Purchasing an RV has the potential to be one of the biggest financial decisions you’ll ever make. While price tags on these vehicles have a large variance, they can easily cost as much as (or even more than) your home! With that in mind, it’s important to understand all the ins and outs of this investment as well as have a firm grasp on what you’re getting into. Knowing what the RV depreciation on your vehicle is going to be is one important step in the right direction.
Understanding the Numbers
For those who are unfamiliar with what RV depreciation is and how it works, allow me to give you a small explanation.
A vehicle’s depreciation is the percentage of value that it loses over time. For example, if you purchase a brand new $100,000 recreational vehicle and the depreciation in the first year is 20%, your vehicle will lose $20,000 worth of value within the first twelve months that you own it. This means it will then only be worth $80,000.
Understanding this is important because it’s vital to know that these vehicles are going to lose their value and, in some cases, especially when buying new, they’re going to lose their value rapidly. I believe it is pivotal for you to understand the long term financial outlook of an investment in a recreational vehicle before you ever drive one off the lot.
Buying a Recreational Vehicle Brand New
While some may consider this common knowledge, many buyers have no idea how dramatically a brand new vehicle loses its value almost immediately after being driven off the lot. As soon as a recreational vehicle goes from being considered “new” to being “used,” it will depreciate roughly 20%. This is true across the board, with only small differences between different types of vehicles.
Because of this, buying an RV brand new is seldom a good financial decision. If you purchase a fifth wheel for $100,000 and it’s worth $80,000 a week later, do you really feel like you’ve gotten your $20,000 worth of fun out of it over those seven days? Probably not.
Of course, when most buyers purchase a brand new vehicle, they aren’t doing so because it’s the most financially sound decision they could make. There are other perks to buying new that may not make financial sense, but are still worth it to certain buyers.
These perks include having the best, most up-to-date features on the market, being able to custom-design an RV to make sure you’re getting exactly what you want and the peace of mind knowing that no one before you has messed up this particular one. It’s up to you to determine whether these benefits outweigh the financial downsides.
The Sweet Spot of RV Depreciation
When we’re talking about RV depreciation, the sweet spot is when a vehicle is going to depreciate the slowest, meaning that it retains more of its value. In this case, the sweet spot is going to be after the first year, but before the vehicle hits its second steep drop.
After the first year, when an RV loses that massive 20% of its value, the depreciation slows down significantly. For the next few years, your RV will only lose about 2-5% of its value every year.
For those interested in buying used, buying a year-old RV and keeping it for a few years before trading it in for a newer model would likely offer the best financial option. Of course, as with anything, there are other downsides to this. A used RV is likely going to require more maintenance, and you could run into trouble with undisclosed problems if you don’t shop with a reputable, honest dealership.
Still, when it comes to RV depreciation, finding the sweet spot can be massively beneficial.
For Class A RVs, this sweet spot is 1-9 years, as they hit their second steep depreciation at the ten-year mark. For Class C RVs, this sweet spot is 1-4 years, as they hit their second steep depreciation at the five-year mark. However, because a five-year-old RVs is still relatively “young,” you could argue that the real sweet spot is 6+ years.
When it comes to fifth wheels and travel trailers, they actually tend to hit a second and a third depreciation, once at five years and once at fifteen years. So, the sweet spot could be considered either 1-4 years, or 6-14 years.
Another Steep Drop, and Finally Hitting Rock Bottom
After hitting the ten-year mark, the depreciation on a Class A RVs will dramatically decline once more. There are several reasons this could be. Two of those reasons include the fact that older vehicles are harder to maintain because parts can be more difficult to find, and most people find the idea of a car in the double digits to be worth less. While one may be more valid than the other, the result is still the same – once your Class A RVs is ten years old, it loses value again in one quick drop.
For Class C RVs, this second depreciation hits the fastest, happening early at the five-year mark. A possible upside to this depreciation is that when buying a used RV, you could choose to look for Class C RVs older than five years old and get a pretty great deal on them.
For fifth wheels and travel trailers, this quick drop generally happens twice – first at the five-year mark and again at the fifteen-year mark. They will see the same quick fall both times, depreciating in one fell swoop and suddenly losing a great deal of their value. Although fifth wheels have two of these dramatic depreciations – not including their first year – they also tend to depreciate overall at a slower rate than RVs, so the numbers tend to even themselves out.
In good news, this drop won’t be nearly as dramatic as what was lost after the first year of an RV’s life, being closer to 10% depreciation rather than a 20% loss. Additionally, this won’t continue happening every year. The depreciation should even out again and lose at a more steady pace until the recreational vehicle reaches its rock bottom price.
A rock bottom price reflects a stagnant price that people will generally pay for much older recreational vehicles, as long as they are still able to run. For RVs, this price is usually reached around thirty years old and will hover around $2,000-$3,000. For travel trailers and fifth wheels, because they are less expensive to purchase than RVs this prices is usually reached an entire decade earlier at around twenty years old, and will typically hover around $3,000-$5,000.
Breaking Down the Numbers by RV Type
While the RV depreciation tends to follow a pretty similar path, there is some variance in the exact percentages. For your convenience, I’ve compiled a comparison of the specific year-by-year depreciation percentages for Class A RVs, Class C RVs, travel trailers and fifth wheels. Note that while travel trailers and fifth wheels are two different things, there is almost no difference at all in their depreciation, which is why they are being lumped together for this analytic breakdown. We’ve written a comprehensive article on the different RV types if you’re unfamiliar with them.
After the first year – As previously mentioned, the first year is going to show the most dramatic depreciation of any year. It’s also incredibly important to understand that this number does not necessarily reflect the value lost in the first year, but the value that is lost almost immediately. Once a brand new car is driven off the lot and can no longer be marketed as new, this depreciation will instantly set in.
For Class A RVs, this number is at about 20% depreciation. For Class C RVs, the number is closer to 21% depreciation. For fifth wheels and travel trailers, the number is also about 21% depreciation.
After the second year – For Class A RVs, about 22% total depreciation, or 2% down from the year before. For Class C RVs, about 22% total depreciation, or 1% down from the year before. For fifth wheels and travel trailers, there does not appear to be a significant depreciation in the second year, with the total depreciation remaining at about 21%.
After the third year – For Class A RVs, about 26.7% total depreciation, or 4.7% down from the year before. For Class C RVs, about 26.6% total depreciation, or 4.6% down from the year before. For fifth wheels and travel trailers, about 25% total depreciation, or 4% down from the year before.
After the fourth year – For Class A RVs, about 30.27% total depreciation, or 3.57% down from the year before. For Class C RVs, about 28.4% total depreciation, or 1.8% down from the year before. For fifth wheels and travel trailers, about 29% total depreciation, or 4% down from the year before.
After the fifth year – For Class A RVs, about 35.98% total depreciation, or 5.71% down from the year before.
The five-year mark is when the depreciation on Class C RVs as well as fifth wheels and travel trailers declines at a much more rapid pace again. Although it will not decrease as quickly as it did in that first year, this is when we will see a faster loss of value than we have seen in the last few years. Thankfully, after the drop from four to ten, five depreciation will even out once again. Class C RVs will not see another dramatic dip, though fifth wheels and travel trailers will see one more at the fifteen-year mark.
For Class C RVs, about 37.6% total depreciation, or 9.2% down from the year before. For fifth wheels and travel trailers, about 37% total depreciation, or 8% down from the year before.
After the sixth year – For Class A RVs, about 39.54% total depreciation, or 3.56% down from the year before. For Class C RVs, about 39.54% total depreciation, or 1.94% down from the year before. For fifth wheels and travel trailers, about 38% total depreciation, or 1% down from the year before.
After the seventh year – For Class A RVs, about 41.15% total depreciation, or 1.16% down from the year before. For Class C RVs, about 40% total depreciation, or 0.56% down from the year before. For fifth wheels and travel trailers, there does not appear to be a significant depreciation in the second year, with total depreciation remaining at about 38%.
After the eighth year – For Class A RVs, about 43.16% total depreciation, or 2.01% down from the year before. For Class C RVs, about 44% total depreciation, or 4% down from the year before. For fifth wheels and travel trailers, about 40% total depreciation, or 2% down from the year before.
After the ninth year – For Class A RVs, about 47.16% total depreciation, or 4% down from the year before. For Class C RVs, about 45% total depreciation, or 1% down from the year before. For fifth wheels and travel trailers, about 43% total depreciation, or 3% down from the year before.
After the tenth year – The ten year mark is when the depreciation on Class A RVs declines at a much more rapid pace again. Although it will not decrease as quickly as it did in that first year, this is when we will see a faster loss of value than we have seen in the last few years. Thankfully, after the drop from nine to ten, the depreciation will even out once again and should not see another dramatic dip down. For Class A RVs, you’re going to be looking at about 60% total depreciation, or 12.84% down from the year before.
For Class C RVs, about 51.69% total depreciation, or 6.69% down from the year before. For fifth wheels and travel trailers, about 45% total depreciation, or 2% down from the year before.
After the thirteenth year – For Class A RVs, about 69% total depreciation, or 9% down over the last three years. For Class C RVs, about 64% total depreciation, or 12.31% down over the last three years. For fifth wheels and travel trailers, about 60% total depreciation, or 15% down over the last three years.
After the fifteenth year – For Class A RVs, about 76% total depreciation, or 7% down over the last two years. For Class C RVs, about 69% total depreciation, or 5% down over the last two years. For fifth wheels and travel trailers, about 72% total depreciation, or 12% down over the last two years.
After the twentieth year – For Class A RVs, about 86% total depreciation, or 10% down over the last five years. For Class C RVs, about 83% total depreciation, or 14% down over the last five years.
The twenty year mark is when fifth wheels and travel trailers reach their rock bottom price. This price will generally range from $3,000-$5,000, and should remain the same as long as they are in working condition. Fifth wheels and travel trailers reach their rock bottom price before Class A and Class C RVs, because they are generally less expensive, so less care goes into maintaining them.
Thirty years and beyond – The thirty-year mark is when both Class A RVs and Class C RVs should reach their rock bottom price. For Class A RVs, this price will generally be about $2,000, and for Class C RVs, this price will likely be closer to $3,000. These prices should remain the same as long as the RVs can be driven.
Making the Best Choice for You and Your Family
If we are looking exclusively at the rate of RV depreciation, it makes the most financial sense to purchase a pre-owned recreational vehicle in its ideal sweet spot age that has seen gentle use from its previous owner. This will allow you to get the best price and the best possible bang for your buck versus buying something brand new or something significantly older.
However, many other factors go into choosing the recreational vehicle that makes the most sense for you, your family, and your lifestyle. Many people choose to take a bigger financial gamble to have features that are not available on older models, and there is nothing wrong with doing that if that’s what you want. Only you can look at all the information available to you and make a decision that reflects your best interest.
