If you are lucky enough to have the finances available to purchase a motorhome outright, then this is one option you should take a careful look at. On the plus side, you will own your own motorhome without the worry of having to make the repayments each month. The downside is that the cost of a motorhome can be almost as much as buying a bricks and mortar home, with some of the larger four-berth, or more, size homes costing around £100,000. However, another plus is that motorhomes do not depreciate as much as a car would do, with the average motorhome still retaining 70% of its value after three years.
Interest-free credit options
As motorhome finance options go, the 0% interest deal is one of the best, but also one of the hardest to find. As the name suggests, the interest-free option allows you to borrow the money for the cost of the motorhome without the added burden of paying any interest. That means the money you pay each month goes to actually paying off the loan rather than paying the interest first, so you will pay the same amount of money as a cash buyer but over a set period instead. Nevertheless, this option is often scarce, or only around for a limited time so finding one amongst all the finance options available can be tricky.
Paying by credit card
The credit card option is another one where you could secure 0% interest, especially if you make use of the many introductory offers that many credit card companies provide if you sign up to them or switch your balance from another lender. In addition to this, you may also earn rewards on your purchase, plus you will be better protected thanks to the Consumer Credit Act which gives certain assurances should you fall foul of an unscrupulous trader. The downsides to paying by credit card include the fact that if you can’t secure a 0% interest introductory offer, then the interest you pay could be high, or the interest rate could soar after the introductory offer ends. Not all dealers will accept credit cards for motorhome purchases, or they may not allow you to pay the total amount if they do.
Hire purchase agreements
With hire purchase, you can pay the cost of the motorhome over a set period, usually a few years, but until the motorhome is paid off you will not be the outright owner of the vehicle. Sure, you’ll be responsible for the upkeep, the insurance and servicing of the vehicle but the finance company will retain ownership until the final payment is made. Some of the benefits of hire purchase include the ability to pay off the outstanding balance at any time, as well as having flexibility when it comes to the size of the deposit you put down. On the downside, leaving the contract early usually incurs a penalty, and if you can’t keep up with the repayments the vehicle will be repossessed.
Personal credit purchase
This option allows you to pay smaller monthly payments with the proviso that you make a more substantial payment at the end of the agreement. A typical deposit is 10% of the value of the motorhome, and then you pay an amount each month usually for two to four years. PCP works by allowing you to not pay the total value of the vehicle, but instead you’re paying the difference between the cost when new and what it’s value is expected to be at the end of the agreement. The rest is then deferred until the end, which is when you will make that one last sizeable payment if you wish to purchase the vehicle. If you do not want to pay the lump sum, you may be able to use the motorhome as a deposit on another motorhome with the dealer you agreed the finance deal with, otherwise you will be required to give the motorhome back.
Personal contract hire
Unlike PCP, personal contract hire does not give you the option of owning the vehicle outright at the end of the agreement and is much closer to vehicle leasing than ownership. This is often the best option for those people who are looking to keep their monthly payments low, and although there may be a limit to the number of miles you can travel each year, some PCH options include tax and servicing. In addition to which, the amount you pay each month is fixed for the length of the agreement.