There is an old joke to the effect that “buying a vehicle is much more fun than paying for it”!

No doubt that’s true but even so, there are a range of options that might be open to you.

Cash

Numbers of people purchase their motorhome using their cash reserves. That often comes from things such as pension cash-ins, life savings, windfalls or sometimes wills and other bequests from relatives etc.

Using your own cash has two big advantages:

  • you don’t have to apply to anyone or seek the approval of a third party in terms of your spending plans. That can make the process fast;
  • your spending doesn’t incur costs in terms of the interest rates and other charges that might be associated with some loans – though that must be modified a little as outlined below.

There are two “cons” to consider too:

  • once you’ve spent your capital, it’s “tied up” and not immediately available should you need it for emergency purposes;
  • strictly speaking, you should consider what’s called the “opportunity cost” of using your own cash. If you could invest it elsewhere and get a good return, then not being able to do so because it’s now been used for your motorhome is a cost to you in the sense of it being a lost opportunity.

Financing (non-bank)

There are several potential options here including those we offer.

Perhaps the most familiar form of motorhome financing is that of Hire Purchase otherwise known as “HP”.

This probably needs no introduction but just in case, it involves:

  • finding a contribution towards the cost of the vehicle from your own finances. A figure of around 10-15% is commonplace;
  • the lender will advance you the balance in the sense that they will buy the vehicle. It becomes their legal property, but they then allow you to use it as the “registered keeper”;
  • each month you will make a set repayment to the funds At the end of the agreed term, the vehicle becomes yours in the legal sense – assuming you have made all repayments;
  • while the agreement is in force, you must not sell the vehicle or significantly modify it without the lender’s/provider’s explicit permission in advance.

This approach has been around for a long time and typically works well and to everyone’s satisfaction.

Your application will need to meet criteria in terms of you being assessed as having sufficient financial standing to indicate that you can afford the sums involved and the monthly repayments. That typically will include a credit history check.

Bank loans

This is another theoretical option for motorhome financing.

It usually works with the bank providing the money for you to go out and purchase the motorhome, with you having again made a financial contribution overall. That contribution may be typically a larger percentage than might be associated with HP.

The question as to whether the bank will demand some sort of security over the loan would be one to discuss with the bank in the individual context of your application.

There are a few points worth keeping in mind with bank loans:

  • some people might prefer to keep their motorhome financing separate from their everyday banking affairs;
  • some banks may move rather slowly in terms of application reviews;
  • not all banks are well-disposed towards loan requests for what they may see as “luxury items”!

There are typically two questions that one regularly encounters in the domain of motorhomes and motorhome insurance:

  • 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?

These are related issues but in some respects also very different.

Living permanently in your motorhome

It’s perhaps important to state at the outset that the vast majority of motorhome insurance providers consider motorhomes to be things you use occasionally for recreational purposes.

Typical policies will contain a clause which 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 have certain algorithms they use 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 in terms of your home insurance?

This is a very different consideration and not one that is necessarily exclusively related to motorhome insurance.

The challenges here arise from the fact that your existing standard home insurance probably contains a clause limiting how long, in terms of consecutive days, 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 for a discussion on the subject of “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 comes out of both of the above points relates to disclosure or, to put it another way, making sure that your motorhome insurance provider and the company that provides your home insurance, are kept fully informed when your situation is going to vary from that which existed when you took out your cover.

Most insurance providers will try to be as flexible and helpful as they can in order to help you to enjoy your motorhome to its full extent