A repossessed motorhome is a good place to start in your search for a new RV. You can often find a high quality, repossessed motorhomes in excellent condition at up to 50% less then the blue book retail value.
Repossessed motorhomes, also known as repo motorhomes are vehicles that has been taken back by the bank or lending institution because of an inability for the buyer to make adequate payments. Because of the recent economic downturn, the number of motorhome repossessions has increased dramatically. As with the housing market, several lenders offered loans to candidates with less than perfect credit. In addition, because RVs are luxury items, they often carry higher interest rates than cars or homes, which are considered essentials. When finances get tight, and people have to make choices about which payments they will make, often the car, the home, utilities and food come before the non-essential items, including motorhomes. However, because of the high cost of motorhomes (sometimes as much or more than a home) and the higher interest rates, the payments on motorhomes are often very high, making it fairly easy for a person to fall far behind on their payments in a relatively short amount of time. Eventually, when a bank or lending institution has determined that the individual can no longer make payments and will likely not be able to make payments in the near future, that lending institution decides to cut its losses and take repossession of the vehicle. Generally, motorhome repossession happens within the first few months of ownership, which means that most repossessed motorhomes are in excellent condition.
Once the bank or lending institution has taken repossession of the motorhome, they have had to pay not only the fee for repossession, but also the fee to store the repossessed motorhome. Because motorhomes take up so much space, the storage fees can be quite high. Often times, the bank just wants to get rid of the added cost and the liability of having that vehicle. Unlike with homes, repossessed motorhomes begin depreciating the moment they are driven off of the lot. The longer the bank holds on to a repossessed motorhome, the more the value decreases and the less money the bank will be able to make. The easiest way to get rid of several vehicles quickly is to hold an auction.
Because the bank wants to get rid of the repossessed motorhome as quickly as possible, they often start the bidding very low, sometimes as low as $100. There is usually no reserve (a minimum price) so if no one else bids, you could potentially purchase that motorhome for $100 (this is unlikely, but possible).
Motorhome dealers are the most common participants in repossessed motorhome auctions. So, you could buy your motorhome from a dealer who specializes in these vehicles; however, the mark-up is anywhere from 30% – 40%, so if you can, you are better off attending the auction yourself.
If this is the case, you might be wondering why everyone doesn’t just buy a motorhome from an auction and skip the dealer altogether. Well, there are a few reasons. First of all, when you buy from a motorhome auction, you are buying it as-is, there is no warranty and no guarantee, so you are taking a gamble. Second of all, auctions can sometimes be hard to find as they aren’t often publicized. There are websites you can join that will give you the date and location of the auction, or you can even try calling banks or lending institutions to find out when and if they are holding auctions.
Repossessed Motorhomes at Auctions
Once you find an auction, be sure to do your research ahead of time. Know what you are looking for and what you are willing to spend on a repo motorhome. Most auctions allow a few hours before the auction begins so that potential buyers can inspect the vehicles up for auction. In your inspection, look for those repossessed motorhomes that have been used the least. One way to figure out usage is by checking the generator hours – lower hours means less use. Also check wear and tear on upholstery and cabinets.
Though there are some risks involved, you can’t beat the value of purchasing a repossessed motorhome, especially if you can find one in like-new condition. The research and effort to locate auctions will be worth it!
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