Welcome to another edition of the RV Podcast. And this week, in our interview of the week segment, we’ll learn the cold hard facts about financing an RV, what’s needed, how to get a good interest rate, how not to get burned by owing more than it’s worth. Plus, we have lots of RV news this week from across North America, your RV Lifestyle questions, our RV tips and a great off the beaten path report from the Burketts.
Show Notes for Episode #256 August 21, 2019 of The RV Podcast;
WHAT MIKE AND JENNIFER ARE UP TO THIS WEEK
We’re just back from an awesome stay at Chautauqua Lakeside, a very unique summer resort on the shore of Lake Erie in Ohio, located on the Marblehead Peninsula halfway between Toledo and Cleveland. We stayed in their campground and were kept busy attending music concerts, enjoying the fitness facilities, taking in lots of organized programs and activities, hiking and strolling “Ohio's Most Beautiful Mile” along lakeshore the beautiful grounds that were bursting with brightly colored flowers of every shape, size and species. On Thursday, look for a full video of this very unique place on our YouTube RV Lifestyle Channel at https://youtube.com/rvlifestyle
We’re hitting the road right after this podcast is published, headed down to the hot and humid weather of Southwest Georgia. We’ll be in Albany, GA Friday night to watch our grandson Matthew play the season’s first high school football game of the season. Matthew is in his senior year at Deerfield Windsor and like I have done for my two sons, and Matthew’s older brother Nick, who graduated a couple years ago, I’ll be doing a movie on his senior team’s season. That’s a lot of work and though we have to do some coast-to-coast RV show travel over the next couple of months, we hope to make most of those Friday night games. In between, we’ll be hanging out on the beach at our condo on Okaloosa Island on the Florida Panhandles Emerald Coast.
As we plan out the stories and blog posts and videos we’ll be creating over the next few months, we’ve been asking our social media followers to share what's the #1 challenge you are having right now with the RV Lifestyle? And we have had dozens and dozens of replies.
We wanted to give you the same opportunity and then build a whole episode of this podcast around your relies, answering and offering tips as we go. So, to you loyal podcast audience… what's the #1 challenge you are having right now with the RV Lifestyle? We want you to phone it in our RV Lifestyle voice mail at 586-372-6990… just tell us your #1 challenge or RV frustration… 586-372-6990.
We’ve had some great responses already, ranging from not having enough time to travel because of work… to having to wait until retirement…. To overcrowded and full campgrounds…. To a lack of timely service from RV dealers…. To dealing with mice in the RV… managing space… storing food. All sorts of things. So let us know. We want to help you manage those challenges. We can’t wait to hear your response.
So what’s your #1 RV Lifestyle challenge right now, Jennifer?
Dealing with Bo when we have to be away from the RV and can’t take him with us, like this coming Friday when we’ll be attending Matthew’s football game? We’ll be camped at a campground in Albany, GA and we know it will be very hot and humid. We’ll have the air conditioner on but what if there’s a power failure?
That’s a legitimate concern. We use a temperature monitor called RVPetSafety that will send me a text alert as soon as the temperature reaches a prescribed level. This is a wonderful tool we’ve been using for over a year. It really gives peace of mind when leaving your pet back at the RV.
If you do buy, be sure to use the coupon code rvlifestyle to get a 10% discount.
If people prefer having a human watch over their dog, they can use Rover.com to find pet sitters nearby. It's an app and website that lists bet sitters and pet boarders across North America. We've used it numerous times all over the country and have been vey happy with the care Bo has had.
Anyway, those are some possible solutions to our top RV Lifestyle challenge right now. What about yours? We’d really like to know so we can serve you with some helpful info. Use that voicemail number…586-372-6990.
RV LIFESTYLE NEWS OF THE WEEK
Wolf attacks sleeping family at Banff National Park, tries to drag dad into woods
Did you hear about the wolf that attacked a sleeping family from New Jersey at Canada's Banff National Park? The husband, wife and their two young sons were sleeping in a tent when a wolf ripped in and attacked them. The dad fought off the wild beast while the mom threw herself over their two sons. Together the couple yelled for help, and a man, in a neighboring tent, is credited with saving the dad's life. The wolf was trying to carry the dad away when e neighboring camper kicked the wolf, startled it, and joined the dad in throwing rocks to scare it away. Wolf attacks are extremely rare, and Canadian authorities did find this wolf and euthanized it.
Article explores why young people are driving RV popularity
The Canadian Globe and Mail produced an interesting article last weekend exploring why RV ownership is so appealing to younger buyers. From millennials being a generation looking for experiences, to RVing being economical than many other ways of traveling, the article did a good job looking at why the incredible growth in camper ownership among a younger demographic. Each year Kampgrounds of America does a survey of campers that explores industry trends and found similar results. To listen to an interview we did with the CEO of KOA on their findings, click here.
Michigan Attorney General warns owners of private campground to stop using aggressive and misleading tactics to sell membership
Owners of a private Michigan campground have been warned by the state Attorney General to quit using “aggressive and misleading” tactics to sell memberships. The Michigan Department of Attorney General issued a Notice of Intended Action to Bay Outdoor Adventures last week, outlining serious concerns with what it termed the company’s “aggressive and misleading sales tactics.” The company operate eight campgrounds in Michigan: in Mt. Pleasant, Davison, Grand Haven, Kalamazoo, Omer, Standish, Sterling and West Branch. A ninth location is in Wapakoneta, Ohio. Among other things, the company was accused of:
–Failing … to promptly restore … a deposit, down payment, or other payment
–Gross discrepancies between the oral presentations of the seller and the written agreement covering the same transaction
–and, Causing coercion and duress as the result of the time and nature of a sales presentation.
Man creating retro posters of national parks to urge people to get outdoors
Those who love art and America’s 61 national parks may be interested in a project we read about last weekend. A photographer and graphic designer who studied under the famous photographer Ansel Adams is creating nostalgic posters with a retro 1930s and 1940s vibe for the national parks, and is selling them for $35 each. His goal is to encourage people to visit the national parks, according to a news article on his effort.
Manufacturing plant blamed for fish kill in country's newest national park
Portions of America's newest national park – Indiana Dunes – were closed over the weekend after dead fish started appearing in mass. The fish death was traced to a steel manufacturing company nearby, which apparently released more cyanide and ammonia-nitrogen than normal. Authorities had to close parts of the beach and water as authorities investigate further into the fish kill. The public is also being urged not to eat any fish.
RV News Shorts, Tips, and Reviews
- A 14-year-old girl died at Glacier National Park last week from rocks that fell down on to her family's vehicle as they drove along Going-to-the-Sun road
- Kayakers narrowly escape injury from crumbling rocks at Pictured Rocks National Lakeshore in Michigan
This part of the podcast is brought to you by RadPower Bikes, an electric bike manufacturer offering direct to consumer pricing on powerful premium electric bikes. Now with free shipping
LISTENER QUESTIONS OF THE WEEK
We answer voicemail questions about:
- The different ways different sized RVs experience wind turbulence on the road
- Whether a retired airplane mechanic would be able to find work as an RV service tech
- Plus, we answer this question posed on our RV Lifestyle Facebook Group (https://rvlifestyle.com/facebook) by a member named Despina:
- Dreaming the RV Lifestyle for 3 years since I first viewed your tour of your RV and learned about Class B RVs. Placed our order for a 2020 Airstream Intestate Grand Tour EXT in April 2019, but have no idea when it will arrive. But when it does, here is my dilemma what type of trips should I plan for the first months of ownership? We have never owned an RV. Do we plan short 2 or 3-day trips for the first 3 or so months to acclimate to traveling and living in an RV or do we jump in and go for longer trips. We have listened to all your podcasts, read your weekly newsletter and watched your special videos. Are we prepared for the RV Lifestyle and do we have to ease into it?
Do you have a question you’d like us to answer, or a comment on the things we’re discussing. If so, we invite you to leave us that question or comment on the special voicemail number we have for the podcast – it’s 586-372-6990. If you are driving and can’t write it down right now, just go to the RV Lifestyle travel blog at rvlifestyle.com and scroll down the page. You’ll see that number prominently posted on the blog.
This part of the RV Podcast is brought to you by Battle Born Batteries, maker of quality, safe and reliable lithium batteries that can be installed in just about every RV. Get in touch with Battle Born to find out what lithium batteries and an upgraded energy management system can add to your RV Lifestyle. Check them out at https://rvlifestyle.com/lithium
RV INTERVIEW OF THE WEEK
Buying an RV is the second most expensive purchase most of us will make in a lifetime, second only to the cost of a home. Financing an RV, be it new or used, is the way most people can swing it. But there are a lot of ins and outs when it comes to RV financing and so this week on the RV Podcast, we thought we’d talk to an expert on what we need to know about financing an RV, the differences between new and old, interest rates, depreciation and much more.
Our guest is Jeff McLeod, who has been connected to the RV finance industry since 1994, starting off with Thor Credit, a division of Thor industries. He currently specializes in Recreational Financing for Newcoast Financial Services, based in Clearwater, Florida, working with dealers and manufacturers and independent brokers, helping them match consumers to the best financing packages.
Here’s a transcript of the interview:
Mike Wendland: Joining us now is Jeff and we were delighted to have you on the program. Jeff, let's start off right away. What do people need to know about financing a recreation vehicle versus that they're familiar with, which is financing a car?
Jeff McLeod: Well, that's a question we get all the time and I'll tell you. Now, car is something that you need. Most people have to have a car to get to and from work, whereas an RV or a boat or recreation type of vehicle is used as a pleasure, as something that's a luxury if you will, and that's how lenders view that. So when they look at the folks that are applying, of course, the underwriting guidelines are much different than applying for an automobile. And in that case, lenders have certain things and requirements based on the dollar amount.
Mike Wendland: Of course, an RV is much more money, but what are those differences besides the dollar amount? I mean, I know that the term of a loan for an RV can be as long as 20 years.
Jeff McLeod: That's correct. So most lenders will look at a 20-year term starting at $100,000 or higher loan amount. So you're right, the terms are longer and then all the way down to 25,000, you can find loan terms up to 15 years. So we usually like to tell folks that are looking to finance to expect on a $25,000 amount up to a $99,000 a 15-year term, and over $100,000 and 240-month or a 20-year term. And when you start getting over the six figure amount, the underwriting criteria changes a little bit and you get, if you will, I don't want to say put under the microscope a little bit more, but they do underwrite a little bit more to those dollar amounts.
Mike Wendland: Now are these for new RVs or does that amount also include used RVs?
Jeff McLeod: Yes. So on used RVs, we're fortunate because in the case of where I am, we were able to go back 20 years and that's a little bit outside the box of of some lenders. But on used RVs, the same terms would apply. You would find terms over $100,000 up to 20 years and below a 15,000 … I'm sorry, 15 years. Excuse me.
Jeff McLeod: The main thing that you want to be cognizant and you want to know about used RVs versus new is when you get past, let's say, two or three years old, the rates can go higher just because it's used versus new. So don't be surprised if you hear of a rate that might sound like a quarter or half a point higher. But in fact, if you're looking at something that's a few years older than that's how the bank's pricing risk for a used RV.
Mike Wendland: Now most people buy from a dealer and when they buy a dealer, the dealer will often offer financing with the lender that they work with. Does it pay for people to shop around? What advice do you give people when they go to a dealer and they're going to have to finance an RV?
Jeff McLeod: So great question. Most dealers work with RV indirect. What that means is indirect is they have a relationship with several different lenders. And then, so some people choose to go through the dealer and secure their financing.
Jeff McLeod: I work for a finance company and we utilize several different correspondent relationships with other banks that are in the RV business. And so sometimes, we will see borrowers will come in through a broker channel or a manufacturer such as somebody that's building on a Prevost chassis. And the reason why that is, Mike, is because people want to check out their options before they get to the dealer and see what type of rates are available.
Jeff McLeod: What I would tell everybody is that … and we talk about “Know before you go.” So when you are looking at an RV, I would like to say that you should be prepared when you're ready to start shopping. And when you finally select an RV and you're ready to go through the finance process, if you're looking at something over $100,000, the lenders are usually going to want to see two years tax returns, most recent. They will want to see proof of income via any award letters from disability, VA. They'll want to see last two years of social security, 1099s, and they will want to see a personal financial statement with corresponding statements to verify the amounts you might list on a personal financial statement.
Jeff McLeod: Again, you won't start seeing those kinds of requests until you get north of $150,000, for sure over $200,000. And oftentimes when I work with dealers and customers, this information is not readily available and there's some confusion because people, again, like you mentioned earlier, “Well, isn't this like buying a car? On my last car loan, I did not have to present all of this.” But when we're talking about a $200,000 motor home, then it's a different dynamic all together. And so it's better to be prepared up front and understand what the banks were looking for to make these decisions.
Mike Wendland: Now, my original question though is, is it better to shop around for lenders or are they all pretty much the same working with your dealer?
Jeff McLeod: Sure. They're pretty much all going to be the same. Rates are going to be the same. Rates are based on your credit score, so most lenders will tier rate based on scores and they may look something like this: 690 to 719 would be the the highest or the highest rate tier. Let's just say hypothetically 720 up to 749, 750 to 800, and 800 above which would be premium or super premium. And so rates are all pretty competitive no matter what different lenders are out there. They're all trying to be competitive in this market because this is really our RVers traditionally are great. That's great paper for lenders because RVers, the demographics of our RVers are such that they're usually a higher credit scores, have the capacity and the capitol and have have good track history on previous RV loans, so it's very attractive paper to a lender, attractive loan.
Mike Wendland: I've heard horror stories in the past about lenders who are locked into say a 20-year loan and they want to sell at the end of 10 years or three years or five years, whatever figures short of that, that they have been held responsible for the interest on all 20 years. Does that happen anymore? Is that a caution that lenders need to be aware of?
Jeff McLeod: Well, yes. It used to … It doesn't happen anymore because all loans are figured on simple interest, which simply means that you're paying interest on the outstanding loan balance. Back years and years ago, they used to calculate interest on what was called the Rule of 78s, which the interest was all front-loaded. So before you even started making principal payments, you were knocking down interest.
Jeff McLeod: And so as in your example, yes, I mean, that would happen. People would owe way more. But one other thing I might add to that is the longer term you go, it will take longer to build equity unless you're going to put down a sizable down payment. So people should understand that if you go into a loan, a 20-year loan and you have a good interest rate, your interest is going to be calculated on the outstanding balance just like a home mortgage is. So every month you make a payment, part of that payment goes to interest and part goes to principal.
Jeff McLeod: The thing is is that RVs depreciate. We all know that and you want to make sure that you don't have a surprise in five years when you want to go to trade-in and you owe more on it than it's worth. And that can happen, especially with people that choose to put a lower down payment up upfront. It's the old saying, “Pay me now or pay me later.” And so sometimes that works for people, but other times they get a little bit of a shock when they go to trade in four or five years.
Mike Wendland: I guess that would be because of the depreciation and you haven't paid down enough of the loan. What is a rule of thumb down payment? Is there one to avoid that and use that $100,000 hypothetical figure?
Jeff McLeod: Sure. So based on a credit score and all positive attributes, there are options out there for 10% down payment. But if you think about it, whatever your sales tax is and your local municipality, it may not even be covering that with a 10% down payment, which could still get an approval depending on everything being equal with a 10% down.
Jeff McLeod: I think that customers that went to avoid something like that probably want to look at it at least 20-25% down. Now that may not be in everybody's budget and you might be in a different place in five or 10 years from now, where you paid it down and up. But the one note of caution is, if you do choose to go with a 10 or 15% down payment, which is perfectly acceptable and you can get a loan that way, just know that in two to three years, you're most likely would not have paid enough down to be in an equity position, if you will.
Mike Wendland: Yeah. And that's kind of scary unless I guess you got a terrific deal on the RV or something to that effect, but yeah.
Jeff McLeod: Exactly. And as I said, some people go in with, “Well, I'm going to keep this for a 10-15 years and that doesn't really concern me.” While others, we at Newcoast, we do deals every day where people have bought a year ago or two years ago and they're looking to move out of that fifth wheel that didn't have a fireplace or maybe their kids are bigger now and they need the power bunks or … There's a myriad of reasons why people want to trade after a couple of years.
Jeff McLeod: I mean these things are changing, as you know, pretty significantly from year to year. So we have options to help you know those individuals too, where everybody has their rule of thumb on how on how they lend and value just like you do with a home. You've heard terms like loan-to-value. So there are options out there for higher loan-to-values and there's things that can accommodate that, different programs or solutions.
Mike Wendland: A couple of quick questions before we have to go. A lot of people are shopping around and buying their RV in other states. There are still a lot of people who I know are buying them as an LLC from Montana. That has been a pretty controversial area, a topic and a practice, but it's still going on. Can you enlighten us a little bit of that? Is that something you'd recommend, not recommend? Does it make sense anymore?
Jeff McLeod: Well, it depends. If you're talking about something in the past million or higher range or maybe even down in the 250 range depending on what your local sales taxes is, it could very well make sense there. There have been states that have struck that down, if you will. They fine people for doing the Montana LLC and they enforce their tax, their local sales tax or state sales tax.
Jeff McLeod: There was a case back years ago in Louisiana where a court overturned a state or a local municipality that tried to claw back the sales tax from the borrower. What I would recommend if that's … And you're right, we see those every day. We get those requests at Newcoast for LLCs and we have solutions for that, but I would recommend consulting with an attorney, with a law firm in Montana because each state has a different situation. Some states are very aggressive when it comes to Montana LLCs and you're not being from Montana, and others, not maybe as much. But I have found through experience that customers are given the full picture of what that looks like, and then they make up their mind based on their individual circumstance and what things look like in their own state where they reside or where they domiciled.
Mike Wendland: Similar question, buying in a low or no sales tax state, Florida for example. Your state is a no sales tax, I believe. And other states have very low rates. New Mexico has a Snowbird law that will sell at the New Mexico rate of 3%. Many states have a 6%. Do those figure into the financing or are those things that would cause red flags? What would you advise lenders about those solutions?
Jeff McLeod: Right. So a borrower, as you said in Florida, New Mexico, Arizona, a lot of snowbirds are here in the winter time. And in Florida let's you get the trade credit, so you're paying six percent on the trade difference plus whatever the county tax. In some cases that's a lot less than where people might live in other areas.
Jeff McLeod: And so what I would tell people there is, it can be done, but you need to have … In the cases where you don't get tripped up, you want to make sure you have a Florida driver's license, as an example in Florida. And wherever you are living during the season, you would probably need to produce a utility bill or something. I mean, there's some people we work with that stay down here for six months and actually have a permanent rental where they pay a utility bill and they have a Florida driver's license, and so for all practical purposes they're able to take advantage. But it's not as easy to do. In fact, I'm not really aware of how it can be done unless you're able to produce some type of residency requirement in that state where you want to title it and then pay the sales tax.
Mike Wendland: It make sense. Last question, Jeff, is this one. Full-time versus the part-time weekend warrior in terms of financing an RV, does that make a difference?
Jeff McLeod: Well, we do work with full-timers at Newcoast. It is a different ballgame altogether. As we talked about requirements from lenders and and the way that there are a little bit more stringent on RV versus auto, even more so for a full-timer.
Jeff McLeod: The real problem with what happened with full-timers, lenders before the financial crisis everybody did them. But then after the banking crisis, some of those rules and regulations changed where RVs became your residence and there were complications with enforcing collections and things like that. So that's what really drove the lenders out of the full-time or full-time business, but there are solutions. They normally look at loans starting at $150,000. They want a really solid borrowers, high credit scores, and you would expect to pay probably 30% down payment if you were looking for a full-time versus, as you said, a weekend warrior, who is just using it and still owns a home or has a residence, and so there are options available.
Mike Wendland: How do you define full-time versus part-time?
Jeff McLeod: That's a great question.
Mike Wendland: I mean somebody who's on the road 7/8 of the time. Is that a full-timer or is that a part-timer? Is there a number attached to that?
Jeff McLeod: It all comes down to this. A full-timer is somebody that has moved into the RV and they're on the road 12 months out of the year, and they have a forwarding address somewhere; and they do not have a utility bill, a mortgage payment or rental payment on a brick and mortar or apartment. In other words, there's no-
Mike Wendland: Collateral. There's no collateral.
Jeff McLeod: Yeah, and the RV is their only residence, so that's a full-timer. If somebody owns a home and they're on the road 11 months out of 12 then that's not a full-timer. That's somebody that's choosing just to travel because they have a home to go back to. That would be the main thing you would look at.
Mike Wendland: Jeff, Jeff McLeod, you have been a wealth of information. You have helped us greatly. We will put a link to Newcoast Financial Services and I know there'll be a transcript of the interview here in the show notes for the podcast. But this has been a big help to us and I want to thank you for your time in helping us sort out the confusion of financing a RV. Thanks Jeff.
Jeff McLeod: Thank you, Mike. I appreciate it very much.
The interview of the week is brought to you by SunshinestateRVs.com, where every new motorhome is delivered to the customer free, anywhere in the country
OFF THE BEATEN PATH REPORT
By Tom and Patty Burkett
One of the things we most enjoy seeing as we travel around the country is outsider art. By definition, Outsider Art is work produced by untrained artists, usually ones who work very locally. We’ve seen some things that are quite old, and other things under construction. These often come from listings on the Roadside America webpage or from the Atlas Obscura weekly emails. Some are simple, like the world’s largest carved wooden catfish or the wind chimes made from acetylene gas bottles.
Some are private works, made only for the artist who created them, like the Trail of Tears Monument built by Larry Baggett near Jerome, Missouri. Others are made specifically to attract tourists, like the giant things in Casey, Illinois. Some were inspired by love, as was the case for S. P. Dinsmoor, who created the Garden of Eden in Lucas, Kansas for his wife. She wanted a log cabin, but they lived on the treeless central plains. He carved logs out of the ubiquitous local limestone and built the house out of them.
Hobbies gone wild figure large in the list, as illustrated by Bill Larkin’s birdhouses in Loogootee, Indiana and Ed Galloway’s Totem Pole Park in Foyil, Oklahoma. Gary Greff built the huge and amazing sculptures along the Enchanted Highway to save his town from dying when it was bypassed by the interstate, and Ole Quammen supervised the collecting of specimens for the Petrified Wood Park in Lemmon, South Dakota to provide work for his fellow town residents during the great depression.
George Turner built Tiny Town, in Morrison, Colorado, to please his daughter, and Tom Lakenen built his sculpture garden outside Marquette to thumb his nose at annoying local officials. Many, many more of these artists show off their work in front yards and along fencerows on the backroads of nearly every state. Some are well known, and some you just happen across by chance, like the bouncy horse gallop along the edge of a cornfield near Fairbury, Illinois.
Among the most spectacular and sometimes disturbing outsider art can be seen in a gallery setting at the American Visionary Art Museum in Baltimore, Maryland. It’s easy to spend the best part of the day wandering the displays, a surprise at every turn. Go to the museum, or drive the neighborhood—you’re sure to find something unexpected when you give up the big roads and spend your time out here where we are, off the beaten path.
This part of the podcast is brought to you by Harvest Hosts – https://rvlifestyle.com/harvesthosts a network of farms, wineries, museums and attractions where RVers can stay overnight, for free.
RV CALENDAR OF EVENTS
- August 23-25, Raleigh Fall RV Show, Raleigh State Fairgrounds, Raleigh, NC
- September 5-8, The Real RV Show, Recreation Enterprises, Pasadena, CA
- September 11-15, Hershey- America's Largest RV Show, Giant Center, Hershey, PA. Jennifer and I will be there! We’ll be doing a live YouTube broadcast from the Hershey show on Saturday September 14. We’ll be doing a meet and greet from 1-3PM at the Leisure Travel Vans display at the show. Again, that’s Saturday Sept. 14.
- October 4-14, the California RV Show, Auto Club Speedway, Fontana, CA. This is a new and larger facility for this amazing show and it offers free parking now, instead of the $15 parking fee there used to be at its previous location in Pomona. Jennifer and I will be there that first weekend and we’ll be doing two meetups Saturday Oct. 5. At 11AM we will be at the Camp California display at the show… that afternoon, we’ll also be hanging out at the Leisure Travel Vans display. To make it a little more enticing for you to come and visit, we can save you $5 off the $13 admission ticket if you use the coupon code CV5. You can order tickets from the show website at https://www.californiarvshow.org/