Financing a Caravan: A Guide
Making a major purchase like a motorhome or a caravan can be a daunting prospect. As well as the possible upfront cost of purchasing your new vehicle, there are dozens of other expenses to factor in: maintenance, insurance, road tax and MOTs are just some of the baselines you have to think about. Your outlays grow even more if you’re looking to park up and use your caravan as a mobile home.
Can I afford it?
“Staycationing” is on the rise. As more and more Brits choose to holiday at home, the demand for touring caravans and motorhomes has increased to reflect this, which means the price has too. Buying the caravan itself is always going to be your biggest outlay.
Whether you’re looking to buy your very own park home or a home away from home, you’ll need to work out how you’re going to cover the costs.
Caravan financing
Don’t have all the upfront cash to foot the cost? Don’t worry, the dream’s not over. A financing package that breaks your purchase down into reasonable payments is a great option for those looking to stagger the cost of their new caravan.
Of course, you need to be confident of meeting the repayment terms before you agree on any deal. RAC research suggested that up to 10% of motorists struggle with repayments on their vehicles.
One advantage of caravans is that they hold their value better than cars. In a worst case scenario, your vehicle may well still cover the bulk of the loan. Aside from this, companies like Lending Valley offer a variety of funding products you can take advantage of as well.
Lump sum
If you have the upfront cash, it’s well worth considering making a single lump sum payment to limit loan interest.
Get quotes
When it comes to financing your caravan, it pays to shop around. Always choose a regulated company authorised by the FCA (Financial Conduct Authority) as this will offer you the best consumer protections.
Getting a loan is personal. The rates you get offered will be conditional on your credit history, the amount you’re looking to borrow and the length of the loan. Because caravan interest rates have been low in recent years, you should look at securing fixed interest rates to make sure you don’t end up with bigger repayments in the years to come.
Credit
Improving your credit score by a few points ahead of securing caravan financing is a clever idea. It’s not as daunting as it seems either. If you’re thinking about taking out a loan to finance your caravan, don’t take on any new credit agreements for a while. Paying down any existing credit card debts and making regular payments to deadline could help you gain access to better interest rates.
Of course, it can be difficult to gain access to financing if you have a bad credit score. But it won’t exclude you altogether from buying a caravan via affordable finance.
Choose your caravan
When you’ve searched around and weighed up the different options, all that’s left is to pick your vehicle. Once you’ve settled upon repayment terms, most caravan financing companies allow you to make a purchase from any reputable dealer. The rest is up to you.
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