Motorhome finance and other funding methods
A big ticket item is always an investment and, other than your house, you're unlikely to purchase a bigger ticket item than a motorhome or campervan.
There are several choices when it comes to financing a motorhome or campervan purchase. Here are some viable motorhome finance options to consider before you sign on the dotted line…
PCP is one of the newest ways to finance your motorhome, with Black Horse (the vehicle finance arm of Lloyds Bank), introducing motorhome finance PCPs in October 2016. The scheme is designed to allow a wider range of people to have the option of enjoying a brand-new motorhome, as the PCP deal allows buyers to spread the cost over several years.
‘‘We’ve spoken to a number of people recently, particularly young families who want a motorhome but are reluctant to make such a large financial and long-term commitment,” said Nagla Thabet, Black Horse's Head of Franchise and Leisure.
The attraction for many is that a PCP allows them to try motorhoming for a number of years without having to commit to buying a new motorhome. If they don’t like it, they will always have the option to simply hand it back at the end of the term.
PCP plans will be familiar to many new car buyers, and lots of the motorhome buying processes are exactly the same as if you were funding a new car. The contract works with the customer paying a deposit and then monthly repayments over a period of up to five years. At this point, there is an option to give the motorhome back, pay the outstanding amount or trade in the vehicle and use any residual equity to start a new PCP agreement on another new motorhome.
There are terms and conditions that dictate what’s acceptable for the cost-free return of the vehicle, including keeping to a limited number of miles per year and a lack of damage. It is also likely that all servicing and warranty work must done by an approved dealer at the intervals recommended by the base vehicle manufacturer and converter.
The primary intention of a PCP deal is to attract more new buyers into the motorhome market. This means it is likely to be better suited to entry-level models, with the ranges on offer usually set by the lender.
Outright purchase using a personal loan can be a great option when financing a motorhome — especially with the low interest rates on offer these days. The main high street banks have competitive rates on personal loans, and your own bank may be able to offer you an exclusive existing-customers-only deal.
An MMM survey showed that over 70 per cent of buyers responded that they planned on using cash savings to purchase their motorhome. With savings interest rates at an all-time low, this can easily be seen as the way to go and with absolutely no financial strings attached, there’s the opportunity to possibly cut a great deal with the retailer.
This is a way of releasing funds from your home, while being able to stay living in it for as long as you need
The most popular type of equity release plan is a lifetime mortgage. There are no repayments and the amount, plus interest, is only paid back when the scheme ends. This is usually on the sale of the property and/or the death of the policyholder. The downside is that the value of the policyholder’s estate is reduced, while the amount of interest on the final settlement can vary significantly.
If you’re aged 55-plus, you have access to the full amount invested in your personal (private) pension. This means you can withdraw a lump sum before you retire. The first 25% of that sum is tax-free, while the remaining three-quarters will be taxed at your normal marginal rate.
Remember that your final pension income will be reduced when you retire, though.
However you choose to finance your motorhome or campervan purchase, it’s vital that you put your money to good use and choose the right ‘van for you. Click here for our ultimate guide to buying a motorhome, including the best tips on haggling and where to buy your motorhome from.
We also have loads of advice about insuring your motorhome or campervan — click here to read these.