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 Motorhome Financing: what Is It And How Does It Work?

Motorhome Financing: what Is It And How Does It Work?

Congratulations On Making The Decision To Purchase A Motorhome! Now let’s Talk About Financing Your Motorhome!

Introduction

Congratulations on making the fantastic decision to purchase a motorhome!

Motorhomes really are the future of a home-from-home source of exploration, and they can be a superb investment for your future, both in financial and holidaying terms.

However, the important question now is how do you finance the purchase of your motorhome to get those shiny new wheels on your drive to use whenever you feel the need to get away?

There are many options to finance the purchase of your new instant-holiday motorhome, and deciding on the option that best suits you and your current financial situation is the best way to obtain your new wheels safely.

So, how does motorhome financing work, and what are the most popular options for financing your new motorhome?

Hire purchase

Hire Purchase agreements are incredibly popular for those people who cannot afford the whole amount of a new motorhome outright but are also not willing to take out a loan for the total amount to cover the cost.

A hire purchase agreement is often an agreement that you take up with the dealership that you are purchasing the motorhome from and consists of signing into a legal arrangement whereby you pay the installments set out in the agreement monthly, and sometimes with a deposit too. 

A hire purchase agreement as a method of motorhome financing is like taking on a mortgage, whereby you won’t physically own your motorhome until you make the very final installment payment, and this can be anywhere from between five and seven years, but this can be variable due to:

  • the risk level applied to the finance agreement
  • the total amount of the hire purchase agreement 
  • the deposit amount
  • The APR rate at the time of purchase, and whether this is fixed or variable

More often than not, the scheduled payments are entirely separate from that of the regular running costs of the motorhome itself, such as insurances, fuel, road tax, and any maintenance and motorhome breakdown cover considerations, which will all be in addition to these monthly hire purchases payments.

Personal Savings Purchases

Of course, there is always the option to buy a motorhome outright, and one of the best ways to finance a motorhome, and this option can attract some fantastic package deals from the dealerships that sell you your motorhome.

Buying a motorhome outright can be achieved through:

  • Savings
  • Pension Payments
  • Bond and Investments

And we say pensions in here, as most people looking to purchase motorhomes are in the post-retirement age brackets and often seek a motorhome purchase as part of their prednisone retirement fund.

If you can comfortably purchase a motorhome in this way, there are going to be some apparent advantages to you, both in the short and long term, such as:

  • No Monthly Repayments to keep up with
  • You will own the motorhome outright
  • Nobody will add extensive time on to your repayments due to interest charges
  • You can drive away on the day of purchase, and it will be yours to keep with no risk of repossession.

Your money may seem like it has gone in a flash, but this is something you have worked for and now own.

Equity Release Options

The Equity release option is popular with some buyers who can choose to release some of the equity in their existing lifetime mortgage to free up funds to achieve their own motorhome financing. The motorhome will then be secured on your property, much like a secured loan would be.

The most significant advantage to this option of financing is that there are no repayments to make, and any interest that has accrued is only paid back when the term agreement has expired, either by selling the property the equity has been attached to or by the death of the person who holds the policy.

Personal Loan Options

Obtaining a personal loan is often the first consideration when looking to buy a motorhome, as they tend to be the most readily accessible option for significant purchases, such as a motorhome.

There are many personal loan options for all circumstances and from a number of lenders on the high street and online, but they will all be different in regards to:

  • Interest rates at the time of purchase, which can fluctuate and can change from fixed to a variable rate in term lengths 
  • Who you’re paying- With a personal loan, you will be paying back the lender and not the dealer. The dealer will have had their sale outright from the funds on the personal loan.
  • How long will you be making the repayments for- Again, this can vary according to the loan amount, interest rates, and the risk factors of the loan.

Purchasing a motorhome is a big deal and an expensive one, too, so make sure whichever option you choose to finance your motorhome purchase is the right one for you

It is always worth shopping around for motorhome financing first. Comparing lenders through websites such as Compare the Market or Money Supermarket will always give you an excellent overview of what kind of rates and deals you are looking at..

If the purchase comes with monthly repayment costs, make sure they are achievable within your monthly financial affairs to repay comfortably, so you don’t have the risk of having your motorhome repossessed.

And if you are buying your motorhome outright, make sure that the big purchase will not leave you in any financial difficulty.

Enjoy your new purchase, and we hope you have many happy years with your new home on wheels!