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There is a lot of excitement about buying an RV repo in this economy. Buying a repo-added RV is a great way to save thousands, but it takes a lot of hard work, patience, fortitude, and a strong mind.
What is Bank Repo RV?
A repo RV is similar to a car that has been repo-ed, or a home that has been foreclosed. This is an RV that has been taken back by the lender (or repossessed) and is now being sold by them so that they can get rid of it. Many times these RV repos are sold at a deep discount so that the lender can get them off their books.
Many people wonder why a lender would sell anything at a discount. They are usually leaving thousands of dollars on the table when they sell their repossessed items. Answer: The business of a moneylender is to lend money. If they have an RV that they are not getting paid for, then they are not making money. They are unwilling to sell RVs at premium prices because they are not a dealership – they do not have the systems in place to market repo RVs and sell them at a higher price. They just want to get rid of them. The federal government has laws that require the lending institution to keep a percentage of the money loaned in cash.
For example: Let’s say the bank has $1,000,000 in cash. Per federal regulation, they can lend up to $10,000,000. At 7% that brings him $700,000 a year. Now let’s say he has an RV that he repossessed. The RV owes $100,000. Because they have this RV, and because they aren’t getting any interest payments on it, instead of being an asset, they have to record it as a liability. This means that they have to subtract $100,000 from their cash pool. That’s a loss of $70,000 per year for them! (Now they only have $900,000 in cash on which to lend so they can lend as much as $9,000,000. At 7% that is $630,000. So $700,000-$630,000=$70,000!)
So you can see why lenders are desperate to sell the repo RVs they have.
So where do I find a good RV repo?
First – they are not at the dealership to find them. Many dealerships will find these lenders and develop business relationships with them. They’ll buy several RVs at once, get a Great Bargain (often the lender will take a heavy loss on the RV repo in order to get it off their lot). The dealer will then advertise repo RV deals and try to get people to buy these “awesome” deals. But usually the dealer has marked up the repo RV at a price well below market value. If you go to a dealer, you lose out on thousands of dollars in savings.
The first place to look is in your local newspapers. Auctions are usually advertised in newspapers. You can also check with county offices to see if your state runs a public auction. When you look at a repo RV, make sure the lender’s name is on the title. This will tell you right away if there is an RV repo or not.
You can also check online. Beware of online scams! As a rule of thumb, if you find an online auction (unless it’s an eBay auction) don’t join unless it’s local to you. You want to be able to check out the RV you’re bidding on, and local is a better way to do that. Ask lending institutions if they lend on RVs and, if so, whether they have repos. Check with local credit unions as they are the largest local lenders on RVs. It may take some time to develop a relationship with the lenders before they will let you view any of their RVs. Remember, for a lender, having repossessed items is like having a messy house. They don’t want to let someone they don’t know in because it’s embarrassing.
One of the largest subprime lenders for RVs is American General Finance. Subprime loans are loans made to people with less than perfect credit for a higher-than-usual interest rate. This is another place to look. Just be aware, that it will be harder to work with someone who is not a local.
Lenders selling repo-ed RVs will want to sell them as quickly as possible and usually want cash for the title. However, sometimes, if you’ve done a good job building a good report and have good credit, they’ll finance the purchase and they may even give you a favorable rate.
What Can I Expect When Buying a Repso RV?
There is not much these banks can do to prepare the RV for auction. That’s okay because you can get a really good deal if you know what you’re doing.
You should look for units with low mileage and for RVs that haven’t been lived in. Generator hours are a good indicator of use and another is worn upholstery. Most RV repos will be in great condition. Some may even come with a host of ‘upgrades’ included in the base price such as satellite, internet access and multiple slide outs. Upgrading on a used repo affects a much lower price than a new RV. The bottom line is that you get more for your money by purchasing a Repso RV.
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