Our Guide to Motorhome and Caravan Financing Options

The motorhome and caravan lifestyle has surged in popularity across the UK in the last few years. Buying one of these impressive leisure vehicles does mean quite a financial commitment, and so understanding the available financing methods is really important for anyone who’s thinking of making a purchase and is looking for a convenient and manageable method of paying. In this edition of our blog, we’ll focus on financing – specifically the type that’s available at Lowdhams.

Given that the initial cost of a motorhome or caravan is going to be quite a substantial amount of money for most people, many opt to finance the purchase rather than pay the whole lot in one large chunk up front. Going down the finance route enables the purchaser to break down and spread the cost of the vehicle into smaller payments that are month-to-month manageable. Doing this means that owning a motorhome or caravan is within relatively easy reach without savings being depleted – and financing might also allow you to select that higher-spec model you had your eye on, which otherwise would have been too expensive.

It’s possible, with Black Horse Finance through Lowdhams, to secure HP to finance the purchase of your leisure vehicle. HP, aka Hire Purchase, is a popular financing option that involves paying an initial deposit followed by monthly instalments until the full cost of the motorhome or caravan (plus interest) is paid off. They will work with you to ensure affordable payments and flexible deposits, and Black Horse Finance can run for up to 10 years (with the maximum term depending on the age of the vehicle you buy). Our website features a really handy finance calculator which can offer an overview of your potential HP outgoings. If you have savings, choosing finance enables you to keep them intact, so you have a financial cushion for other personal and unexpected expenses, future travel plans or any investments.

• Advantages: After an initial deposit, you’ll make manageable monthly payments, HP agreements often have competitive interest rates. Also, as the motorhome is secured as collateral against the loan, there’s sometimes no need for a perfect credit score. Successfully making regular payments on a finance plan can positively impact your score. For anyone looking to improve their credit history, one of the side benefits of financing a motorhome is that your consistent payments will contribute to a better credit profile over time.
• Think about: Unlike with a personal loan, the motorhome or caravan itself is used as collateral during the term of the HP, which means you won’t own it outright until all of your payment schedule has been completed. Once all the payments are made, the agreement ends, and the vehicle is yours. Missing payments on HP can be a big problem and could result in repossession.

Though HP is very straightforward, convenient and manageable, there are other financing routes available. Here, we’ve outlined the most common.

• Personal loans: Quite a straightforward option, if you have a strong credit history. Borrow the full or partial cost of the vehicle from your bank (or lender) and pay it back over an agreed term. Personal loans are usually unsecured.
• PCP: Personal Contract Purchase is broadly similarly to HP but you make lower monthly payments for a set period followed by an optional ‘balloon payment’ at the end of the term if you want to own the motorhome or caravan. Alternatively, you can return it to the lender or exchange it for a new model.
• Lease: This type of finance works in a similar way to PCP but offers longer repayment terms and requires a larger final payment. Lease purchase is for those who are certain they want to keep the vehicle long-term but prefer to initially have reduced monthly payments.
• Savings / part exchange: Some buyers choose to offset the initial outlay for a new motorhome or caravan by using their current vehicle in part-exchange or using some of their savings to cover part of the expense.

1. Interest rates and terms: Before deciding on finance, it’s important to understand the interest rates and terms. The current interest rate of Black Horse finance is 7.9% APR.
2. Long-term affordability: It’s very important to work out your total cost over the term of the finance. Extending the loan period might reduce your monthly costs but it will also increase the amount of interest you pay in the long run.
3. Insurance: Motorhomes and caravans usually require comprehensive insurance, which can be a significant additional cost. Make sure you factor in expenses like this when you’re getting your budget together to buy.

Choosing to finance the purchase of your motorhome at Lowdhams might depend on a variety of factors (including your budget, travel plans and financial outlook). It’s important to note that Lowdhams is a broker and not a lender, and that your finance will be organised by and with Black Horse. Learn more about the motorhome financing options available at Lowdhams – and it’ll not be long before you’re out on the road in the vehicle of your dreams!