In this economy there is a lot of excitement about buying RV repos. Buying RVs that have been repo-ed is a great way to save thousands, but it does require a lot of work, fortitude, patience, and a strong mind.
What is a bank repo RV?
A repo RV is the same thing as a car that has been repo-ed, or a house that has been foreclosed on. It is an RV that has been taken back by the lender (or repossessed) and is now being sold by them so they can get rid of it. Many times these RV repos are sold at a deep discount so the lender can get them off their books.
Many wonder why a lender would sell anything at a discount. They are typically leaving thousands of dollars on the table when they sell their repossessed items. The answer is – the lender’s business is lending money. If they own an RV that they are not getting payments for, they are not making money. They are not set up to sell the RV at premium prices, because they are not a dealership – they don’t have the systems set up to market & sell the repo RVs at a high price. They just want to get rid of them. The federal government has laws required lending institution to keep a percentage of the money they have lent out in cash.
For example: Lets say the bank has $1,000,000 in cash. According to federal regulation, they can lend as much as $10,000,000. At 7% that brings in $700,000 per year for them. Now lets say they have an RV they have reposessed. The RV has a balance owed of $100,000. Because they have this RV sitting on their lot, and because they aren’t getting any interest payments on it, instead of being an asset, they have to record it as a liability. That means they have to subtract $100,000 from their cash pool. To them this is a loss of $70,000 per year! (Now they only have $900,000 in cash they can lend on so they can lend as much as $9,000,000. At 7% thats $630,000. So $700,000-$630,000=$70,000!)
So you can see why lenders are desperate to sell any repo RVs that they have.
So where do I find a good RV repos?
First – they place NOT to find them is at a dealership. Many dealerships will find these lenders, and develop business relationships with them. They will buy many RVs at a time, get a great deal (often the lender will take a huge loss on an RV repo just to get it off their lot). The dealer will then advertise repo RV deals & try to get people to come in a buy these “awesome” deals. But usually the dealer has marked the repo RVs up to just under market price. If you go to a dealer, your missing out on thousands of dollars of savings.
The first place to look is in your local newspapers. Auctions are usually advertised in the newspaper. You can also check with the county offices to see if your state runs public auctions. When you look at the repo RVs be sure the lender’s name is on the title. This will tell you right away if the RV is a repo or not.
You can also check online. Be careful of scams online! As a rule of thumb, if you find an auction online (unless it is an eBay auction) don’t get involved unless it is local to you. You want to be able to check out the RV you are bidding on & local is a much better way to do that. Ask lending institutions if they lend on RVs & if so, do they have any repos. Check with local credit unions as they are the biggest local lenders on RVs. This may take some time to develop a relationship with the lender’s before they will let you look at any of their RV’s. Remember to a lender, having repossessed items is like having a messy house. They don’t want to let anyone they don’t know in because its embarrassing.
One of the biggest sub-prime lenders for RVs is American General Finance. Subprime loans are loans given to people with less than perfect credit for a higher than normal interest rate. This is another place to look. Just beware, that it will be harder to work with someone who is not local.
Lenders who sell repo-ed RVs will want to sell them as soon as possible and usually want cash for the title. Some times however, if you’ve done a great job building a good report & have great credit, they will finance you on the purchase and they may also give you a favorable rate.
What can I expect when buying a repo RV?
These banks may not do a whole lot to get the RV ready for auction. This is alright because if you know what you are doing you can get a really good deal.
You should look for units with low mileage and for RVs that have not been lived in. Generator hours is a good indicator of use and another is is worn out upholstery. Most RV Repos will be in great condition. Some may even come with a lot of ‘upgrades’ included in the base price like satellites, internet access and multiple slide outs. Upgrades on used repos effect the price much less than an new RVs. The bottom line is that buying a repo RV you can get more for your money.
English