Buying a Repossessed Motorhome: More
Value for your Money
A repossessed motorhome is a good place to start in your search for a new
RV. You can often find a high quality, repossessed motor home in excellent
condition at up to 80% of Blue Book value.
A repossessed motorhome is a vehicle 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, 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.
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. 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!