However, the price tag of a motorhome can be a significant barrier to entry. That’s where motorhome finance comes in. In this guide, we’ll take a look at everything you need to know about financing a motorhome.
Types Of Motorhome Finance
Before we dive into the details, it’s important to understand the different types of motorhome finance that are available. The three most common types are hire purchase, personal contract purchase (PCP), and personal loans.
Hire Purchase: Hire purchase is a type of financing where you pay a deposit, followed by fixed monthly payments, over a period of time. Once you’ve made all the payments, you own the motorhome outright.
Personal Contract Purchase (PCP): PCP finance is similar to hire purchase, but with a few key differences. With PCP, you have the option to make a balloon payment at the end of the agreement to own the motorhome outright, or you can return the motorhome to the finance company.
Personal Loans: Personal loans are a type of unsecured loan that can be used to finance a motorhome. With a personal loan, you borrow a lump sum of money, which you then pay back in fixed monthly instalments over a period of time.
How To Choose The Right Motorhome Finance Option
Choosing the right motorhome finance option is essential to ensure you get the best deal possible. Here are some factors to consider:
Interest Rates: Interest rates can vary significantly between different types of motorhome finance. Be sure to compare interest rates from different lenders to find the best deal.
Deposit: The size of your deposit can affect your monthly payments and the interest rate you’ll be offered. A larger deposit can often lead to a lower interest rate.
Repayment Term: The length of your repayment term can affect your monthly payments. A longer repayment term can lead to lower monthly payments but may result in paying more interest over the life of the loan.
Balloon Payment: If you’re considering PCP finance, be sure to factor in the cost of the balloon payment at the end of the agreement. This payment can be significant, so it’s essential to plan ahead.
Secured vs. Unsecured Loans: Secured loans are backed by collateral, such as the motorhome itself. Conversely, unsecured loans do not require collateral as a security. Secured loans generally come with lower interest rates, but if you default on the loan, you risk losing your motorhome.
Tips For Getting The Best Motorhome Finance Deal
Now that you understand the different types of motorhome finance and how to choose the right option, here are some tips for getting the best deal:
Shop Around: Don’t settle for the first motorhome finance offer you receive. Shop around to find the best interest rates and repayment terms.
Negotiate: Once you’ve found a finance offer you’re happy with, don’t be afraid to negotiate for a better deal. Lenders may be willing to lower the interest rate or waive fees to secure your business.
Check Your Credit Score: Your credit score can affect the interest rate you’re offered. Be sure to check your credit score before applying for motorhome finance, and take steps to improve it if necessary.
Consider a Guarantor Loan: If you have a low credit score or don’t meet the lender’s eligibility requirements, a guarantor loan may be an option. With a guarantor loan, someone else (such as a family member) guarantees the loan, which can improve your chances of being approved.
Final Thoughts
Financing a motorhome can be an excellent way to realise your dream of owning one. However, it’s important to do your research and choose the right finance option for your needs and budget. By considering factors such as interest rates, deposits, repayment terms, and balloon payments, you can make an informed decision and get the best deal possible.
