Here Are The Biggest Ones I Get
Something that always comes up in the world of sales is whether or not you should purchase used with big ticket items. There are many reasons both good and bad when buying used but I want to cover a few myths that seemed to be common in customers minds and hopefully clear some confusion. This quick article will be focused on the RV purchased, however the information is true when shopping most products today.
“I don’t want someone else’s headaches“
This is one of the first things I hear when people mention a used RV. The truth is, as nice as a new one can be, it doesn’t guarantee it will be free of headaches. In fact it is almost certain any new RV you buy can and will have issues the first trip out. The reason being is RV’s are mass produced and the manufacturing plants are pushing out 30 to 35 units a day and sometimes more depending on the brand and models themselves. As much as they would like to catch every issue or imperfection going out they simply can’t. The second reason is these products are made with two worlds opposite of each other combined, the residential amenities and lifestyles paired with mobility and freedom of travel. Simply put:
A house on wheels = things will break
This is why it is better going used in most cases. The original owner has gone through the good, bad, and inconvenience of the problems bound to happen with “never before used” product. When they trade or sell their RV, the unit is finally broken in and will be a more enjoyable experience for the new buyers. Not to mention better on the new owners pocket book
“It’s a better deal because its cheaper“
This statement is a bit tricky to tackle from one side. If people mean its cheaper because its not close to retail when sold new then yes, absolutely. If they say its cheaper because the sale price is lower therefore the monthly payment will be too, then hold on a second. Just because its lower priced doesn’t mean it will be a lower payment. Banks are very cautious as providers of money when it comes to any loan you apply for. They want to see your score, credit’s revolving history, and the biggest loans you’ve responsibly handled. When you throw in a product that is not “new” and usually bares no warranty then it changes the dynamics of the loan. Now throw in a product that is considered a luxury purchased such as an RV, the loan structure can be completely different than what you would expect. Luxury loans can range from 5 years up to 20 years depending on the loan amount and item and with a used product their concern is the value has already dropped, the item is likely to fail sooner, and they chance losing money on the buyer if he defaults and they don’t have a valuable product to sell to recoup any lost money from the deal. What this means is they don’t want to fund the deal.
This results in loans with a shorter note, higher interest rate, and more of a down payment. Depending on the unit it usually makes more sense going new in this aspect.
The deprecation hit
Its no secret that new cars, boats, RV’s, and other products take a sizable loss in value the moment they leave the dealership. This hit is what we call deprecation and the product will continue to deprecate value during its lifetime until it no longer exist. When shoppers think in terms of financial investment, it makes since to purchase an item that has already taken this hit from the previous owners. An idea that is very true.
What isn’t considered is the deprecation rate the used item will continue to take and what kind of demand will the market have when you go to sell. Ill give you an example:
Mercedes vs KIA
One of these will hold their value stronger and longer. The other will deprecate faster. This is true with any product on any market so when you shop used, you need to consider these factors before committing to the deal.
There is much more you can say on these three myths alone but I just wanted to give a quick idea to get the gears turning. I was a salesman in the RV world and these few things came up quite often, and as an adviser, it is my job helping people consider all angles when making a long term investment. Below are some informational books to help you make the right buying decision. Enjoy!