Why Do RVs Depreciate So Fast? (and which hold value best)


depreciate fast lg

RVs cost a lot of money, and while we know we’ll save more buying a used one, there’s nothing like a brand new RV. But you’ve probably wondered why do RVs depreciate so fast?

Here’s what I know, seeing as my wife and I own one:

RVs depreciate faster than other vehicles due to the complexity of being both a vehicle and a living space with more complicated systems and equipment. However, certain types of RVs depreciate faster than others.

It’s a known fact that most vehicles lose about 20% of their value the minute you drive them off the lot.

Unfair! I know. But that’s the reality. RVs are not immune to this rapid loss in value. This is the theme we’ll be exploring in this article.

We’d also check out if they’re a good investment, whether to buy a new or used rig and related issues around getting great value out of them.

Let’s dive right in…

How much do RVs depreciate per year?

On average, RVs depreciate by 20% in the first year and 5% each subsequent year. By the 5th year, an average RV would have depreciated by 40%. But at that point, the depreciation slows down.

Because depreciation is an estimate, the rate is affected by many factors. These include the expected life, upgrades, if any, and the brand. After all, RVs are not created equal. There are different types and brands.

You’ll find slightly different rates and figures on many sites. This is the way it should be because we are dealing with estimates.

Let’s look at the depreciation rates for some types of RVs.

 Type of RV  3 Years  5 Years  10 Years
 Travel Trailers  40% lost  55% lost  74% lost
 Fifth Wheels  38% lost  52% lost  71% lost
 Class A RVs  43% lost  66% lost  75% lost
 Class B RVs  33% lost  49% lost  62% lost
 Class C RVs  26% lost  49% lost  61% lost
 Pop-up Campers  38% lost  75% lost  88% lost

(source)

Vs, campers, trailers, motorhomes, fifth wheels. What does it all mean? If you’re brand new to RV life, it can be confusing!.

Luckily, in a recent article, I looked at the differences between an RV and a motorhome. What really surprised me was how well one holds up over time compared to the other.

Just click the link to read it on my site.

Do RVs depreciate faster than cars?

RVs do depreciate faster than cars, as RVs are luxury assets that a substantially smaller number of people are looking to purchase. But travel trailers and pop-up campers depreciate the fastest of all RV types. And certain brands hold their value better than others.

It’s vital to note that there are exceptions.

There are brands like Airstreams that do not depreciate faster than cars. There have been cases where some used ones sold at a price higher than the one the original owner paid for them!

What’s depreciation?

It’s an accounting term, an estimate of the reduction in the value of an asset over time. It’s caused by wear and tear. In actual terms, it’s the value you get when you buy an asset and what you get when you trade it in or sell it.

But why do RVs depreciate faster than cars?

It is easier to trade in a car than an RV. RVs are “exotic”, most of us get cars, but RVs are a different ballgame. There’s a bit of a learning curve in owning them. And, a lot of RVs are prone to damage by water. This affects their residual value.

It’s not wrong to say there’s an RV subculture, and the folks in it are less than 10 million, while car owners are about 280 million.

So, it’s a lot easier to sell a used car.

Cars depreciate at an average of 20% each year, while RVs depreciate at an average of 25- 30% each year.

NADA suggests that an average RV loses 20-30% of its value once it’s driven off the lot.

Of course, it depends on the model of the RV. The higher the quality of the model, the lower the rate at which it depreciates. But, on the whole, the IRS allows a 20% rate of depreciation for RVs.

So, you’re thinking of buying an RV to live in full time?

Check out a recent article of mine where I shared all you need to know to get the right type. After all, what you’ll need is totally different from weekend warriors and summer family travelers.

Just click the link to read it on my site.

Are RVs a good investment?

RVs should not be seen as an investment from a financial perspective as their value will only decrease. Investments are made in things that increase in value. The primary reason to buy an RV is for fun and travel.

So, let’s quickly get something out of the way:

If you’re looking at renting or buying a rig compared to putting money in a high-growth stock or real estate, then it’s a no-brainer that the former might not be a great investment. You don’t invest in a rig to make money.

And, you may not be able to sell it for much later.

We’ll still touch on the financial implication, but owning an RV is more of an “investment” in awesome memories with your loved ones, in a lifestyle, in your mental health, in general, an investment in a richer experience.

Joy, fun, bonding, relaxation…are some of the real returns on your investment, and that’s worthwhile.

What of the financial implication?

According to a survey by camperreport.com, as soon as you drive off the lot after buying a brand new RV, it’s already lost 21% of its value.

Axleaddict.com noted that it depreciates at 30% once you drive it off the lot. 3 years later, some brands would have lost 25% of their value!

If you’re not using your rig a lot or if you live in an area where you can’t park it on your premises, it may be setting you back about $100 for storage, it guzzles gas, and of course, there’s repairs and maintenance. All that adds up.

If you can afford it and you’re more interested in having richer experiences, I’d say go for it.

But, financially speaking, it may not be a great investment.

Of course, as I hinted at the beginning of this section, whether RVs are a good investment depends on your knowledge because there are strategies to make it worthwhile from a financial standpoint.

Say you’re considering Class B RVs.

Are they worth it? In a recent article, I explained they are worth it if you don’t intend to live full time in them. They’re okay for one or two people and are easy to maneuver because of their small size. But there’s 1 factor that makes them a no-go for me.

Just click the link to read it on my site.

What is the average lifespan of an RV?

When properly maintained, the average lifespan of an RV is 10-20 years or up to 200,000 miles. As with other vehicles, how long they last are a function of the model purchased, the frequency of use, and the consistency of care they are given.

We can only talk of an average lifespan because there are different models, and different owners would even use the same models differently.

Some models last for decades.

But, 10 years is a more realistic time frame. After that, the fraction of rigs that are still in top condition drops significantly. At this point, you might want to trade it in for a newer model or sell it in the open market.

The key is to ensure your RV is always clean and properly maintained because if it’s not, it may not last, and you might not get much money when it’s time to sell it…that’s if you’re able to sell it.

It’s good to note that the IRS allows RVs to be depreciated over 5 years if they are being used as business assets. In other words, at an average rate of 20% per year.

So we know trailers depreciate faster than motorhomes.

But does that mean a motorhome is better for everyone? Check out the pros and cons of both in a recent article of mine where I shared everything you need to know about how to decide between the 2.

Just click the link to read it on my site.

Should I buy a new or used RV?

A late-model used RV between 4,000 and 10,000 miles will be a much better financial decision than buying a brand new RV. Used RVs have also typically had all the warranty issues rectified. But some brands are better purchased new.

Each option has its pros and cons.

Ultimately, it depends on the individual. The most important factor is your budget. If you can afford to finance a brand new rig, why not. It’s brand new.

Especially if you’re a tad finicky about using what’s been pre-owned by others.

You’d get one with the latest features, and you’re sure everything is in perfect working condition. And, it comes with a warranty.

About the only snag is that as soon as you drive it off the lot, it’s lost about 20 – 30% of its value! Steep. I know. But, it’s a vehicle, not a home.

Naturally, it depreciates like other vehicles.

This leads us to the option of buying a used one. This is what most savvy RVers advise. First off, it’s a lot cheaper. You’ll be saving money which could potentially run into thousands.

And the rig is not going to depreciate as you drive off from the previous owner. It’s also possible that the previous owner has added some upgrades and that it’s still in relatively good condition.

The problem to be wary of when buying a used RV is that you could end up paying for a lemon. Thor is kind of notorious on RV forums for being poorly built and not holding up well.

And, there may not be a warranty, as factory RV warranties don’t usually transfer from one owner to the next.

So with any used RV (or vehicle of any kind), take it to a mechanic for a pre-purchase inspection. In some cases, a serious seller may even offer to pay the cost of the inspection.

But generally, that would only happen when supply is high (on used RVs) and demand is low.

On the whole, buying used may be a great deal. But, try not to buy one that’s more than 10 years old, as some RV resorts do not allow rigs above that age.

And then again, whether you buy used or new also factors on how you plan to use it.

After all, weekend warriors need very different things out of their RVs than full-timers. If you’re thinking about full-time RVing, check out this recent article of mine, where I looked at 25 important things to note.

Just click the link to read it on my site.

Conclusion

Phew. That was a lot of interesting info around RV depreciation.

We explored how much they depreciate each year, whether they depreciate faster than cars, and if they are a good investment.

As an investment in awesome memories with loved ones, sure. But, from a financial perspective, not so much. Like other vehicles, they depreciate fast!

We also looked at their average lifespan and concluded with which one is better: buy a new or used RV? It’s almost always better to buy a used one.

Jeff Campbell

Jeff Campbell travels on and off with his 3 daughters in a Newmar Baystar Class A Motorhome. He writes extensively on both RVs, campgrounds, parenting on the road tips, remote learning & schooling, and much more!

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