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.
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.
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.
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.
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.