RV life is not for everyone. Sadly, they find this out after buying a nice, expensive RV. Or they are just tired of moving about and living in such a small space. At that point, they want to get rid of their RV but with an outstanding loan on the vehicle, it is not going to be easy to do.
The worst way to get rid of your RV is to turn it over to the bank that lent the money to you to buy it. That will ruin your credit rating as well as get you nothing for all the money you put into your RV. There are other options available that protect your credit rating.
To learn more about how to trade in your RV that still has a loan on it, just continue to read our article. It delves into the topic so you have the information you need to know. While it is hard to do at times, it can be done and the key is not to give up and lose it to the bank.
The first step in the process is to discover the real market value of your RV. The word real is there because what you paid for it, and all the taxes, etc., do not constitute the real value.
For the real retail value, you need to find an RV Blue Book website and start comparing their figures with what is inside your RV. That will get you a value if you are planning on selling it yourself.
However, if you are trading it in, then the dealer will look at his criteria and figure out his real wholesale value, which is much less than the actual retail value. Dealers need to make a profit and they buy wholesale or less and then sell retail.
What you think your RV is worth and what the dealer says it is worth to him, are two different figures.
The second step would be to take stock of your finances and if the RV is low enough, you can pay off the loan and then trade the RV in. Another option would be to delay the trade-in deadline for a couple of years till you pay off more principle on the loan and make the RV a bit more attractive to dealers to accept.
The drawback here is you may pay down the loan but your RV depreciates during that same time period. Finally, you can look to see if the loan is assumable or if you are able to transfer the loan to another RV or even your traditional home.
What this all boils down to is that you have to satisfy the loan before you can work out any deal.
The first way you can do this is to turn the RV back to the bank. While this is done all the time, it is not the best way to go. You ruin your credit rating making it very difficult to get another loan for a long time. This is the fastest option available.
The second way to accomplish this goal is to sell your RV. Find the actual retail value of your RV and set your price according. Just make sure the loan is not higher than the value of your RV or you may never sell it.
The third way would be to pay off the remaining balance. This may be hard but at least you have extra money each month for other bills. Or you can refinance the RV but the drawback here is you still have a monthly loan payment, and the value of the RV is less than your original loan amount.
RVs depreciate quite a bit in the first few years of ownership and it is quite possible to have a loan amount that exceeds the value of the RV. In this situation, you can only keep paying the loan until the balance of the loan is less than the value of the RV.
Or you can increase your monthly loan payments to twice a month and pay more on principle than on interest.
This is a difficult but normal situation for many RV owners. When you find yourself in a negative equity or upside-down loan situation, you do have the options to choose from above. If the loan is assumable, then that is a good way to get rid of your RV and bad loan. Let a buyer assume it for little to no money down.
But the best way to go about this is to trade it in. Some states happen to give tax credits for RV trade-ins so you should check your state to see if they are one of those. Or you can transfer the loan to a newer RV and add it to your new loan.
The best way to go about this is to talk to some financial experts who have a lot of experience in RV loans. These experts will know all the avenues you can take and be able to explain how each avenue works.
This process can be complicated and it is good to have someone help you navigate this situation and come out on the positive end of the deal.
If you can afford to, paying off the loan balance is one of the best ways to handle this problem. It is better when the actual retail value is quite higher than the loan balance. Then when you sell the RV or trade it in, you get your money back as well as a little profit.
The problem with RVs and loans is the depreciating value of the former. The value sinks like a rock not only after you drive it off the lot but also in the first 2 or 3 years of ownership. You may never recoup your money unless you keep your RV forever.