Looking for motorhome finance

Motorhomes are not only perennially popular but there is some evidence that they’re becoming even more so due to increasing “staycation” tendencies.

However, whether they are new or pre-used, they typically constitute a fairly large expenditure for the typical individual, couple or family. As such, motorhome finance is often high on the list of things to be investigated when people are considering such a purchase.

Let’s look at some of the options you might be facing if you’re considering getting into motorhome ownership.

Hire purchase

This is one of the most familiar forms of funding in the UK.

It is been around for a long time and that is a testament to its flexibility and utility. Although it may need no introduction, let’s have a quick look at some of its key operating characteristics:

• you will identify a motorhome as your provisional target;

• keep in mind that you will typically need to find a contribution from your own financial resources towards its cost. That figure may vary slightly but 10% is a good working guideline;

• a potential provider of hire purchase funding will consider the valuation placed on the motorhome by the seller. Looking at things such as its age and mileage, they will check the amount you are considering paying for it to ensure that it is appropriate based upon industry norms for comparable vehicles;

• at the same time, they will perform an assessment of your overall financial position. That is something they are obliged to do by their professional duty of care and to some extent legislation, in order to try and be sure that you are not over-committing yourself and that you will be able to comfortably afford the monthly repayments of the sum you are borrowing;

• assuming all is well, the provider of funds will purchase the vehicle in their name. You will be allowed to use it as the official “registered keeper”;

• you will then repay the sum you have borrowed, plus interest and other charges, over an agreed period of time;

• once you have made your last repayment, ownership of the vehicle is transferred to you;

• while the agreement is open and you are making your repayments, it would be an offence to sell the vehicle to a third party.

The HP motorhome finance application process is typically easy and progressed rapidly.

Bank loans

You could, of course, apply for a bank loan from your existing provider of banking services or indeed any related alternative provider.

In many respects, the process will be similar to that outlined above except that the bank will be unlikely to purchase the vehicle for you.

Although there is always a risk in generalization, bank loans for what the banks define as “luxury items” may be harder to come by than they once were. The bank’s lending limits and authorization criteria may also be relatively strict. In addition, you may be able to reduce the amount of loan if you decide to buy a small motorhome, which may cost less than larger ones. Well, you might want to analyze your needs and look at other factors such as family members. If you don’t have a large family, you might want to think about it.

Your own cash

If you have cash reserves or indeed are about to inherit money as a result of pensions or inheritance, it may be tempting to use that to purchase your motorhome outright.

That might be the most cost-effective solution, given that you have no third-party interest or related charges to pay. However, do keep in mind that once you have put your money into a motorhome, it may be difficult to get it back very quickly.

Cash in the bank can be extremely comforting in the sense of knowing that you have reserves to deal with any unforeseen problems or opportunities that come along.

So, it might be worth thinking carefully before deciding to use the bulk of your cash reserves as motorhome finance.