BUYING STRATEGIES THAT CAN GET YOU IN TROUBLE
Focusing On The Best Price
Even a seasoned professional in the RV business can’t tell how much an RV costs or sells for with any degree of accuracy just by looking at it. Park any three of the same model and floorplan side by side and the price could vary as much as $10,000 on optional equipment alone. Without some research, and a detailed list of the standard and optional equipment included, it’s nearly impossible to tell the price accurately, and it’s extremely easy to be misled. The lesson in this is that it’s easy to be fooled about what you’re getting for your money.
When you focus on price alone you are missing some key items you need to pay attention to in order to tell if you are really getting a good deal. Tragically, many people pay too much for their RV simply because they were too narrow in the criteria they used to compare. You will need to focus on all the details that make up your RV.
Here’s a short list:
- Standard Equipment
- Optional Equipment
- Dealer Options Included
- Year, Make And Model Of RV And Chassis
- When Was The RV Built? How Old Is It? Model Year?
- Dealer Preparation And Check Out
- Items You Will Need To Use The RV-Included?
- Full LP Gas Included?
- How Much Fuel In Fuel Tank?
- Factory Warranty Coverage
- Dealer Warranty Coverage
- Quality Manufacturer
- Parts Availability
- Stability Of Manufacturer And Dealer
- Service Availability
- Convenience Of Service
- Trained Service Techs
- Service Facilities
- Service Network Affiliation
- RV Owner Education
- Willingness To Solve Your Problems
- Add Any Other Details That Are Important To You
Focus on price alone is a sure way to have some or most of these important issues ignored and absent when you need them. In many cases, the best price is less than the best deal or the best value.
The savings evaporate quickly when you discover some of the things you assumed were included are actually extra. How much was saving even several thousand dollars really worth when your limited vacation and recreation time is marred by service problems, and a servicing dealer who is several hours from home? What if the dealer is uncooperative and unwilling to address your problems? What if the staff is untrained and continually fails to repair your problems, adding many hours of travel and days of down time? What if the local dealer refuses to service your RV because you bought elsewhere? RVs should add enjoyment to your life-style, not add hassle.
Compare all the items, not just price. Always ask yourself and the seller “What’s missing?” Before you determine that the best price is the best deal. Be wary of new RVs with extra mileage or a built date that is more than several months old. While it is not unusual for there to be an older new RV in a dealer’s inventory, it may also be a factory or dealer buy-back. More questions need to be asked and satisfactory answers provided in such a case. Remember, there is no magic. When you pay less you get less. Look at the overall package and determine what is important to you. Be sure you’re getting all you expect.
Focusing On The Best Trade Allowance
Don’t focus on trade value alone. Many buyers don’t even want to consider an RV if they are not getting what they think they should for their trade. If you’re one of these people, be very careful! Review your research. How did you come up with the value for your trade? What is the value of the RV you’re considering? Are they both in line with the market?
Many people look in the newspaper or on the Internet, or visit a dealer to establish the value for their RV. Don’t fall into this trap.
Here’s an example of how the problem starts:
- Someone is asking $20,000 for a similar model in the paper or on the Internet, so you think your RV must be worth $21,000.
- A dealer “high-balls” your RV as a trade-in against an expensive new model and shows you $20,000, so you think you may be able to get $21,000.
- A friend sold his RV and told you he got $20,000 for it. You know yours is nicer, so you figure you should get $21,000.
In these cases, you now have an idea of your RV’s value that is based on pure fantasy. None of these examples is any real basis for establishing a value.
- Just because someone asks $20,000 in the paper or on the Internet doesn’t mean anyone actually paid that much.
- The trade value the dealer gave included a large discount lumped together with the actual cash value.
- Your friend fibbed about what he sold his for – he actually sold it for much less.
All your research is based on exaggerated prices. If you insist on seeing $20,000 to $21,000 for your trade, you’re extremely vulnerable to an RV seller who will play games with you.
Here’s an example of how you can get hurt by focusing on trade value alone:
You own an XYZ brand motorhome. In talking with you, the RV seller discovers that you are looking for a motorhome in the $60,000 range and that you want $20,000 to $21,000 for your trade. He finds this out BEFORE he quotes you any prices. He takes you to a lower cost high-glitz motorhome that looks more expensive than it is. The motorhome has the right floorplan and features to meet your needs as you’ve explained them, plus a few gadgets that really catch your eye. He then inflates his selling price to cover for an extra over-allowance and quotes you $59,999, a price that is more than sticker price but still in your stated price range. He’s able to do this because you’re really looking at a lower price range vehicle. (This happens often. It’s hard to tell what RVs cost accurately just by looking. Even for professionals.) Then he offers you $21,500 for your trade. You are excited! Since no prices were posted and you are focused on your trade-in value, you don’t really notice what the seller has done. You’re thrilled with the trade value and it confirms your idea of what your trade is worth. Since the RV is in your stated price range the payments, term, etc. fit your budget and assuming you like the RV, you’re likely to buy it. Right?
But what has happened? Is this a good deal?
Upon checking the NADA RV Appraisal Guide, we discover your XYZ motorhome has a used retail value of $15,500 and a used wholesale value of $12,400. Meanwhile the RV you are looking at has a suggested list price of $49,029. That’s almost a full $10,000 less than the price you were quoted. So the seller has really only allowed you $11,500 for your trade which is worth about $12,400 and the seller is almost at full list price!!! Using used retail and the suggested list, the new motorhome should have been selling for somewhere between $44,000 and $47,000.
This is a very bad deal. You didn’t even get any of the discount most folks get when they walk in the door! But, you did get more than you wanted for your trade… sort of. I am constantly amazed at the number of RV buyers that fall into this expensive trap. These are intelligent and reasonable folks like you and me. Their only fault was a foolish focus on trade value instead of the overall deal and a lack of basic research into the RV market.
Always try to work with actual cash value for your trade and get the best-discounted price for the RV you’re buying. Use the NADA Guide to establish a reasonable Actual Cash Value (ACV) for your trade and reasonable discounted price for the RV you’re buying. Focus on the monetary difference and the RV you’re buying. By knowing the true ACV of your trade, you are in a position to sell it yourself and come out ahead, or at least you can be sure you’re really getting a reasonable deal to begin with.
Focusing On The Lowest Payment
Today RV financing terms go up to 15 or even 20 years. A 20-year loan will have a payment lower than the payment on a 10-year loan or a 5-year loan. If you focus on payment alone, it’s often easy for a seller to extend the term and give you a lower payment without you realizing it.
Focus on rate, term, amount financed as well as the lowest monthly payment. Be sure to look at the total package. There is no magic way to get to a lower payment without changing the rate, term or amount financed.
By focusing on the lowest payment, you’re also vulnerable to sellers’ rate games. Many RV sellers will quote a “show” rate or other “special” rate that usually has a limited availability or is difficult to qualify for. Using this rate the monthly payment looks lower than many or all other sources. The seller is hoping you will eliminate all the others in your shopping process and return to him to finalize the deal. However, when the time comes to settle, the seller will claim a mistake was made or the rate ran out or they need a new approval or some other excuse will be given. While this may be true, the seller should not have been relying on such a limited program without telling you the likelihood of a change.
As in other areas, if one source seems to be dramatically different, ask yourself “Why is this deal so special? – What’s missing?” Generally, major RV sellers are dealing with the same RV financing sources and can get the same deals. A special deal is usually a gimmick, unless backed by the RV manufacturer.
Always focus on the entire financing package, not just the payment. Ask for a firm commitment (in writing) to the rate and terms before you rely on them. Know when they will run out.
Thinking “I Don’t Need Service”
If you believe you are buying a new RV and, therefore, it will not or should not need service, you are in for a surprise. If you believe a used RV will have most of the bugs worked out and therefore will not need service support, you are in for perhaps a very expensive surprise.
Human hands make RVs; mistakes happen. Most RV manufacturers put the dealer in the position of final quality control and repair. Therefore a comprehensive pre-delivery inspection process as well as warranty and service capability is extremely important.
RVs are houses on wheels. Just imagine what would happen if you towed or drove your house across our highways – some problems will arise, and when they do, it’s nice to have help readily available.
People sell and trade their RVs for a reason, often to avoid a costly repair bill. It is typical for a dealer to spend hundreds, even thousands of dollars to put a used RV into safe and proper operating condition.
RVs require maintenance. Bad things would happen to your car if you didn’t change the oil regularly or check the tire pressure. Similarly, structural sealant maintenance and other maintenance procedures are required to prevent problems with your RV.
Unless you can honestly say you have never had a problem with your home, your car, or any of your appliances, and you’re feeling even luckier today than you have so far in life, you will need service for your RV.
Be sure you make the dealership service reputation, facility, and capacity part of your consideration. An RV is no fun when it doesn’t work and you can’t get it fixed in time for your trip.
Assuming All Dealers, RVs, Warranties are The Same
This is an assumption that can really cost you. There are major differences between all of the above. Always assume they are different and find the one that best fits you.