If you wish to buy a motorhome, used or old and do not have readily available resources for it, you may be wondering if you can source it through a loan. It is not unusual to consider the process complex if you have not done it before.
However, we are here to make things easier for you and guide you in this regard. Continue reading this article as we walk you through the process of financing a motorhome and what aspects you need to consider in this regard.
How hard is it to get finance for the motorhome?
For many, the idea of travelling is closely associated with enjoying freedom, and using a motorhome to travel is the best way to enjoy your trip freely, moving according to your timetable and stopping when it suits you.
However, the aspect of the heavy cost associated with owning a motorhome holds many back from their dream.
But what if we told you that owning a motorhome is possible, and you may not have to liquidate any asset or save money for years to materialize your dreams?
Arranging finance for a motorhome is not a complicated process, and you need to pick a package that is in line with your financial capacity.
Read on as we discuss a few options.
How can I finance a motorhome?
With motorhome finance, your dream of driving your own motorhome is not far, and with the right finance options, you can make your motorhome purchase easy and smooth.
There are multiple options to cater to various budgets, including those that do not require you to submit a heavy deposit to acquire a loan.
Here are some options you can consider
Getting a personal or bank loan
Getting a loan from a bank or a finance company depends on your credit rating and score. Banks need to assess the risk factor associated with issuing a loan to you before they can proceed.
If you have a good credit score, you can get a loan, as a good credit score implies a low risk for the lender. Having a good score means having a history of regularly submitting monthly bills and payments on loans.
Similarly, having a low credit score will make it hard for you to secure finance, as your credit history may indicate financial trouble when you struggle to make regular due payments.
The bank may be wary of lending a loan to you as they do not have the confidence that the due instalments would be paid in time.
Like most finance issuers, banks issue secured loans with lower interest rates. You can research about the rate being charged by other financing companies to get an idea.
When it comes to financing, most individuals prefer getting a personal loan as it enables them to secure cash with the optimal deal.
The interest for a personal loan may be higher than a bank loan but is considerably less than credit card payments.
However, before you consider a personal loan, you must be sure that you will be able to pay regularly so that the interest rate does not accumulate.
Personal loan-providing companies offer finance packages that you can consider to find a suitable option.
The next option is equity release, which implies getting an advance loan payment on partial property value.
One common form of this method is a lifetime mortgage, whereby the loan is paid back with interest only at the time of sale of the asset or demise of the policyholder.
This method, like a mortgage, implies that you do not own the motorhome until you have made the last instalment with interest.
Before you begin your monthly instalments, you will need to make a fixed deposit, which is usually 10% but may vary according to the repayment period duration.
As much as we like to own an asset without relying on external financing, it is perhaps not the best idea to invest our whole or a major chunk of our savings in one asset only.
You may significantly limit your spending capacity and not have any funds for an emergency.
Instead, you can buy a new motorhome by putting down a large chunk of the price as an initial deposit and paying the remaining in the form of instalments.
Unless you have sufficient funds left in the bank after you pay for the motorhome upfront, we do not recommend paying the total price upfront.
Get broker finance
You can get dealer or broker finance if you already have outstanding finance on an existing loan and do not want another.
A broker can assist you with the application for getting a motorhome as they have linkages with banks and financial institutions and get you a good interest rate. Hence you can secure a loan from your preferred institution or bank.
What do I need to consider for financing a motorhome?
Before you decide which channel to use to secure finance for a motorhome, you need to consider whether you want a new or old motorhome according to your budget or loan preference.
You must also consider your credit score as a good rating will improve your chances of getting a loan. You also need to consider other costs you may incur when you own a motorhome.
You will need to account for these costs when estimating your monthly expenses. These include maintenance and fuel costs, insurance, taxes, and security fees, where applicable.
Is it easy to finance a motorhome?
While securing a loan for purchasing a motorhome may be harder than it is for getting a car. However, getting a loan should not be a problem if you have a good credit score.
This also depends on how much you are borrowing, the duration of repayment, and the interest rate. The process will be smooth and easy if you decide on a package that suits your circumstances.