Now's the Time to Buy a Prevost...For Free?

Now the title of this particular article sounds too good to be true.

However, if you are one of those people who is determined to own a fine luxury motorhome, here are some points to consider about making your Prevost acquisition soon:

-Interest rates are still very low, yet they are likely to rise soon, probably at least to 7, 8 percent.

-A Prevost coach is built with a 2 million mile chassis, unlike any other luxury coach in the world.

-Prevost coaches are considered high quality collateral for most lenders in the luxury motorhome marketplace.

-In comparison with other 'diesel pusher' coaches, a pre-owned Prevost can be a much better investment than most other products on the marketplace.

-There are better places to park cash than in a non-Prevost coach; up to 14% return, v. massive depreciation.
 

Here's the discussion:

Let's say you are about ready to make a commitment to own a luxury coach. Let's take a look, not even at the high end of luxury coaches, but entry level coaches. According to figures obtained on the net, a 2005 Winnebago Vectra sports an MSRP of $215,418  base. Most dealers have them fairly loaded, a recent visit to a dealer showed one at $295,000. Here's another one: A 2005 Holiday Rambler Navigator sports a base MSRP of $239,900. And the fiberglass coaches go up from there to the $600,000 range.

A quick review of 10-year old versions of the above mentioned coaches is striking: A 1994 Holiday Rambler Navigator retails for $67,500, so a purchase today may result in something like a depreciable loss of as much as $260,000. The Vectra about the same: A 1994 Vectra recently sold for $36,950, a potential loss of $228,000, more or less. One must keep in mind that mileage is indeed a consideration for fiberglass coaches; it is rare that, without significant investment and maintenance, they will run efficiently for 100,000 miles or more. They simply are not constructed for such use.

So each of the coaches will cost more than $20,000 per year in depreciation alone, tying up about $300,000 in capital.

Now let's take a look at a Prevost conversion that's already 10 years old. Here are two recent listing from www.prevost-stuff.com 's coaches for sale page:

For the sake of argument, let's average the two coaches together and come up with an average price of about $175,000 just for comparison purposes. Immediately, you will see that there is an excess of $125,000 available for investment. At Morgan Stanley's Centennial fund at 14% return, (any of us can do the math) that will more than cover the, say 5.6% for financing the coach. Yes, there will be more depreciation, but likely 1/3 of the fiberglass models.

More importantly, even after twenty years of use over the road, the Prevost will have the balance of its 2 million mile chassis. Maintenance over the term of any of the coaches is likely to be about the same.

So, if you follow the logic here, spend less, get more. In ten years you still have a worthy coach, a hefty amount of cash which self-finances the investment in the Prevost, and oh, you get a magnificent Prevost for ten years, essentially for nothing.

Now there are those who will say, sure, I'd like a Prevost, but the older models don't have slides?

If you sharpen your pencil, you will find that a 5.5% loan with 20-year amortization on, say $220,000, will result in a total payment of about $367,000. In addition, you may have experienced a $200,000 depreciation on the fiberglass coach. So (theoretically) if you keep the coach twenty years, you spent over $560,000 and have nothing. On the other hand, if you follow the course of purchasing the Prevost, you will likely have at least half of your coach value on the road, and have about a half million in the bank. So, is that slide out worth $1 million to you?

Newer Prevost coaches offer completely different financial challenges, but it is all a matter of scale. Purchase a pre-owned Prevost at $600,000 or a high-end fiberglass coach at the same money and see where you are in a few years...and the huge differences in the value of its use.

So, while interest rates are low, inflation likely to increase at some point, Prevost valuation v. the depreciation of newer fiberglass coaches, now is the time to make the decision to purchase a quality pre-owned Prevost conversion. Check out the other articles on this site about buying a pre-owned coach, view the coaches for sale page on the site (the largest on the internet).

And enjoy the ride.