Motorhome Finance Guide

A motorhome is unlikely to be a low-cost purchase.

As a result, many purchasers will need to consider how they go about finding suitable motorhome finance.

The basic framework – cash reserves

Some purchasers use their own capital reserves to fund their purchase.

That’s fine but it does mean that your capital is now tied up in an asset and that means it might not be quickly accessible in a crisis. As a result, many purchasers turn to one form or another of motorhome finance to help.

It’s perhaps also worth keeping in mind that your capital, once used to purchase a motorhome, is not available for other investment purposes.

Bank loans

This was once a staple of motorhome finance and the principles of operation are doubtless familiar to all.

In the 21st century, this option might not be so routine as it once was due to:

  • banks are perhaps more risk-averse than they once were. That might be attributable to the ongoing effects of the financial crises a decade ago but the result is banks may be instinctively uneasy about lending for “luxury recreational purposes”;
  • banks may be slower to react due to their internal processes and procedures;
  • some people may prefer to keep the visibility of their purchases distinct from their daily banking arrangements.

Hire Purchase

Another form of financing a motorhome purchase is the familiar HP or “Hire Purchase”.

Going back arguably to Roman times, this is a very simple and elegant way to find motorhome finance.

The basic outline is:

  • you will find a percentage of the motorhome purchase price (sometimes referred to as “the deposit”) from your own finances;
  • the funds provider will review the seller’s price for the motorhome against their own professional price lists. Assuming they believe that the asking price makes sense, they will purchase the vehicle and become its legal owners;
  • they will allow you to use the motorhome under the auspices of being its “registered keeper”;
  • you will then make monthly repayments over a set period of time, in order to repay the sum the purchaser has advanced;
  • during that time, you must not sell the motorhome as it is not yours to sell and you may be committing a prosecutable offence if you do so;
  • once you make your last payment the vehicle becomes legally yours, as the funder transfers title.

Dealership finance

Some motorhome dealers may offer or seek to offer their own motorhome finance schemes.

There is nothing wrong with that and their propositions might typically be based upon some variation on HP. It’s worth keeping in mind though that there might at times be some advantage in keeping your negotiations on the price of the motorhome entirely separate from those involved in you seeking motorhome finance assistance.

Acceptance criteria

Whichever form of motorhome finance you’re considering, typically the funds provider will need to satisfy themselves that your overall financial position is such that you will be able to afford the repayment on the loan or HP agreement.

You may also be required to meet certain minimum acceptance criteria in terms of your credit standing.

In summary, there are a number of motorhome finance options that may be suitable for you – seeking the advice of experts, such as ourselves at ACF Direct, may help you find the most appropriate and cost-effective solution.