows that the small dealer has maybe one or two other loan companies to deal with if he doesn’t give this dealer’s customer a good interest rate.
At the same time, he knows that the large dealer has a relationship with a dozen or more loan companies that they can try and get a deal with, and he knows that if his interest rate isn’t competitive then he is probably going to lose the loan.
This is the reality of getting a loan on an RV when you trade, so keep this in mind when you start your search for your new or newer unit, Even a half-a-percent difference in interest rate on a ten- or twenty-year loan adds up to a lot of money.
Know Your RV Values Before You Start Making a Deal
I'm assuming you have already read the first two parts of this series of articles covering the subject of RV Financials which are:
RV Financials, Part 1: Understanding RV Prices. What RV prices are, and how to find the appropriate pricing values for any RV.
RV Financials, Part 2: Understanding RV Depreciation. How an RV depreciates, just what the depreciated value of any RV is, and exactly what you can expect to happen to the value of your own RV.
So, if you read all of the articles in this series, you should be prepared with not only what you can expect as a valuation of your existing RV, but you should also be armed with the value of any RV you are interested in trading for, and just how much of a hit that RV’s value drops after you purchase it.
To give you a little more perspective on the Low Retail Value of an RV, I used the data I had placed into my article on Understanding RV Depreciation to generate Table 4 below, on Fleetwood Bounders.
I used the same data and added the NADA Low Retail Values for the potential trader to study and understand the relative difference from Average Retail.
Because I am not a professional RV dealer, I do not have access to the documented Wholesale Value for an RV, but from what I understand you can usually, in a stable market, assume it to be 15% to 20% lower than the Low Retail Value.
Table 4: Bounder Values, Including Low Retail
|Model Year||Bounder Model||List||Low Retail||Avg. retail|
Annual RV Buyers Guide
The Handshake With the RV Sales Person
Let’s assume you’ve walked into a dealer’s door and this sharp dressed guy (or lady) walks up with their fake smile on their face and firmly grasps and shakes your hand.
Well, this is where the trading game starts, so grab their hand back and shake it vigorously, with the same fake smile on your face, because you are preparing to go into battle: a battle for a good deal.
After the initial chit-chat, the sales person will spend as much time as you want, showing you every RV they have that they think they might be able to talk you into purchasing. Avoid answering certain questions, especially: How much do you want to spend? If you answer this, then they now know which units to show you, instead of the ones that you might really want to purchase.
My answer to this question is usually something like: "I have a 20xx, xx-foot-long motorhome, and I want to look at whatever you have that is at least 5 years newer, and I can get for as little difference as possible. I do not want to spend the money that a brand new unit costs, so let's start with what you have that fits these criteria.
Oh, and my credit rating is over 700 (or whatever actually it is), I have been camping in RVs for x-years, I know the NADA on my rig, and I want a great deal." This is enough information for any salesperson to start out showing you what they have in inventory, without their steering you to certain rigs they want to sell at the moment.
Working the Deal
At this point in your search for the best trade deal, you need to keep these basic facts in mind:
- The salesman already has access to the dealer’s pricing on his RV, and it’s usually on that piece of paper he keeps looking at as he shows you his inventory.
- The dealer’s sale price on the RV you’re looking at already includes a comfortable profit for the dealership, so you need to concentrate on the offer for your RV.
- The salesman has access to the NADA values on your RV, the same as you do, so whatever he initially offers on your RV is indicative of whether you might eventually be able to work out an acceptable deal.
- The salesman has absolutely no authority to make a final deal with you, other than an initial offer that falls within the pricing margins defined by the sales manager, which includes a very nice profit for the dealership.
- Most dealerships will make a tentative deal offer to you before even inspecting your unit (for the moment). But their deal will be tentative until they have had their person perform a thorough inspection of your RV, including a test drive.
- If you make a counter-offer other than what was set by management, the salesman will have to go back to the sales manager for approval.
- If your counter-offer is flatly rejected by sales management, you must assume they are not flexible in their pricing and you have been placed in a position of accepting their deal or not.
- If your counter-offer is rejected but they counter your counter, then you need to decide whether to continue with another offer very close to their counter.
During this negotiation process, your best deal from that dealership, is when they stop and tell you it's their best offer and to take it or leave it.
A Deal or a Walkout?
This back-and-forth process of negotiating takes a little time. Once you get the dealership’s “best offer” you have two options:
- If the deal is acceptable to you, you accept it and eventually drive your new(er) RV home and start preparing it for it's next trip. Or:
- There is one more thing for you to try. You can try a "walkout" tactic.
There is a method to this last-ditch effort for getting a better deal on a trade. You can always do the following;
- First of all, be polite with the sales person. There is absolutely no need to burn any bridges.
- At that point where the deal is just not good enough, but maybe close, you should stand up and let the salesman know that his offer is unacceptable and you are leaving to look at other dealerships.
- Give the salesman your personal business card (or just your name and phone number).
- Tell the salesman that he is close to what you need as an offer, but you need a little more to close what you would call a reasonable deal.
- Tell the salesman that you are serious about buying an RV, and you will be purchasing one form someone within a few days, but until you do close a deal, he is welcome to call you if he and his management change their mind about their numbers.
Then, you and your spouse you should leave the dealership and accept the fact that the deal they are offering you is not the right one for you.
As you walk away, you will probably be disappointed that you didn’t get that great RV you had tried to buy.
But you need to keep your perspective and remember one thing, when you go into the RV marketplace with a goal of trading an RV, you will find a lot of dealerships out there who just will not accept as small a profit margin as what you feel is reasonable and fair.
The buyer who ends up visiting several different dealerships is one who knows what he wants and is willing to look at more than one option to get that dream RV he wants.
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.