Before you buy
Various caravan finance deals are available. However, all of them will work out more expensive than outright purchase.
To work out if caravan financing is right for you, get a clear idea of how much you can afford to spend each month, paying back a loan.
Remember also to take into account the hidden costs of caravanning, such as equipping the caravan for the first time, fuel, insurance, site fees and storage costs.
Most caravan financing companies will ask for some basic information about you such as your income. In addition, depending on the type of loan you require, you may be asked how many miles you will travel each year.
You can usually buy from a dealer using the financing options below but you will be limited to a personal loan or secured loan if you are buying from a private individual.
If you have a bad credit rating this could affect the cost of the loan or your ability to get a loan.
Remember, don’t rush into the first deal you are offered, make sure you have a number of comparisons and take time to read the small print!
Four ways to caravan financing:
1. HP (Hire Purchase)
Hire Purchase is a loan which is secured against the caravan and tends to be the most popular form of caravan financing.
The caravan will only be owned by you once the loan is settled in full; therefore you cannot sell the caravan until it is paid for.
Many caravan dealers offer this type of loan and the loan charges can be reduced depending on how much you pay up front.
Take time to shop around as you will find that the annual percentage repayment (APR) will vary.
2. Personal loan
This is an ‘unsecured’ loan and widely available online or at the bank or now even at supermarkets.
Always shop around for the best APR; small differences can really add up over time.
With this type of caravan financing you can sell the caravan before the loan is settled but you will of course, still have to continue the loan payments.
3. Secured loan or additional mortgage
This loan is usually secured against the value of your house and, should you fail to keep up the loan repayments, the result could be the loan company recouping the money you owe them through the sale of your property.
Keep in mind that although these loans are usually spread over a longer term than others and this may make the repayments cheaper; they may cost a lot more in the long run and the risks associated with forfeiting the payments are much greater.
Secured loans can also take longer to arrange and unless you take a fixed interest deal, the payment rates (similar to your mortgage) may fluctuate up or down.
4. Credit Card
If your credit card has a high enough limit you may be able to purchase a caravan on it.
However, credit cards usually charge much higher interest rates than loans, so do be careful.
If you can afford a large enough upfront payment and you only need to finance a small amount of the purchase price then this method may be beneficial.
Yours to enjoy
When you’ve worked out which method is right for you, you’re all ready to make your purchase and take advantage of the great benefit of caravan financing which is; that you can take delivery of your caravan now and start to use it straight away!