The first point to make is that what follows is not financial advice.
Just what methods of funding would be suitable for you will depend a lot upon your own personal financial situation. As that isn’t known here, please keep in mind that the points below are generalities that may or may not apply in your unique circumstances.
In the majority of cases, there are typically four potential sources of motorhome finance:
- your bank;
- the dealership;
- a finance company you’ve found yourself;
- friends, family or your own financial resources (e.g. a retirement lump-sum).
As this is about finding finance, the last one above won’t be discussed further.
The other three have their strengths and some issues to consider.
Whoever it is you’re asking to advance motorhome finance, they will typically be looking for you to bring certain things to the table:
- evidence that you can afford the repayment schedule (usually in the form of regular income);
- a price for the vehicle proposed that makes sense when viewed against its realistic market value;
- an identity and address that can be easily verified against things such as the electoral register– this is to prove that you are who you say you are;
- a financial contribution towards the price. This is sometimes called “the deposit” and it is a way of reducing or sharing the risk with the lender. Typically, the more of your own money you’re including as the deposit, the easier you should find it to secure funding at attractive rates (assuming all other things are equal);
- an acceptable credit history record. Contrary to some myth, credit history issues are NOT usually a showstopper but they may affect how much you’ll need to pay for your finance.
This has a major attraction for some in that it’s familiar. Banks have also cleverly positioned themselves in the marketplace over generations so that they sound like solid pillars of the community – and that still appeals to some.
On the downside, you might find that:
- they’re rather slow to make decisions;
- it’s possible they’ll demand a higher contribution from you than some other potential providers;
- you may wish to keep your vehicle purchasing affairs private in terms of your bank’s view of the totality of your engagements;
- the banks can be risk-averse and less receptive to luxury vehicle financing than some other sources.
Dealerships have a big advantage – they know the finance providers who are likely to be receptive to applications relating to motorhome finance. This route might for example, help to keep the deposit you need to provide at a lower level.
It might save you a lot of time and trouble because it’s one-stop shopping.
Things to keep in mind might include:
- some may prefer to keep the business of finding finance and driving a deal on a motorhome, separate (though due to the high demand for motorhomes and the fact they hold their prices, this might be less of an issue than it would be with cars);
- do review the finance proposition from the dealership just as you would any other, looking at interest rates and so on.
Finance companies of your own choice
Remember, every time you make a loan application and it’s refused, that will potentially damage your credit score. So, avoid making large numbers of random applications in the hope you’ll get a favourable outcome and instead look for companies that have a track record in motorhome finance.
Look at all the usual factors including:
- whether they’re a fully regulated company;
- the interest rate they’re apply in AER terms;
- how long they’ll allow repayments over;
- the maximum age of the vehicle they’ll accept;
- any conditions or penalty clauses etc.
Take your time reviewing their proposition and if you’re not really comfortable with financial concepts, get objective advice from someone who is.