Category: Motorhome Finance

Are you looking for motorhome finance? Well it is an important thing to check out the actual costs. Whilst interest rates have been at an all time low, it can still add up. Especially over long periods of time. Many motorhome loans are over ten year periods.

There is no such thing as guaranteed motorhome finance, although some people would have you believe that. So when taking out any finance find out who you are dealing with.

Motorhome Finance.

Also, anyone in the UK offering motorhome finance has to be on the FCA register and approved to do so. This is a way to ensure that people are treated fairly. Motorhomes are no small cash items far from it. Do your finance homework before you buy any motorhome.

This could well become the largest amount that you spend after buying your house. Therefore, it is important to check Interests charges and any arrangement fees are in order.

Whether you want to buy a new or second-hand motorhome, there is no way around the fact that it is likely to set you back a fair sum of money.

So, the purchase of a motorhome is likely to be one of those larger items for which you may need to borrow money. With that in mind, let’s look at some of the most frequently asked questions (FAQs) about motorhome finance.

What is motorhome finance?

Motorhome finance is a type of loan or financing option designed specifically for purchasing a motorhome. It allows individuals to spread the cost of buying a motorhome over time, typically through monthly repayments.

How much can I borrow?

The amount you can borrow for a motorhome depends on various factors, including your credit history, income, expenses, and the lender’s lending criteria.

When determining how much you can borrow, lenders will assess your affordability by considering factors such as your income, employment status, existing debts, and monthly expenses. They will also evaluate the value of the motorhome you intend to purchase and may require a deposit, which could affect the amount you need to borrow.

To get an idea of how much you can borrow for a motorhome, you can use our free motorhome finance calculator.

Keep in mind that borrowing for a motorhome is typically done through a secured loan, where the motorhome serves as collateral for the loan. As such, the amount you can borrow may be influenced by the value of the motorhome and the lender’s loan-to-value (LTV) ratio requirements.

Ultimately, it’s essential to carefully consider your financial situation and budget constraints before taking out a loan for a motorhome to ensure that you can comfortably afford the repayments and enjoy your motorhome without financial strain.

How does a finance company calculate that affordability?

As we touched on above, the motorhome finance company will consider the amount you are putting down as a deposit, your regular earnings and expenditure and – perhaps most important of all will examine your credit rating.

Any finance company is obliged to check your credit history – which illustrates how well, or otherwise, you have managed borrowing and credit in the past and, so, provides the lender some confidence in your maintaining the agreed repayment schedule on any new borrowing.

Don’t be misled by those advertisements suggesting that there is any such thing as “no credit check credit”.

How can I trust any lender to offer a fair deal?

Lenders providing motorhome finance advice need to be authorised and regulated by the Financial Conduct Authority (FCA) – and you may review the FCA register to confirm that here at Derby Motorhomes we have just such authorisation, trading as Motor Plus Derby Limited.

Not only is our motorhome finance business regulated by the FCA but it also means that if you subsequently have any complaint or dispute about your finance, you may refer the matter to the Financial Ombudsman Service.

Do I need a deposit for motorhome finance?

Some motorhome finance options may require a deposit, while others may offer 100% financing. The deposit amount required can vary depending on factors such as your creditworthiness, the value of the motorhome, and the lender’s requirements.

What types of motorhome finance are available?

There are various types of motorhome finance available in the UK, including Hire Purchase (HP), Personal Contract Purchase (PCP), Personal Loans, and secured motorhome loans. Each type of finance has its own terms, conditions, and repayment structures.

What is hire purchase (HP)?

Perhaps the most familiar form of motorhome finance is hire purchase. If your application is approved, you typically need to find a deposit of around 10% of the purchase price of the motorhome you have chosen.

The balance of the purchase price is then repaid in equal monthly instalments over the agreed term of the hire purchase agreement. In some instances, you may be able to opt for monthly repayments followed by a larger, final, “balloon” payment.

It is worth remembering that legal ownership of the motorhome does not pass to you until the final instalment has been paid and that if you default on the repayments, your motorhome may be repossessed.

What happens if I can’t keep up with repayments?

If you’re struggling to keep up with repayments on your motorhome finance, it’s essential to contact your lender as soon as possible to discuss your options. Depending on your circumstances, your lender may be able to offer temporary payment arrangements or alternative solutions to help you manage your repayments.

Can I pay off my motorhome finance early?

In most cases, you can pay off your motorhome finance early by making additional payments or settling the outstanding balance in full. However, early repayment terms and fees may apply, so it’s essential to check with your lender before making any early payments.

How can we help?

For more information on how we can help you with motorhome finance, please visit our dedicated page here or please give us a call on 01332 360222 – we’d be delighted to help.

Have you thought of taking your motorhome to the Netherlands?

When planning a European tour, many motorhome owners head for the mountains of Austria and Switzerland or the beaches of southern France, Italy or Spain. But you do not need to drive so far to enjoy a continental journey much closer to home. The Low Countries – and the Netherlands, in particular – have a great deal to offer.

Why the Netherlands?

If you don’t fancy another long journey after driving your motorhome off the ferry, the Netherlands offers a perfect solution. Take the ferry from Harwich in Essex to the Hook of Holland and you reach your destination as soon as you roll off the boat. The ferry crossing takes just under seven hours, but this can vary.

Or, take the Eurotunnel from Folkestone to Calais and drive to the Netherlands – this takes less than four hours says their website.

The Dutch

You are almost certain to receive a warm welcome from the Dutch people you meet. They are friendly and family-oriented, with as great a taste for the outdoor life. Think Holland and you’re sure to think cycling family days out or pottering about on any one of the many stretches of open water.

Although Dutch, of course, is the native language, practically everyone you meet will have (very good) English as their second language – so striking up a conversation is never likely to be all that taxing. As anywhere, though, it always goes down well if you have at least a spattering of the country’s own language.

What documents will I need?

To legally drive in the Netherlands, visitors must be 18 years or older and possess a full, valid driving licence. For motorcycle riders operating vehicles up to 125cc, the minimum age requirement is also 18.

Driving licences issued in European Union (EU) and European Economic Area (EEA) countries are accepted in the Netherlands. While international driving permits are recognized, they are not obligatory.

To ensure compliance with local regulations, it is imperative you carry the following documents while driving in the Netherlands:

  • Full, valid UK driving licence
  • Proof of identification (passport)
  • Motor insurance certificate
  • V5 registration document

Plus, you will need a “UK” sticker, not “GB”.

On the road

Although you’ll be driving on the right, the highway code is very much as you find it at home – although there are one or two differences to bear in mind.

Different speed limits apply depending on the vehicle you are driving – see the Caravan & Motorhome Club for more information here.

Unless otherwise directed, always give way to vehicles emerging from the right and remember that use of your mobile phone while driving is prohibited (but hands-free devices are allowed).

Roads and motorways are toll-free, but there are several different anti-congestion and low emission zones in different cities – so make sure you’re aware of the rules in place if you intend driving there. Sounding your horn in cities is also illegal.

Overnight in your motorhome

When it’s time to turn in for the night, you must park your motorhome on a recognised campsite – so-called “wild camping” is prohibited and strictly enforced with a possible fine of up to €500 per person, according to the website Caravanya.

Fortunately, therefore, campsites are plentiful, of a high standard, and affordable (according to some sources, prices are ranked the seventh cheapest in Europe).

Ideal for your motorhome tour is Delftse Hout campsite, near the city of Delft, with its typically Dutch architecture and famous for its ceramics. The 5-star site is surrounded by a beautiful park, has mostly grass pitches, is family-friendly and has English-speaking staff.

If you thought the whole of Holland was flat, just visit the southern part of the country towards its borders with Germany and Belgium. Set in rolling hills, with stunning views across South Limburg, is the beautiful Europarcs Gulperberg.

Buying any motorhome represents a more significant investment than buying a runabout car. Buying a motorhome in the distinguished class and luxury of an Auto-Sleeper is likely to be a still bigger investment.

So, how might you go about financing your Auto-Sleeper purchase? The good news is that there should be a finance solution that most suits you.

Savings

If it has long been your dream to own a motorhome, you might have been saving over the years for the tidy sum likely to be required. If you have savings set aside, this could be a straightforward way to finance your motorhome. Using your own funds eliminates the need for a loan and avoids interest charges. However, ensure that you still have an emergency fund after the purchase.

Equity release

For homeowners who have reached the age of 55 or over, the dreams they nurtured in owning a motorhome might be realised through equity release.

Typically, this involves a so-called lifetime mortgage on the home that is owned, so that you have the cash released through its equity but make no repayments on the loan until the property is sold, you go into long-term care or you die.

Auto-Sleeper finance

Auto-Sleeper finance, on the other hand, helps you avoid having to do anything quite as drastic as blowing your savings or unlocking the equity in your home in order to purchase a motorhome.

A reputable Auto-Sleeper dealer is almost certain to be able to offer a range of finance options – and, to do so, must be registered with and authorised by the Financial Conduct Authority (FCA).

Those options might include:

  • a personal loan – for the whole or just part of the purchase of your Auto-Sleeper – with repayment terms spread over several years;
  • hire purchase – which typically involves you paying an initial deposit of around 10% of the purchase price – and equal monthly payments until the final balance is cleared; or
  • Personal Contract Purchase (PCP) – the widely popular method of car finance which has also been extended to the purchase of motorhomes and which leaves you the option of returning the vehicle at the end of the contract agreement instead of paying the final “balloon” instalment to complete the purchase.

As with any finance credit agreement, of course, the terms of your Auto-Sleeper finance is going to depend on your creditworthiness – the healthier your credit score, the more favourable the rate of interest you are likely to be offered and the better your chances of securing the credit you need.

Motorhome finance calculator

You can use our online motorhome finance calculator here that will help you decide how much you need to borrow, the repayment terms and any other conditions that may be attached to your Auto-Sleeper finance deal.

Specialist Auto-Sleeper dealers – such as ourselves at Derby Motorhomes – are likely to have close working relationships with several major banks, brokers and financial institutions, offering you a wide choice of different types of finance to suit your particular needs and circumstances.

What else do I need to consider when financing a motorhome?

  • Determine and stick to your budget: The first step in financing a motorhome is establishing a realistic budget. Consider not only the purchase price but also additional costs like insurance, maintenance, and storage. Knowing your financial limits will help you narrow down your choices and avoid overspending.
  • Credit Score. If you are going down the finance route, then remember that your credit score plays a crucial role in securing favourable financing terms. Before applying for a loan, check your credit report and score. A higher credit score increases your chances of qualifying for more attractive interest rates.
  • Insurance considerations: Remember to factor in insurance costs when budgeting for your motorhome. Insurance requirements may vary, so obtain quotes from different providers to find the most appropriate for your needs.

Financing a motorhome in the UK involves careful consideration of your budget, financing options, and future plans. By researching thoroughly, comparing offers, and understanding the terms, you can embark on your motorhome journey with confidence. Whether you choose a traditional loan, dealer financing, or another option, the key is to find the motorhome finance solution that aligns with your financial goals and lifestyle.

Some things in life are destined to remain forever a dream unless you somehow find the ways and means of buying them – it’s not that money can buy you happiness, of course, but it certainly helps in making your dreams come true.

You don’t have to bank on the unpredictable British weather and expect a Summer that is dry, warm, and sunny. If you buy a motorhome, you’ll always have somewhere dry and cosy to see out the worst our climate may bring – or drive it over to the Continent, save on rising hotel costs, and have your own home away from home wherever you are.

What better way to enjoy the outdoor life and freedom of the open than behind the wheel of a motorhome? So, if you are thinking about buying a motorhome, what are some of the most important points to take into consideration?

Should I buy a new or used UK motorhome?

There’s nothing quite like knowing that you’re the first person to have taken your motorhome on its first outing, nothing like being the first person to have slept in it – so buying a new motorhome lets you in on all of that, together with the reassurance of a lengthy warranty.

The greatest obstacle, of course, is likely to be the cost of buying a new motorhome. Used motorhomes hold their value pretty well, but they do still depreciate, so one that is, say, three years old might offer a significant saving on the new price, if it still has a relatively low mileage.

Whether to buy a new or second-hand UK motorhome depends on several factors, including your budget, preferences, and priorities. Both options have their advantages and disadvantages, so consider the following points to help you make an informed decision:

What are the pros and cons of buying a brand new UK motorhome?

Buying a brand new UK motorhome comes with its own set of advantages and disadvantages. Here are the pros and cons to consider:

Pros of buying a new motorhome

  • Reliability: New motorhomes are less likely to have mechanical issues or require repairs because they are covered by warranties. This means you can have confidence in the vehicle’s reliability for your travels;
  • Warranty cover: New motorhomes typically come with warranties that cover various components for a specified period. This can save you money on repairs and maintenance during the warranty period;
  • Latest features: You’ll have access to the latest technology, safety features, and design innovations. This can enhance your comfort, convenience, and overall travel experience;
  • Customisation: When buying new, you often have the option to customize your motorhome to your liking. You can choose the layout, interior finishes, and additional accessories to suit your preferences and needs;
  • Fuel efficiency: Newer motorhomes may be more fuel-efficient due to advances in engine technology, which can save you money on fuel costs in the long run;
  • Resale value: While new motorhomes do depreciate, they tend to retain their value better than used ones over the first few years. If you decide to sell or trade in your motorhome down the line, you may get a higher resale value.

Cons of buying a new motorhome

  • Higher initial cost: New motorhomes come with a premium price tag, which can be significantly higher than that of used models with similar features. This can strain your budget;
  • Depreciation: While new motorhomes retain their value better than used ones initially, they still depreciate quickly in the first few years. You’ll experience a substantial loss in value if you decide to sell or trade in the motorhome within that time frame;
  • Limited availability: New motorhomes may have limited availability, especially if you’re looking for a specific make and model. You may need to wait for the manufacturer to produce and deliver your chosen configuration;
  • Higher insurance costs: Insuring a new motorhome can be more expensive than insuring a used one due to the higher replacement cost in case of accidents or theft;
  • First-year bugs: Even with warranties, new motorhomes can sometimes have unexpected issues or bugs that need to be addressed during the first year of ownership;
  • Customisation costs: While customisation is a pro, it can also add to the overall cost of your new motorhome. Upgrading or adding features can increase the price significantly.

What are the pros and cons of buying a second hand UK motorhome?

Buying a second-hand UK motorhome, also known as a used motorhome, comes with its own set of advantages and disadvantages. Here are the pros and cons to consider:

Pros of buying a second-hand motorhome

  • Cost savings: Used motorhomes are generally more affordable than new ones, allowing you to get more value for your money. You can often purchase a higher-quality or larger motorhome within your budget;
  • Less depreciation: New motorhomes depreciate rapidly in the first few years. When you buy used, you avoid the steepest part of this depreciation curve, which can save you a significant amount of money over time;
  • History and condition: You can assess the history and condition of a used motorhome more easily. If the vehicle has been well-maintained and comes with a complete service history, you can have confidence in its reliability;
  • Variety: The used market offers a wider range of motorhome models, brands, and layouts, giving you more options to find a configuration that suits your needs and preferences;
  • Lower insurance costs: Insurance premiums for used motorhomes are often lower than those for new ones. This can result in cost savings over the life of your ownership;
  • Less financial risk: Buying a used motorhome can be less financially risky, especially if you’re unsure about how much you’ll use it or if motorhome ownership is right for you. You can enter the market at a lower cost.

Cons of buying a second-hand motorhome

  • If you are buying privately, there may be uncertainty about its condition: While you can assess the condition of a used motorhome, there may still be hidden issues or wear and tear that are not immediately apparent. A thorough inspection is essential;
  • Potentially outdated features: Older used motorhomes may not have the latest technology, safety features, or design innovations that newer models offer;
  • Limited Warranty (if you are buying privately): Used motorhomes may not come with the same warranty coverage as new ones, which means you may be responsible for repair costs shortly after purchase;
  • Availability: Finding a specific used motorhome model or layout that suits your preferences may require more time and effort, as availability can be limited;
  • Higher maintenance costs: As a motorhome ages, it may require more frequent maintenance and repairs. Be prepared for ongoing maintenance costs, especially with older models;
  • Unknown history: Not all used motorhomes come with complete service histories, and some may have had multiple owners. This can make it challenging to assess how well the vehicle has been cared for if you are buying your used motorhome privately rather than from a dealer.

Ultimately, the choice between buying a new or used UK motorhome depends on your financial situation, preferences, and priorities. If you have a specific model in mind, want the latest features, and can afford it, a new motorhome may be the way to go. On the other hand, if you’re budget-conscious, open to a wider range of options, and willing to do some research on used models, a second-hand motorhome might be the better choice.

To help you decide whether to splash out on a new motorhome or get a good deal on a pre-loved vehicle, here at Derby Motorhomes we have a permanent exhibition of both new and used models from which to choose – after you’ve had your own up close and personal inspection of as many motorhomes you’d like to try out for size.

Size matters

Probably the greatest feature of any motorhome is its versatility. You not only get to drive it from A to B, but it also provides shelter in which to take your lunch along the way and your accommodation when it is time for bed.

Versatility also gives you the choice between a motorhome that is a genuine home away from home – with all the creature comforts you might possibly want – and a vehicle that is agile and manoeuvrable enough for negotiating new and unfamiliar routes while still providing more than adequate sleeping accommodation at the end of the day’s touring.

Size, therefore, often represents a balance between manoeuvrability on the move and spacious comfort at the end of the day. Summing up the questions of size, therefore:

  • it is likely to come down to how you are planning to use your motorhome;
  • is your motorhome likely to be used mainly just by you and your partner or do you need the extra berths for a child or two;
  • are your outings and holidays planned mainly in the UK, or will you be taking your motorhome further afield in continental Europe;
  • the balance between practical manoeuvrability, weighed against all the space and comfort a larger motorhome may offer, is likely to swing your judgment;
  • however you choose, do keep a note in the cab of the height and width (metric and imperial) of your vehicle, if you encounter any road width or bridge height restrictions.

Whatever size motorhome you eventually choose, you might want to take advantage of one of the Manoeuvring Courses run by the Caravan and Motorhome Club.

Weight

Closely related to the question of how you plan to use your motorhome – and, in turn, its size – is the critical matter of its weight. The bigger your motorhome, of course, the heavier it is likely to weigh and the payload you can carry.

As a guide published by AutoTrader Motorhomes explains, weight is an equally important consideration, especially if you have chosen a vehicle in one of the heavier categories. You may then need to consider whether your standard Category B driving licence qualifies you to drive the vehicle.

The Camping and Caravanning Club explains that you currently need a Category C1 driving licence to drive a larger motorhome with an Maximum Authorised Mass (MAM, the technical term for the maximum laden weight of your caravan) between 3,500kg and 7,500kg.

If you passed your driving test before the 1st of January 1997, you are automatically entitled to this Category C1 licence, but if you took it after that date, you must take a separate driving test to gain the additional entitlement.

In either case, your current driving licence entitles you to drive motorhomes up to 3,500kg MAM – and the majority of motorhomes built in this country therefore comply with this weight restriction.

For the most up to date information, visit the Government website.

Layout

The design and planning that goes into the internal layout of every kind of motorhome – from a simple campervan to the largest of leisure vehicles – has become ever more skilled and innovative.

There are countless possibilities when it comes to the motorhome’s layout and you might want to give serious consideration to the one that best suits your proposed use.

If you are likely to be travelling alone or with your partner, for example, a simple layout that requires converting the seating into beds at night might suffice; if you are likely to be holidaying with the family or expect to be entertaining, then a layout that includes a more spacious lounge area and fixed beds may be more appropriate.

Budget

When you have made those necessary choices about the layout, overall size and weight of your preferred motorhome, the final decision might come down to the budget you have available or the motorhome finance that is available:

Your savings

  • some people are fortunate to have savings – and, especially as you approach retirement, you might be looking forward to ways of spending your pension’s lump sum cash pay-out;
  • by using your savings, of course, you avoid the need for finance altogether, so there are no credit repayments to find, no interest to pay, and your motorhome is 100% yours from the start;
  • unfortunately, though, many people’s savings do not extend to the amount necessary to invest in the motorhome of their choice;

Personal loans

  • even for such a relatively expensive purchase, your bank manager might still be amenable to granting an unsecured personal loan, which you repay in monthly instalments over a period of up to five or six years;
  • as it is an unsecured loan, however, with the lender having nothing to fall back on if you default on the repayments, you are likely to need a more or less perfect credit score to secure this type of borrowing;

Dealer arranged finance

  • if you are buying your new or used motorhome from a large and reputable, specialist dealer, however, you might need to look no further than the dealership itself;
  • making the finance available goes hand in hand with any dealer’s main business of selling you the motorhome you have chosen and his standing and reputation in the market is likely to mean that any finance partners are competitive, reliable and duly regulated and authorised by the Financial Conduct Authority (FCA);
  • try out our motorhome finance calculator to get an idea of costs;

Hire purchase

  • one method of motorhome financing almost certain to be offered by such a dealer takes the familiar shape of a hire purchase agreement;
  • this needs an initial deposit, typically around 10% of the purchase price, although you might be able to meet this requirement by trading in an older motorhome in part exchange for the one you want to buy;
  • repayments are by equal monthly instalments, and if you default on these, you risk the motorhome being repossessed by the hire purchase company;
  • that is because ownership of the motorhome is not transferred to you until the final instalment has been paid and it is illegal to attempt to sell your motorhome before that date whilst the outstanding finance balance remains;
  • because hire purchase agreements are effectively secured against the vehicle in question, financial confidence is generally sufficient for a competitive rate of interest to be offered;

If you have ever dreamed of owning a motorhome, there are a number of financing options available to you – and many dealers may be able to help you turn your dreams into reality. Those options tend to be increasing all of the time. One of the most recent developments, for example, is the extension of Personal Contact Purchase deals to financing the purchase of your motorhome.

For a discussion about any of these motorhome finance options simply contact us here at Derby Motorhomes. You can also read our Motorhome finance guide here for more information.

Your biggest investment is likely to be the home you live in. But, after that, a motorhome comes in a close second as the most expensive item you might consider buying.

The truth of the matter all depends on your personal financial circumstances, of course. What is in no doubt, though, is that any such purchase requires significant expenditure, and it will be prudent to think carefully how you go about funding a new motorhome.

Your source of funds

Unless you are one of those very rare individuals with stacks of cash in hand, the funds you need to buy a new motorhome have to come from somewhere – a source involving some kind of formal process.

There are several different avenues you might want to pursue in your search for such a source of funds and here at Derby Motorhomes, we’ll try to objectively outline some of those for you.

Funding through pension cash-ins, inheritances, savings and liquidating financial instruments

Savings, investments, and even your pension pot have the potential for providing you’re the funding you need. The examples are numerous and include:

  • the rules on withdrawing funds from your pension pot have been recently relaxed and the government-sponsored website explains how you can do this once you reach the age of 60 or 65 (or age 55 if you have a workplace or personal pension);
  • use of a bequest that has been left to you in the will of a deceased friend or relative; or
  • your sale of investments through the liquidation of stocks and shares you own.

Some of these options may provide you with sufficient funding to buy your new motorhome outright – with no monthly repayments going forward.

Nevertheless, you may need to bear in mind that although these options give you immediate access to the funding you may need, neither one of them might be the most appropriate or prudent way of proceeding with your intended purchase.

If you have depleted your existing savings, investments, and reserves of cash, for example, they will no longer be there if you face any financial emergency in the future and need more or less immediate access to additional funds.

These are complicated matters, and we are by no means qualified to offer financial advice or guidance. Instead, we recommend that you consult an independent financial adviser before cashing in your savings or investments or withdrawing funds from your pension pot.

Bank loans

Depending upon your personal financial circumstances and the standing you have with your high street bank, you might want to consider an application for a standard personal loan to fund the intended purchase of your motorhome.

This will give you the cash you can then use to pay for the vehicle, whilst you repay the loan over time, through monthly repayments to the bank.

A personal loan such as this is a fairly straightforward matter, although you might find that banks are perhaps a little less free with such lending for luxury items than they might have been some 15 years or so ago. You may also need to have an excellent credit history record and find a fairly substantial deposit towards the vehicle from your own reserves.

Hire Purchase (HP) and related dealer finance

This essentially involves a finance company purchasing the vehicle which legally remains their property although you will be allowed to use it as the “registered keeper”.

You will repay the funds provider over time and once you make the final payment, the vehicle becomes legally yours.

An initial deposit – typically of around 10% of the purchase price – is generally required from the outset.

Secured loans and equity finance

A secured loan is borrowing against assets you either own or have substantial surplus cash invested in.

For example, if your home is realistically valued at £400,000 and you have an outstanding mortgage on that of £50,000, then you have £350,000 notional equity in your property. It may be possible to borrow against some of that equity in order to buy your motorhome.

In that event, you must keep firmly in mind that your home is at risk if you take out a loan secured against it and find yourself subsequently unable to make the repayments on the loan.

Summary

There is a wide range of funding options available, and we’d welcome your contact in order to clarify how we might be able to assist further.

Whether you are buying new or second hand, a good motorhome is likely to be a large financial purchase. That’s why many of our customers look to various forms of borrowing to finance their motorhome purchase.

To set your sights on any particular motorhome, of course, you will want a better ballpark idea of how much you can borrow.

Here at Derby Motorhomes, we’re happy to help you discover just that.

Motorhome finance calculator

Our online motorhome finance calculator can give you an estimate of how much your HP motorhome finance may cost based on how much you want to borrow.

If you decide to proceed with an HP motorhome finance application, the actual cost may be different as it will be influenced by the points discussed below. But it is a good starting point.

How much can I borrow?

The amount you can borrow – the amount you will have available to buy your motorhome – depends on and typically not limited to:

  • your financial circumstances (how much you can afford to repay each month);
  • the period over which you want to complete the repayments;
  • the rate of interest attached to any loan or credit; and
  • the measure of your creditworthiness that is expressed in your credit rating.

Hire purchase

The amount you can borrow – and how much that credit will cost – is also determined by the method of borrowing you choose. As you’ll have noticed, our online calculator takes hire purchase as your favoured method. Why is that?

It’s quite simply because hire purchase is one of the most popular forms of motor finance – according to the Money Saving Expert in a piece updated on the 11th of April 2022.

Hire purchase is a credit plan involving precisely those two elements: after paying a relatively modest deposit (typically of around 10%) you make monthly repayments to hire the vehicle and have the option of making a final payment – the purchase – to own it.

As the government-backed website MoneyHelper explains, your delayed ownership means that the loan can be secured against the value of the vehicle – and this typically helps to reduce the level of interest that is charged in other types of borrowing (an unsecured personal loan from your bank, for example).

There are other advantages to this method of financing your motorhome purchase:

  • the interest rate is fixed, so you know exactly how much you’ll be paying each month;
  • because the loan is secured against the vehicle, you might have more success getting hire purchase than an unsecured loan if your credit rating is less than good;
  • the initial deposit – of around 10% – is typically affordable, as is the final payment to complete the purchase (unlike the steep final payment you typically need to make at the end of a Personal Contract Purchase or PCP); and
  • unlike some other credit arrangements, hire purchase does not typically involve any mileage restrictions.

Summary

There is good reason for the abiding popularity of hire purchase agreements. They are typically easy to understand, have straightforward terms and conditions, and might often prove a cheaper way of borrowing than some other methods.

Our online calculator for motorhome finance will show you, at a glance, an example of just how much your monthly motorhome finance repayments could be.

If you are looking to finance your next motorhome, then please contact us today.

Many of the questions we’re often asked here at Derby Motorhomes are about the financing options for buying a motorhome.

With the strict proviso that we are in no way qualified financial advisers, we’re happy to share with you some of our observations on the subject of motorhome finance. Our aim is simply to highlight – in the broadest possible terms – some of the options that you may be able to choose from when buying a new motorhome.

Using your own cash

A lot of buyers use their own cash – especially in circumstances where they have taken a lump sum out of a pension fund, have inherited money from a relative’s estate, or come into a similar windfall.

In many respects, paying by cash is intuitively attractive. It means you won’t be paying interest charges to a lender, and neither will you need to convince someone else that you can afford the money you are spending. It is your decision and yours alone.

However, you may need to keep in mind that some advisers might argue that spending your own cash is not always an optimum solution. If you spend a substantial sum of money on your motorhome from your own cash reserves, then by definition, that money isn’t available for you to use for other purchases.

True, you could always sell your motorhome in future to get a percentage of your cash back but that can take a little time and while you’re going through the sales process, your funds aren’t available to you.

Hire Purchase

You are almost certain to be familiar enough with the concept of Hire Purchase (HP) that it needs no further explanation.

In brief outline, suffice it to say, that all is required from you is to find a sum of your own cash to contribute towards the cost of the vehicle by way of a “deposit”. The Hire Purchase provider will then fund the balance and purchase the vehicle for you to use as its registered keeper.

You will then pay a monthly repayment of the outstanding sum, over some years, until such time as you have paid off the balance. During that period of time, the vehicle legally remains the property of the HP provider and you must not sell it without their advance written permission.

The advantage of HP is that the vehicle is being purchased, in large part, with somebody else’s money, meaning you keep your capital reserves for something like an emergency. Of course, you will need to show – by way of relevant credit checks – that you are financially able to maintain the repayments.

Use our motorhome HP finance calculator for an idea of figures here.

Personal loans

You could go to a finance company or bank and ask them to advance you a sum of money which you can then spend on buying the new motorhome of your choice.

You will then need to repay the loan, of course, over an agreed period of time or term.

Once again, you will need to find some form of deposit. You will also again typically be assessed in terms of your creditworthiness and ability to financially meet the loan repayment commitment you are entering into.

Loans offer the advantage of giving you a degree of freedom over where you purchase your vehicle, and they may increase your negotiating position a little with a seller or dealership (as to them you will effectively be a cash buyer).

On the downside, certainly, bank loans are perhaps not always as readily available for luxury or non-essential expenditure as might once have been the case.

Personal Contract Purchase (PCP)

In recent years, the market in motor sales has been dominated by personal contract purchase (PCP) arrangements. Inevitably, perhaps, this financing option is widely gaining ground for the purchase of motorhomes.

One of the attractions of the PCP is that you visit the dealer or franchise holder, choose your motorhome, put down a deposit, agree the monthly repayment schedule, sign the papers, and drive away in your new motorhome.

It might seem similar to HP but differs in crucial respects.

Your monthly repayments are reduced and rolled over until the final “balloon” payment, which you can pay so that the vehicle becomes yours outright.

Alternatively, you can hand back the motorhome, with nothing further to pay. But if you have built up an equity in the vehicle – because it has maintained its value better than expected, for instance – you can arrange its sale and put down the released equity as a deposit on the purchase of a new motorhome.

Summary

At Derby Motorhomes we work with a number of motorhome finance specialists to find you what we consider is the most suitable finance solution for your next motorhome. Why not contact us today to see how we can help?

Apart from some of the more usual and expected questions about insurance for your motorhome, there are others that might seem relatively uncommon – but are no less important for all that.

Here are just two examples of the questions we are sometimes asked:

  • can I live in my motorhome full time and keep it insured?
  • what happens to my house insurance if I am away on extended motorhome trips?

In some ways, the questions might seem related – yet the issues they raise are certainly different.

Living permanently in your motorhome

It’s important to state at the outset, perhaps, that the overwhelming majority of motorhome insurance providers consider motorhomes to be vehicles you use occasionally for recreational purposes. It’s no coincidence, of course, that motorhomes are often referred to as “RVs” – quite simply, recreational vehicles.

Typical motorhome insurance policies will contain a clause that limits, in some form or another, just how much you can use your motorhome in a given year. That may be some months and that might be entirely satisfactory for the vast majority of motorhome owners. However, if you decide you want to spend your life on the road, it is likely to be inadequate for you.

There is no mystery behind the reasoning here.

Insurance providers use certain algorithms designed to calculate the risk of offering you cover. The facts they use to construct your risk profile include certain assumptions about your permanent address and how much time you will be living there for each year, as opposed to using your motorhome.

If you plan to be on the road all the time, in effect you don’t have a permanent address and that is going to cause many insurance providers a degree of conceptual difficulty in terms of offering you cover.

It may be possible to obtain specialist cover if you do decide to spend your life on the road but the key message here is to avoid simply selling up and driving off in your motorhome on the assumption that your existing motorhome insurance will be valid. It may not be!

How much time can you spend in your motorhome before it impacts your home insurance?

At first sight, this is also a question related to spending longer periods of time in your motorhome – but it raises quite different issues that have no direct impact on your motorhome insurance.

The challenges here arise from the fact that your existing standard home insurance almost certainly contains a clause limiting how long – counted in consecutive days and nights – you can leave your property unoccupied before your insurance is at risk.

That period of time is usually somewhere between 30 and 45 consecutive days.

If you wish to go off and spend extended time on the road discovering the world in your motorhome, you will typically need to remember that you may need to contact your home insurance provider about your plans and consider whether you must arrange specialist unoccupied property insurance. This will extend a policy to cover your property for longer periods when you are not in residence.

Disclosure

A key message that emerges from our consideration of both these questions relates to the importance of disclosure to your insurance company. Put another way, you must make sure that your motorhome insurer and any broker involved are both kept fully informed when there is any change at all in your circumstances (those that existed when the cover commenced) – and that includes a decision to live for a time in your motorhome or to leave your home temporarily unoccupied for longer than a month or so.

Most insurance providers will try to be as flexible and as helpful as they can in order to help you to enjoy your motorhome to the fullest possible extent.

Here at Derby Motorhomes, we are dealers in motorhomes – among the best in the country, we like to think. We are not financial advisers, though, so the following thoughts and comments are offered by way of suggestions rather than any form of financial advice.

Furthermore, suitable methods of funding and sources of finance for your new motorhome are going to depend mainly on your personal financial means and circumstances. Of course, we have no idea of those at present. So, all that follows needs to be interpreted in an entirely general fashion – and may or may not apply to your own unique circumstances.

Finding finance

For most intents and purposes, there are typically five potential sources of motorhome finance:

  • your bank;
  • the dealership from which you intend to make your purchase;
  • an independent finance company you’ve found yourself;
  • loans from friends or family; or
  • your own financial resources (from your existing savings or a retirement lump-sum, for example).

For this article about sources of finance, we might put to one side any further consideration of loans from family or friend or the use of your existing savings since our particular interest is in finance deals available commercially.

That leaves us with the three possibilities of your bank, an independent finance company, or finance arranged by your dealership.

Your circumstances

Whoever you approach for an advance of motorhome finance, you are almost certain to be expected to bring certain things to the table, such as:

  • evidence that you can afford the repayment schedule (typically, documentary evidence of a regular income);
  • evidence that the price asked for the vehicle proposed is realistic and makes sense when viewed against its current market value;
  • proof of your identity and address that you are who you say you are – by way of readily verifiable data such as the electoral register;
  • a deposit or some other financial contribution towards the price, that helps to reduce or share the risk to the lender – so that, the bigger the deposit or the more of your own money you are contributing, the easier you are likely to secure the funding you are after as an attractive rate of interest (assuming all other things are equal); and
  • an acceptable credit history record – contrary to widely-held myth, credit history issues are not usually show-stoppers, but they may affect how much you’ll need to pay for your finance.

Bank funding

This has a major attraction for some in that it’s familiar. Banks have also cleverly positioned themselves in the marketplace over generations so that they sound like solid pillars of the community – and that still appeals to many customers.

On the downside, you might find that:

  • they can be rather slow to come to a decision;
  • they may demand a higher contribution from you than some other potential lenders;
  • you might want to keep your vehicle purchasing affairs private in terms of your bank’s view of the totality of your spending; and
  • the banks can be risk-averse and less receptive to luxury vehicle financing than some other sources.

Finance companies of your own choice

Remember, every time you make a loan application and it’s refused, that will potentially damage your credit score. So, avoid making large numbers of random applications in the hope you’ll get a favourable outcome and instead look for companies that have a proven track record in the provision of motorhome finance.

Look at all the usual factors including:

  • whether they are duly authorised and regulated by the Financial Conduct Authority (FCA);
  • the rate of interest you will be paying for the finance;
  • the term of the finance arrangements – in other words for how long you will be repaying any credit or loan;
  • the maximum age of the vehicle the lender will accept; and
  • any conditions, penalty clauses, and the like that the lender may apply.

Take your time reviewing any offer of finance, of course, and if you’re not fully comfortable with the financial concepts and jargon, make sure to take independent and objective advice from someone who is.

Dealership finance

Dealerships have a big advantage – they know the finance providers who are likely to be receptive to applications relating to motorhome finance. For example, this route might help to keep the deposit you need to a lower level.

Things to keep in mind might include:

  • whether you would prefer to keep entirely separate the related issues of finding finance and driving a deal on a motorhome;
  • the high demand for motorhomes and the fact they hold their prices may make your whole approach to negotiating a deal quite different from the way you might buy a car; and
  • remembering to appraise and review any offer of finance from a dealership in just the way you would any other offer – by looking at rates of interest, the term of any finance, conditions, and penalties, for example.

We hope this brief guide to getting the most attractive motorhome finance deal is useful. At Derby Motorhomes we are not independent financial advisors and so are unable to provide you with independent financial advice. We do, however, work independently with funders and brokers to help you access motorhome finance. You can find out more on our motorhome finance page.

It’s likely to be a simple financial fact of life. Statistically speaking, a motorhome is likely to be the second most expensive purchase – after your home – you’ll ever make.

Put even more simply, if you are looking to buy a motorhome, you will want to give its funding – your finance options – some especially careful thought. And that is a subject on which, here at Derby Motorhomes, we can help.

So, let’s take a look at some of the major and most common sources of motorhome finance chosen by many purchasers.

Cash

That’s the money you have to hand in your bank account, of course. You might be fortunate enough to have an instant access savings account, for instance, which can let you pay for your motorhome in a single transaction, paying by electronic transfer or money order.

In these days of relatively straitened financial circumstances, of course, savings might be few and far between – but perhaps you have been the beneficiary of a windfall through someone’s will or maybe you have just drawn down a pension lump sum.

Pros: Easy, simple, and straight forward. There are no interest costs or related charges. Neither are there going to be any credit score issues if that is an area in which you might be challenged. The vehicle becomes yours immediately after you have handed over the cash.

Cons: Depending on your overall financial circumstances, using “spare” cash to fund the purchase of a motorhome may not necessarily always be the most appropriate use of your liquid capital. Your cash is immediately gone and isn’t available for other emergency uses.

Equity release

In a sense, this is a variation on cash. It differs only in how long it takes you to release the equity and to some extent, how you do so.

Essentially, equity release involves getting hold of liquid capital you might currently have tied up in other things, then using that to purchase your motorhome.

For example, if you take out a loan based upon the equity you have in your property (equity there is defined as the difference between your property’s realistic market value and any remaining mortgage you might have on it).

Pros: once again, the funds released through such an arrangement make you effectively a cash buyer for your motorhome. Unsurprisingly, therefore, equity release can be a very cost-effective way of accessing capital

Cons: it can take a little time, involve some form-filling, and legal documents to be drafted as you try to free up your equity. Borrowing against equity is still borrowing, so you need to look closely at interest rates as per normal. It will invariably involve reference to your credit status and score. If you’re borrowing against the equity in your home, remember that your home might be at risk if you fail to keep up the repayments.

Hire Purchase (HP)

For most of us, this is a thoroughly familiar form of finance.

It works very simply. If your application is approved, the lending company will purchase the vehicle and give you permission to keep and use it as the legally recognised “registered keeper”.

After paying a deposit – typically, around 10% of the purchase price – you’ll then repay the balance over a specified period of time, but the vehicle becomes legally yours only after you have made the final repayment. During the term of the agreement, the vehicle is NOT legally yours and you must not sell it without the HP provider’s advance permission (to do so would be a criminal offence).

Pros: a thoroughly familiar form of funding. It can be more cost-effective than paying in cash, depending upon your particular overall financial circumstances. Decisions may be reached fairly quickly once your application is made.

Cons: your motorhome may be legally seized if you default on the repayments – that is, you fail to maintain the repayments in accordance with the agreed schedule. You will typically need to meet certain minimum credit risk scoring criteria.

Bank loans

Conventional bank loans have been around for a long time, of course, so the ins and outs of borrowing from your bank are probably well understood.

Pros: it’s likely to be a familiar arrangement. It is likely to be most convenient for those with an established relationship with their bank.

Cons: some banks may be reluctant to lend larger sums for what they will consider to be luxury items. Decisions can be slow and credit scoring is likely to be involved.

Summary

Although we have mentioned credit scoring above, please don’t assume that you need a perfect credit score in order to obtain finance! We are authorised by the Financial Conduct Authority (FCA) to advise on motorhome financing options and stand ready to help you with motorhome finance even if you have a less than perfect credit history.

Why not call us for a further discussion?