Motorhome Finance Options

It is generally accepted that, after your home, a motorhome or related recreational vehicle is likely to be your most expensive lifetime purchase.

As such, you’ll be keen to ensure that not only do you get a good deal on the purchase price for the vehicle concerned but also find finance that is cost-effective and fit for purpose.

For the majority of purchasers, that probably involves either:

  • using cash from your own financial reserves (e.g. savings, pension lump sums, selling off investments etc.) or;
  • hire purchase.

Let’s consider these two options in more detail.

Using your capital reserves

At face value, using your own cash for motorhome finance might appear to be an attractive way forward.

You don’t need to ask anyone for a loan or justify what you are buying and how much you are paying for it. You might also not need to concern yourself with things such as interest rates and how much you are paying to a lender for the finance concerned.

In some respects, all those apparent attractions are accurate but they might only tell part of the story. That’s because when using your own cash it is advisable to keep in mind:

  • you are turning your cash into a non-liquid asset which of course, cannot be immediately deployed by you for any other purposes, including coping with financial emergencies. Should you need access to your cash immediately, it may be difficult to get it out of your motorhome quickly and cost-effectively;
  • your cash is also potentially something you can use to earn money for you. Once you have put it into a vehicle, it will be subject to depreciation and that cost needs to be factored into your overall deliberations.

These are important and significant factors that should not be overlooked on the simple assumption that cash is, by definition, an acceptable option. It is why many potential buyers turn to motorhome finance options instead.

Hire purchase

Hire purchase or “HP”, as it colloquially known, is one of the most familiar and longest-established methods of funding the acquisition of vehicles.

It typically works very simply:

  • you will find a vehicle and agree a price in principle for it;
  • at that stage, you will apply to the lender for an amount of money by way of motorhome finance. Typically lenders will expect you to make a cash contribution towards the total cost and this is often referred to as “the deposit”;
  • your application will be reviewed in terms of the reasonableness of cost of the vehicle against market norms, your ability in overall financial terms to be able to afford the repayments and your past financial credit history;
  • even if you have credit history problems, you may still be eligible for HP motorhome finance, though your cost of borrowing may increase a little;
  • if all is approved, the lender will purchase the vehicle and allow you to use it as “the registered keeper”. They will remain the legal owners until you have made your final repayment and during that period, you must not sell the vehicle without their prior agreement.

Which approach is for you?

At ACF Direct, we would not presume to tell you which of the above approaches is the one for you. That is something only you can decide based upon your knowledge of the totality of your financial position.

In terms of motorhome finance, we are acknowledged experts in the provision of hire purchase and related loan facilities. We would therefore welcome the opportunity to discuss your options with you in more detail, so as to allow you to make a fully informed decision.