The Ultimate Guide to Motorhome Financing

Motorhomes are a massive investment that much is true, with even the most basic of models costing around £20,000 it can be a hefty upfront cost for an item.

As the market continues to grow and boom the prices for brand new motorhomes are becoming more and more competitive making them less expensive than previous, however as previously mentioned it is still a large amount of money to cough up.

In the car market most cars these days are bought on some sort of finance deal to spread the cost over a longer period of time, this gives the car owner some breathing room if they do not have the full balance at the time and it gives the dealer the chance to make some extra money with interest charges. When we look at the motorhome market this isn’t the case, or at least anywhere near as common.

Motorhomes and caravans are looked at as a luxury and therefore many of the owners normally have a little extra cash to splash on such a purchase, but that doesn’t make it an exclusive club, after all, everyone should have a slice of the pie.

The best part about owning a motorhome is that they hold their value incredibly well, especially when you compare this to cars which lose their value as soon as it has been driven off the forecourt, therefore you can expect to make a small loss on your investment when the time comes to sell it on, but it won’t be anywhere near as much as it would be if you were to sell a car.

There are two main options for financing motorhomes with both offering various pros and cons to them which we will explain.

Hire purchase (HP)

This option has been around for more than a century now and is the most common way you will see people finance a motorhome, instead of having to pay the full cost in one go you can instead split the payments over a set period of time paying a monthly instalment to the hire purchase company.

Once the set period of time has elapsed and the motorhome has been paid in full it will become yours and you will be the owner of the motorhome, the risk here is that whilst you are in this repayment period whether it be months or even years, the motorhome will be owned by the hire purchase company.

This can raise problems if payment isn’t made and you fail to meet the contracted agreements set out for whatever reason, problems include termination of the entire agreement and the motorhome being repossessed by the hire purchase company. There can also be other financial repercussions but that will specifically depend on the type of agreement in place.

Finance lease

This option is an interesting item if you want to have all the benefits of using a motorhome without actually owning it, sort of like a rental agreement for a motorhome which sounds a bit mental.

You will get exclusive access of the motorhome without owning it and can use it and go on holiday in it as you please. The way it works is that you will pay a monthly fee to a leasing company over an agreed period of time, this price is worked out by the value of the motorhome over time meaning it could start to get cheaper as the months wear on.

Once the time has elapsed the leasing company will take the motorhome back and you have the option to go and get a newer, nicer motorhome for the same price. Alternatively if you like the motorhome you have been using you may have the option to take out a second term at a reduced price reflected in the value.

It is worth noting that with this type of finance you do not own the vehicle and there will be no option to buy at the end of the term.

Personal Loan

This one is fairly self-explanatory; you take out a loan for X amount of money over X number of months for X APR. Once it has been taken out you will be given a lump sum of money to go and purchase the vehicle you desire paying the seller in full.

You then will pay the loan company back in monthly instalments until the loan term has finished.

You have a lot of freedom with this option to shop around and try to find the best deal for you instead of having a finite number of options with Finance Leasing and Hire purchase (HP).This one is fairly self-explanatory; you take out a loan for X amount of money over X number of months for X APR. Once it has been taken out you will be given a lump sum of money to go and purchase the vehicle you desire paying the seller in full.

You then will pay the loan company back in monthly instalments until the loan term has finished.

You have a lot of freedom with this option to shop around and try to find the best deal for you instead of having a finite number of options with Finance Leasing and Hire purchase (HP).

Conclusion

You have many options to purchase a motorhome of your dreams and holiday around the country to your greatest desires and aren’t limited to having to pay upfront.

It is worth noting that all of these options come with hefty repercussions if the payments are not completed and you must be wary of this, if you have any questions or queries about if a finance agreement is a good option for you we recommend speaking to a financial advisor.