The RV Trap

  • June 16, 2024

It’s common to make payments on a new car for six years  – in part because of the high cost of new cars; many people could never afford the payments if they were on a three or four year timetable, as they once were back in the days when cars were affordable.

How about ten years – on an “affordable” small camper? One of those little guys you can pull behind your truck or SUV that has a bed, mini-kitchen and maybe a small bathroom/shower combo.

The latter can be found for $25,000 or so – which is about half the price paid for the average new car, financed over six years. But it’s common for loans on even small and putatively “affordable” campers to extend as far out as ten years – in part because the interest on RV loans is roughly twice what it costs to borrow money for a new car loan. The monthly payments seem pretty low – but how much will you have paid by the time you pay it off?

I did the math – as the saying goes – because I’ve been interested in one of these small campers for some time, not so much for camping but for traveling. It’s not so much that hotels are too expensive – though they aren’t cheap. It’s that hotels are where everyone else is staying. Put another way, your travels are winnowed down to where the hotels are.

That usually means where we don’t want to be.

There is something very appealing about the idea of having a cozy-comfy little “hotel” room of our own right behind us, wherever we decide to go. Our sheets. Our stuff. Our pets, too. All the comforts of home – away from home.

No worries about Hotel Policies – and no need to show ID or hand over a credit card to get put up for the night. And – on the road – one of us can take a nap in back. Maybe make some lunch, watch a movie. You’re not supposed to do that, of course. It’s illegal.

It’s not saaaaaaaaaaaaaaaafe!

We care about that as much as we do about the laws saying we must “buckle up” for “safety.” Because we consider the risk of doing/not doing either thing to be trivial relative to fun/freedom we enjoy from doing/not doing such things. And – much more important – it’s no one else’s business.

Which is part of the reason for the camper-lust. Having one of these things allows you to spend the night wherever you like and on the spur of the moment. Wherever you can find a place to park for the night. And that can be almost anywhere. No having to look for a hotel when you’re too tired to drive anymore. Just pull over – and make some supper.

Also – and related – no one knows where you’re staying unless you tell them.  It’s a way to claw back some of the freedom we once had and took for granted. It’s also a way to get away, if things get bad. I got into this a few months ago in another column. The gist of it being that mobility is good when times get bad. It’s hard to take your house with you. But how about a home that you can?

It’s a way to get away, in other words. In both senses of that term.

Even a small, affordable travel-trailer will allow you to take a hot shower – and keep perishable food cold. To sleep in a bed. To have lights, heat – and Internet – independent of the grid. Most have solar/can be fitted with solar sufficient to power those things. You’ll still have to replenish the water supply every few days, but it beats a tent and a mummy bag.

Especially given how affordable these small campers seem. But when you look into how much they cost, you might – as Geraldo used to say – be shocked!

If you can’t afford to pay cash.

And there’s the rub. Most – including us – can’t. But it can’t cost that much to take out a small loan . . . can it?

Yes, it can.

The travel-trailer we looked at (and lusted after) is called the Flagstaff E-Pro E15FBS. It’s a little guy, only about 17 feet long. The weight – just 3,500 lbs. – is within the towing capacity of almost any truck; no need for a dualie with a gooseneck to pull it. And it seemed very affordable – with asking prices around $25k. If this were a car, the payments would be around $400 per month – for six years. The payments on the travel trailer seemed much more affordable – about $253 per month.

But the catch is those payments last for 120 months (ten years) at 9 percent interest. And assumes $5,000 down, which is a proportionately large down payment equal to 20 percent down.

Do that math. A ten year, $20k loan – plus interest – adds up to about $30k paid in total over those ten years, to pay off $20k.

Plus the $5k down payment you paid to reduce those payments to $253/month for ten years.

Granted, the monthly payments are “affordable” – in the sense that many people can afford to spend $250 or so each month on an indulgence. But it does mean buying into debt (on a depreciating asset) for decade and you never know what you might not be able to afford a long time before that elapses.

It probably makes more sense to save up – and buy a two or three-year-old travel trailer in cash for much less.

And for a lot less longer.

. . .

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