If you want are planning to join the estimated 225,000 motorhome owners in the UK, then financing those plans will be a big part the process.
At ACF Direct, here is a quick overview of the motorhome finance process, to help you understand how you can buy a motorhome.
Motorhomes and borrowing
Whichever form of financing you select, the company providing the funds to help you purchase your motorhome will need to understand the risks they are taking by entering into the transaction with you.
Very broadly speaking, they will be looking to satisfy themselves that:
- the vehicle you are considering purchasing is reasonably priced based on their own internal sources for verifying various motorhomes against realistic market valuations;
- you are of sufficient financial standing to be able to find a contribution from your own financial reserves towards the cost of the vehicle. This is commonly referred to as you “providing a deposit”;
- your income or other sources of finance are such that it is clear you will be able to afford the monthly repayment of the total sum that you are either borrowing or asking a facility provider to invest in, in the form of something like hire purchase. That may involve a consideration of your existing financial commitments as well as your income;
- your past financial behaviours indicate that you conduct your financial affairs responsibly. This is the “credit-history check”.
Here we go a little more in-depth with each of these factors.
Just as with buying anything, whether a car or a home, any prospective lender needs to make sure that the price being asked for the item is realistic. This is because the finance provider will typically have a financial interest in the vehicle right up until the time your finance has been completely paid off.
The request for a contribution serves two purposes:
- it indicates that you have some financial reserves;
- it also reduces the total financial exposure to the hire purchase facility provider.
The larger the deposit you have, typically the less you will pay in motorhome finance interest overall.
There is no suggestion that the potential facility provider wishes to intrude into your personal financial affairs.
However, in terms of both their own risk management techniques and the requirements of the regulator, they are obliged to perform an assessment of this nature. It is intended to be primarily in the best interests of you, the applicant, to make sure that your planned purchase won’t over-stretch you financially.
Credit history check
The motorhome finance provider will also need to carry a check of your credit history record in order to secure hire purchase or other forms of financial facility.
Some finance providers, such as us at ACF Direct, do understand that even responsible people may have experienced odd difficulties in the past in terms of their credit history and related transactions. This may not be a showstopper in terms of progression towards the agreement of motorhome finance.
Of course, any finance provider may reserve the right to refuse an application in a situation where they believe that problems on the credit history files are particularly significant.
If you are concerned about aspects of your credit history, it is advisable to highlight these in advance to us so that we can consider them and offer appropriate advice. If finance is refused following a full credit history check, that fact may be reflected on your credit history files and in turn further negatively influence future funds providers.
It may be possible to perform a “soft footprint” credit history check that does not affect your credit history standing at all.
At ACF Direct, we are experts in all aspects of motorhome finance and we will be only too pleased to discuss any of the above with you in more detail.