How to Finance A Caravan Or Motorhome On Almost Any Budget
We’ve all had that dream of selling up, ditching our lives in the city and buying a caravan to travel around the countryside. From the Welsh Valleys to the South of France. When you have a touring caravan or motorhome, anything is possible. And surveys by the National Caravan Council (NCC) have shown that there was £1.6 billion spent on caravan holidays.
But do you really have to sell up to be able to afford your dream of becoming a full-time four-wheeled nomad?
No. In fact, motorhome financing has never been easier. It is now perfectly possible for you to get the cash to own a motorhome and keep your current house or apartment.
Even better, you can finance them over 10 years (dependent on the age of the vehicle) in the confidence that they will hold their value extremely well.
Here is how to finance a leisure vehicle;
The Trouble With Banks
After the financial crash of 2009, banks all across the world stopped lending money as easily. It became extremely difficult for the ordinary person on the street to get the loans they needed, even when they had no history of bad credit.
Now in the UK, with the current uncertainty over Brexit, which now does not look like it will be resolved until the end of October, there is another financial slowdown.
Instead, try lending from a specialist caravan company like Auto Finance Online. Check out our process here.
What’s Your Budget?
Before you decide to make an application for a loan you will need to decide on your budget. There are obviously many different types of motorhome caravans and you need to consider which ones you can afford and will best suit your needs.
Used or New?
If you have a tight budget you might be able to get more for your money by getting a used motorhome. But it is important to remember to do some proper checks first, such as making sure the motorhome is road-worthy and investigating whether it will need any work done on it in the near future.
If a used caravan might need a lot of serious work doing to it then you need to cost up how much that would cost versus buying a new caravan.
If you are buying a new caravan or motorhome you want to be sure it is going to last. This will, of course, depend on the number of miles you are planning on putting in. If you are going travelling around Europe then it will probably need quite a big tank of petrol so you don’t have to keep filling up and will need to be quite sturdy.
The interior should also include the latest mod cons and be comfortable as it will be your home for days or weeks at a time and the travel times between places might be longer than in the U.K.
Buy from a dealer or private seller?
Good question! There are pros and cons to both, and which way you decide to lean will dictate the type of finance required.
When buying from a private seller you may make initial savings on the cost of the vehicle. However, unless you’re able to find a specialist lender (like AFO) who will pay direct to the private seller, you will be required to apply for a more expensive personal loan.
A dealer on the other hand will secure the finance against your chosen vehicle, making your monthly repayments lower than if you went private.
When buying from a reputable dealer, although the sales price of the motorhome or caravan may be slightly higher, you will also receive the piece of mind of a strong, legally binding warranty and aftersales service commitment should anything fail you. You get none of these benefits when buying from a private dealer.
Length of the loan
You will need to decide how long you wish to take the loan out for.
The shorter the ‘pay back’ terms, the less the total cost of credit but the higher your monthly payments will be.
Or visa versa, the longer the ‘pay back’ terms the less the monthly repayments will be, but the higher the total cost of credit.
Lenders typically offer pay back terms from two to ten years. You have to choose what best suits your current financial situation.
The age of the vehicle matters
The age of the motorhome of caravan you wish to purchase will dictate the length of the finance agreement available to you. Bear this in mind.
Do you need to pay a deposit?
In short, no. But the higher the deposit you can make the lower your monthly repayments and cost of credit.
We all love adding optional extras to our recreational vehicles. It’s what makes them unique.
If these are fitted as part of the sales deal they will be included in your finance package, allowing you to spread the cost over your monthly repayments.
It is important to remember that you need insurance for your motorhome, though it isn’t technically compulsory for a touring caravan. Just as you would with a car, if your caravan hits another car you are going to be expected to fork out.
But accidents are just one part of the insurance policy. You are going to want to be covered for fires (even more so if you have a cooker on board), theft, vandalism or freak weather accidents.
Most of the time if you have a separate caravan that is towed by a car, your car insurance will cover you but it will only act as third party insurance. In other words, it will pay out to those parties who have been hit by your caravan in an accident situation but will not cover damage from any other situation.
If you’re travelling to Europe you are going to need additional cover for difficulties you could get into abroad.
The premium you pay could also be higher unless you invest in some security measures for your caravan. These could include a wheel clamp, an alarm and perhaps even some padlocks for your doors.
Plan your route across Europe or the World
Now that you have decided upon your caravan and have managed to find a way to finance it is time to begin planning the caravaning trip across Europe that you have always dreamed of.
Be sure to research the law in each country you are going to visit to ensure you know where you can legally park your motorhome.
Also, be sure to cost up all of the expenses that you will need to ensure you don’t run into trouble with your finances. This includes the essentials you will need such as petrol and learning how to obtain this whilst abroad.
If you are planning a trip further abroad and into the Middle East or even Russia they do remember that some countries have stricter rules regarding visitors bringing vehicles into the country that could cause you some trouble at the border.
How to Finance a Caravan? Do Your Research
This is the best piece of advice that we can offer to those looking to start a new life with a caravan or motorhome. Without research, you can end up buying a vehicle that you are unsuited for and which does not suit your requirements or, worse, one that is too expensive.
A loan from a specialist caravan loan company is a dead easy way of financing a recreational vehicle. It can ensure that you do not have to sell valuable assets like your house to make your dream of owning a motorhome or caravan a reality.
If you are thinking about how to finance a caravan be sure to check out our budget calculator and apply for a loan by clicking here.
Lending £15,000 over 7 years with a representative APR of 6.9%, an annual interest rate of 6.9% (Fixed), would cost £217.57 per month, with a total cost of credit of £3,275.88 and a total amount payable of £18,275.88.
Rates may differ as they are dependent on individual circumstances. Subject to status.