RV Financials, Part 1: Understanding RV Prices
RV Financial Tips
Buying an RV is Not the Same as Buying a Car
The first thing any potential RV buyer learns is that an RV costs a lot more than a car and it's expected to last longer. So anyone interested in getting into this unique world needs to understand all they can about the special financials involved.
Your typical cars sell for less than an RV because, well, they are actually just a means of transportation; while on the other hand, an RV is a home of sorts, that can be driven or towed to campsites where it provides numerous creature comforts for the owner's use.
Because a modern RV has so many of these creature comforts installed in them, such as air conditioning, heating, toilets, beds, refrigerators, sofas, dining tables, and more, they will naturally cost more than what you would pay for the average car.
Another difference is that there are a lot fewer lending institutions who will finance an RV than ones who will finance cars, so RV loans can be a little harder to get..
An RV, especially a motorhome, because of its high cost, will usually need to be be financed for a much longer period of time than a car, just to get the monthly payment down to a reasonable and affordable number.
In fact, a new motorhome or high-end fifth-wheeler will often be financed for ten years or more, and often for as many as twenty years.
RV Financials, Part 1 of 5 parts
This article is Part 1 of the 5 Part series of data on what an owner needs to know and understand about Buying, Trading, and Selling an RV.
New and Used RV Prices
To potential buyers, new to the world of Recreational Vehicles, the pricing systems and the real values of the different models, new and used, will seem a little complicated. But the buyer must use the tools available to avoid the costs of making a bad deal on an RV they may like.
The good thing is, there are several places a buyer can quickly find the relative values of a specific RV that they might be interested in, so that they can level the playing field with dealers.
Probably the most popular source for accurate pricing, which is also pretty much the pricing standard used by RV dealers across the country, is the NADA (National Automotive Dealers Association) database on the web and the local dealers handbook.
Another popular resource used by some dealers and others is the Kelly Blue Book website.
And of course, there are a few other sources, but the vast majority of dealers and banks will be using these top two sources for their RV pricing standards.
Using the NADA Site for Pricing Data
The NADA website provides data for Consumers and for Dealers. The dealer section is only available to those with a paid membership. It does provide certain information not available on the Consumer section, but it hs same basic pricing numbers as on the other site.
In order to get to the appropriate place on the NADA website to look up actual values, you should do the following;
- On your PC, go to www.nada.com.
- Click on “Visit Consumer Site”. The other option is for paying dealers only.
- At the top of the page click on “RVs”.
- You will then be taken to the “RV and Prices page”.
- Click on “Start Here”.
- A pop-up will ask for your local zip code, enter it. Prices do vary around the country.
- At this point, you will be in the area of the NADA site where you can enter the basic details about the RV you are interested in.
- Do not duplicate accessories that may have been standard in your specific model.
Once you are done, you will see that you have the latest NADA suggested values for the specific RV you have chosen.
These prices you will find are a necessary tool for you if you want to negotiate your best deal with any RV seller, whether they are a dealer or not.
The NADA Pricing Names and What They Mean
When you do get to the NADA pricing page for a specific RV, you will notice that there are several prices available for you to use. You must understand these prices as well as how they are used by dealers.
Suggested List Price
This is (or was) the original list price for the RV when it was new. With cars you might recognize this price as the familiar term MSRP, or as it is sometimes called, the Sticker Price.
You should immediately understand that this price is only relevant when you are looking at a brand new RV. Just like the name says, this is a hypothetical sale price suggested by the manufacturer for the dealers to use.
And, it has no financial relevance when you are looking at a used RV, other than being there as a data point, in the past. It is often used by salesmen to impress the potential buyer with how much their RV was once valued.
NADA Average Retail Definition
Average Retail Price
This number was once considered to be the retail value of this RV, if it is in top condition.
It exists in the NADA book to let the dealer know what this particular model of RV should sell for in their local market.
But far too often, it’s automatically used by many dealers as their minimum retail asking price for all of their used RVs, some of which are not in top condition.
In fact, most large chain dealerships now expect to get this price for all of the used RV’s, on their lot, and many will rarely come down from this "jacked up" price even if there are obvious problems with the unit they are trying to sell.
NOTE: Because of this new way of pricing by dealers, it is recommended that if you do actually see a used RV on a lot that is priced significantly lower than this, you should be wary of what might be wrong with the unit that makes them want to get rid if it so easily.
Definition of NADA Low Retail Valuation for RV's
Low Retail Price
This number was once the suggested value of each model of RV, if it is in below-normal or even poor condition with some serious problems.
Often such an RV, labeled with a Low Retail Price would be deemed as functionally sound, but might have problems such as;
- Signs of having not been properly cared for
- Serious cosmetic problems, inside or outside
- Very high mileage
- Something minor but relatively costly wrong with it’s engine or transmission.
But now, especially over the past decade or so, this price has become the maximum amount a dealer will allow you for your RV, even in excellent condition, as a trade-in value.
NOTE: You should be aware of this fact about RV dealers. If you bought an RV for the NADA Average Retail Price from a typical dealer, and drove it to the same dealer the very next day to trade on another RV, they would invariably offer you the NADA Low Retail Price, or far too often an even lower price.
This way of pricing is becoming the sales standard of the major chains of dealerships.
They do this because if they allow the Low Retail Price for a trade-in, and then sell the same RV used and “cleaned up” at the Average Retail price, they can have a very healthy markup (profit) on every RV they handle.
This so-called price is not available on the Consumer side of the NADA site, but only to dealers.
At one time, you could guess this Wholesale price to be approximately 20% below the Low Retail price of an RV.
But its relationship to the other pricing that NADA lists for an RV can vary dramatically with the season and the economy as well as the overall health of the RV marketplace.
Be aware that in the past this "wholesale" number was what dealers might offer you when you try to sell your RV to them for cash.
But sad to say, some dealers will try offer you this "wholesale" price for your RV in a trade, rather than somewhere near the Low Retail price.
When you see these kinds of discounts offered on your used RV the dealer is essentially telling you they don’t really want your old RV.
When you see this kind of very low offer for your RV from a dealer you should assume one of the following;
- your RV is very old and not very much for resale
- your RV is in very bad condition and not considered worth upgrading
- the dealer is just trying to take advantage of you and "low-ball" you with such a low price.
In my opinion, when you se this, it's a sign you need to move on to another, more reasonable, dealership for your trade, or consider your other options, such as selling your RV yourself or repairing the problems with your RV.
Be Aggressive, and Look Further Away for a Better Deal
Remember, when you start your trading process, unlike a few years ago, you now have the internet as your information resource, as well as access to pretty much every RV dealer in the country if you want to search for a better trade.
And you can also get a lot of real-time offers and model information on trades over the phone with pretty much any dealer.
What this does for the buyer is open up a nation full of dealers, many of whom will close a deal with you over the phone and web, and some of whom will even deliver your new RV to you and pick up your old one (for a fee of course).
Our economy is a dynamic thing and the RV market varies monthly to some degree, so do the values of different RV’s around the country.
Because of this, as with cars, the latest NADA values are updated monthly for the dealers (and consumers) to use.
So, before you walk into a dealership, take your iPad, tablet, or laptop with you, so you can have your own access to the latest values of new and used RV’s.
How to Prepare for Purchasing an RV
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© 2016 Don Bobbitt