When we roll up in our brand-new Winnebago View sporting a hard-to-miss Mercedes emblem on the front, non-RVers always ask us the same question: “How can you afford that?” While it is tempting to let them assume we are Lotto winners or the makers of a popular app, the truth is much more surprising to them – we just make payments.
Making a $100k+ purchase can be daunting. When we first started looking at RVs, we struggled to come to terms with the total price of a motorhome and were frustrated that there weren’t any quality options with a sticker price that didn’t give us anxiety. So, we decided to stop paying attention to it. Instead of comparing motorhomes based on MSRP, we changed our focus to monthly payments. And since an RV can be financed for up to 20 years, that number was much lower than we had anticipated.
Deciding what we could afford based on what we would pay each month was a lot easier to swallow, and much more realistic. This is the primary reason we decided to buy new. The difference we would pay per month to have a new RV with a warranty seemed well worth it. Plus, living in an RV would actually save us money!
How can an RV save you money?
Deciding to live in an RV full-time was not just about the exciting adventure for us, it was a way to minimize our bills. Before our purchase, we were paying $1,500 for a one-bedroom apartment outside Denver, not including utilities. So, when we realized an RV payment for a brand-new Winnebago would be less than half that, it wasn’t very hard to pull the trigger.
Since our View fits in most parking lots, we were also able to sell both cars – unburdening ourselves from a car payment, car insurance and upkeep on two cars. And by traveling full-time in our RV, we also save a ton on travel expenses (plane tickets, hotel rooms, etc.) because we are constantly visiting new places in our home and don’t feel the need to escape anymore.
The savings will be different for everyone, but luckily RV life is very flexible. Making conscious decisions on how much fuel you are using, where you are camping and how often you cook in your rolling home can all have a huge impact on your budget.
Plus, you can write off the interest of a motorhome on taxes every year because it is seen as a second home!
Getting approved for financing
However, deciding you can afford an RV based on monthly payments won’t matter if you can’t get financed. Good credit, a decent debt-to-income ratio and a 10% down payment are usually necessary to get financed as a full-timer. However, loan-to-value ratio of the motorhome also effects the down payment, so this may increase or decrease what you will be expected to put down.
Find out if you will have any trouble getting financed before you begin your search. And, with most things, there are always some unconventional alternatives – like this co-buying loophole Heath & Alyssa Padgett used to buy their RV.
Getting in the green
Another common concern is depreciation. Although RVs are seen as rolling homes, they depreciate similar to a car. This can be frustrating when making such a large purchase, but the way we got around it was committing to a certain amount of time in our RV. Before we began our search, we decided that whether we liked it or not (and we REALLY like it), we’d live in our RV for at least two years. After that, we could trade it in for something different or sell it without taking a large loss.
For more detail on this, Don Cohen explains how to look at buying a motorhome from a business analysis perspective, in this helpful article.
But at the end of the day, we honestly aren’t too worried about if our RV is holding its value or if it is a smart investment in the traditional sense. It has brought us more value than we could ever pay for and was the best financial decision we’ve ever made, because it was an investment in us – our marriage, our freedom, our happiness.