What is the Best Way to Finance a Motorhome

When the open road is calling, a motorhome seems like the perfect answer. But the question of how to finance a motorhome can feel like a bit of a roadblock. Finding the right financial solution is just as important as choosing your perfect motorhome, and this guide will explore the various options available to finance your home on wheels. 

And, luckily for you, here at Auto Finance, we make motorhome finance easy. We’ll liaise directly with the UK’s top dealers to secure your dream motorhome at the best possible price. 

Ready to find out how to finance a motorhome? Let’s dive into it…

How to finance a motorhome – 7 ways to consider 

Financing a motorhome can be a smart choice depending on your financial situation and long-term adventure plans. Instead of waiting years to save up, motorhome financing gives you the joy of travelling now while spreading your cost over time. Figuring out how to finance a motorhome doesn’t have to be stressful either – whether you’re looking at bank loans, hire purchase, or dipping into your savings, there are plenty of ways to make it work. 

Let’s have a look at them in a bit more detail. 

1. Bank or personal loan

Banks and personal lenders can offer loans based on your credit rating, income, and repayment ability. Bank loans will often have lower interest rates, while personal loans may be easier to secure for smaller amounts. Consider Annual Percentage Rates (APRs) and repayment terms to find the best deal. 

Rates and terms are typically fixed interest and repayable over 1-7 years, and are a good option for buyers who have a good credit score and want quick approval for motorhome loans. 

2. Hire purchase

Hire purchase is a straightforward option where you pay a deposit and monthly instalments until the loan is paid off. At the end of the agreement, the ownership is transferred over to you. This is a great way to budget for your dream motorhome, and ideal if you prefer fixed repayments without big balloon payments. 

You’ll be expected to pay a deposit of 10 %+, with fixed monthly payments over 1-5 years. This is a great option for those who want to own a motorhome outright and have predictable repayments. 

3. Mortgage redraw

If you already have an existing home loan, a redraw facility lets you borrow against what you’ve already paid off. This method can offer lower interest rates compared to personal loans, but it will extend your mortgage repayment period. We’d recommend speaking to your mortgage lender to understand the long-term costs. This can be a good solution for homeowners who are looking for a cost-effective way to pay off a motorhome. 

4. Savings 

Perhaps the most cost-effective way to buy a motorhome is to use any savings that you may have. This way, you’ll avoid interest and monthly repayments. However, we don’t recommend emptying your savings entirely, as unexpected expenses can crop up. If you do happen to have enough cash, consider putting down a large deposit instead of paying for it outright. 

5. Equity release

Equity release allows homeowners to borrow against the value of their property. This option, such as a lifetime mortgage, means you repay the loan when you sell the property or after passing away. While it’s a solid option for retirees, it reduces the inheritance value of your home. The rates and terms are based on your property’s value, and interest will accumulate over time. 

6. Personal contract purchase

Personal Contract Purchase (PCP) works a bit differently from the other loans, as you’re not paying for the full motorhome value. Instead, payments are split into three parts: deposit, loan repayments, and a final balloon payment. You can upgrade, return, or pay off the balloon amount at the end of the agreement. 

Some key features include:

• Deposit – Pay a deposit of around 10%
• Loan – Fixed monthly payments based on the predicted depreciation over the loan term
• Balloon payment – Pay the final amount or upgrade to a new model
• Rates and terms – APRs range from 5-7% with 2-4 year terms
• Best for motorhome enthusiasts looking for flexibility or considering upgrading later 

7. Broker/dealer finance 

Motorhome dealers and brokers can arrange financing through trusted lenders. Dealer finance is often convenient as the process is handled for you, and brokers can access competitive rates. At Auto Finance, we do all the hard work for you, liaising directly with the UK’s top dealers to secure your dream motorhome at the best possible price. 

Check out our budget calculator, our easy tool that lets you see how much money you can borrow and then pay back over the number of years that you require the vehicle.  

Things to consider when choosing the best way to finance a motorhome 

When you’ve decided that you want to finance a motorhome, there are several key factors to weigh up. You’ll need to consider whether you want to buy new or used, as this can affect costs and loan options. Consider the following questions:

Do you want to buy a new or used motorhome? – New motorhomes cost more but come with warranties and zero mileage. Used motorhomes are cheaper but may require repairs or compromise on customisation. Whichever option you choose, you should carefully consider all available motorhomes for sale that suit your budget. 

What is your credit score? – Your credit score will directly impact the loan options available and the interest rates you’ll be offered. If your credit score is low, consider improving it before applying for motorhome finance with bad credit options. Higher credit scores will unlock better deals and save you money on interest. 

Have you considered maintenance and running costs? – Beyond just the initial purchase, owning a motorhome includes other expenses such as fuel, insurance, and general upkeep. Regular maintenance can prevent expensive repairs down the line, so it is definitely worth keeping on top of repairs. Factoring in these expenses will help you create a realistic long-term budget.  

How to finance a used motorhome 

Many motorhome dealers offer finance for used motorhomes as well as new ones. Typically, the process shares familiarities with financing a new one, including the methods we’ve mentioned above. However, one thing you should be aware of when financing a used motorhome is depreciation. 

Motorhome depreciation refers to the difference in the value of your vehicle from when you bought it to when you sold it. So, if you’re wanting to finance a used motorhome, this could be a financial advantage. However, older models may depreciate more slowly, resulting in higher maintenance costs. 

Your next adventure begins with Auto Finance

Hopefully, this blog has taught you all you need to know about how to finance a used or motorhome or a brand new one. Ultimately, the best way to finance your motorhome will be one that aligns with your financial circumstances and long-term goals. 

Remember, Auto Finance is the place to go for securing vehicle finance. Our quick and easy process allows you to get a quote, choose a vehicle, and drive off onto your next adventure. Make sure to contact us for more information.  

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