Motorhome purchase and how to finance it

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RAS

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Dear members,

As a VW Campervan owner looking to upgrade to a motorhome, could I please ask and I am not looking for any personal details.

Purely for my benefit and hopefully this is not taken as being too intrusive or rude. I am looking to understand how I go about funding such a large investment as a motorhome.
Could I please ask the members as to how you have financed their motorhome purchase and whether you would do the same again.
If it was via financial loans or lease purchase then which finance organisation did you use, rate did you get?
Was it via the MH dealer or done separately?
The interest rates quoted by some brokers is as high as 8.9% which puts a lot on a loan over 10 years.
If you would prefer to share information but not on a general thread then please do make contact on a private conversation.





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Kannon Fodda said:
I bought new, effectively fully financed, half on the mortgage, half on a 7 year Black Horse HP. I took the view that being single with no dependents I'd much rather be able to have access to something I enjoy now, rather than go without for many years in the hope I'd eventually have finally saved enough (never going to happen I always spend whatever I can get my hands on).

My mortgage is one of the flexible types, effectively my current bank account is my mortgage and thus a horrible sized overdraft that in theory gets reduced when salary goes in and hopefully if you keep your spending down, you pay it all off quicker. But effectively you have a large credit limit secured against the value of the home. I didn't want to take the mortgage right up to the limit, so I'd still have headroom for other contingencies and to do stuff to improve the house. In my case, as I've been here so long my loan to overall house equity is less than a sixth. I could pay it all off tomorrow using the 25% lump sum from pension plans. Meanwhile the growth on the pension has far outstripped the interest rate on the mortgage.

The HP loan (advised against a PCP type plan as I was putting so much equity into the van outside of the HP) I chose 7 years as I'd figured the van would be a reasonably long term purchase. Even with depreciation, the PVC will be worth more than the debt. Contrary to the MHF rule of thumb that it takes 3 MH's to find the right one, this is my only van purchase, I spent some time working up to the layout I wanted, and whilst the eventual decision to buy was effectively made in 3 hours at the NEC, I'd spent over a year looking around, getting ideas, and dithering. I don't expect to change it until I've worn it out, or after retirement when inevitably my expectations would change. Meanwhile I did clarify that I could pay off the HP more quickly if desired. The HP has a higher interest rate than the mortgage, but is still outperformed by the pension (even when I'm now making negligible contributions to the pension), and the 25% pension lump sum would cover both HP and mortgage if needed.
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But why take hp and not draw down more on the flexible mortgage or wasn't there enough drawdown available?. No point borrowing at a higher rate
 
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I think a lot of dealers would be in trouble if they didn’t get their fees from finance companies.
Borrow smallest amount you need and pay it off as quickly as you possibly can
 
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We got our first one in 2009.
They bought out the scrappage deal for old motors.
I saw the Hyundai i10 was 4,500 with scrappage so worked out it would cost me £150 ish a month for 3 years for a brand new motor.
Thought i would ring up the mortgage company and see if i could borrow the money. Because I had paid a lump off my mortgage they were willing to lend a substantial amount (to me it was substantial) so I thought how much can i borrow for 150 quid a month over a longer time and borrowed that money
So we bought a motorhome and a car.
Sold the motorhome 7 years later at a loss of £5,500 and still have the car.
mortgage finished some time ago and we save now and have paid off our second motorhome so now in the position to save money for the first time in our lives whilst owing nobody anything.

If i had decided to save for the motorhome we would have missed out on 7 or 8 years motorhoming and £150 a month was not deblitating (to us) or we wouldnt have considered the car
 
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The Wino said:
But why take hp and not draw down more on the flexible mortgage or wasn't there enough drawdown available?. No point borrowing at a higher rate
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Whilst anything I do buy will need to seem reasonable value, I'm fortunate not to need to watch every penny so don't spend hours analysing finances. My mortgage was set many years ago and I'd have needed a higher credit limit to buy the complete MH on it. If I was really motivated, I would have remortgaged a few years ago for a better interest rate. Having said that the mortgage valuer would shudder in horror at the "building site" state of my home - think DIY SOS for numerous over ambitious projects started and never completed (there is a reason for my being single). The MH allows me to run out the front door and ignore the latest thing going wrong. Since the rate the pension plans can accumulate at is unpredictable, perhaps I should just take the 25% lump sum, and get rid of all debt, but I also have a live for now rather than tomorrow attitude to my financing. In 2020, the overall pension pot increased in value by the total value of the MH so I might not be doing things totally efficiently, but on balance it's working for me.
 
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Jim said:
Maybe don't borrow as much. £20,000 will buy you an old but very good motorhome that you could keep for three years and sell for around, £20,000 (y). I guarantee that you'll be as excited in that first week away in it as the first owner was 15 or 18 years ago. (y)
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I agree with Jim's point of view. I dipped my toe in 4 years ago with an older van for @15K. It's taken us to France, Holland and Belgium over the last couple of years as well as lots of trips in the UK. I've only spent maybe 2K over those years. Some on repairs and some on improvments since I bought it and it's still worth @15K today (possibly more in the current market). I don't think I would have had any more trips, or fun, if it had originally cost me £45K +. I currently have no plans to replace it either.
 
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suavecarve said:
We got our first one in 2009.
They bought out the scrappage deal for old motors.
I saw the Hyundai i10 was 4,500 with scrappage so worked out it would cost me £150 ish a month for 3 years for a brand new motor.
Thought i would ring up the mortgage company and see if i could borrow the money. Because I had paid a lump off my mortgage they were willing to lend a substantial amount (to me it was substantial) so I thought how much can i borrow for 150 quid a month over a longer time and borrowed that money
So we bought a motorhome and a car.
Sold the motorhome 7 years later at a loss of £5,500 and still have the car.
mortgage finished some time ago and we save now and have paid off our second motorhome so now in the position to save money for the first time in our lives whilst owing nobody anything.

If i had decided to save for the motorhome we would have missed out on 7 or 8 years motorhoming and £150 a month was not deblitating (to us) or we wouldnt have considered the car
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When you think about it, that wasn't really a £5,500 loss you could have spent double or triple that on hotels over seven years so good on you.
 
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Bought our new 11years ago with some black horse dealer finance, (not going to say on here how much borrowed), we were asset rich and cash poor at the time, 4 years later when we sold a property, cleared the remainder of the 10 year finance, so save a fortune in interest. I did simular with solar panels on house, financed then for 2 years before settle early. This gave me a much higher feed in tariff than if I save up.

One thing to remember buying with a finance company give you better protection against
”not fit for purpose”.

secondly my brother in law died at 62 saving for his perfect van,
 
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Jim said:
Maybe don't borrow as much. £20,000 will buy you an old but very good motorhome that you could keep for three years and sell for around, £20,000 (y). I guarantee that you'll be as excited in that first week away in it as the first owner was 15 or 18 years ago. (y)
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That is my way to go, plenty good old motorhomes about, in my first post to this thread, I wasn't suggesting the op did not buy a bigger van, just not spend more than you have, you never know when you may need some money for something else.

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DandG5515 said:
Bought our new 11years ago with some black horse dealer finance, (not going to say on here how much borrowed), we were asset rich and cash poor at the time, 4 years later when we sold a property, cleared the remainder of the 10 year finance, so save a fortune in interest. I did simular with solar panels on house, financed then for 2 years before settle early. This gave me a much higher feed in tariff than if I save up.

One thing to remember buying with a finance company give you better protection against
”not fit for purpose”.

secondly my brother in law died at 62 saving for his perfect van,
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Many people who pay cash may have had an inheritance or a lump sum, normal mortal people tend to get a loan (or pcp) for a car so why not a MoHo. There are not many people who have the odd stash lying around so why not borrow for something that can give so much pleasure, the only caveat is only borrow what you can afford and not max out the monthly spare money.
 
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Jim said:
Maybe don't borrow as much. £20,000 will buy you an old but very good motorhome that you could keep for three years and sell for around, £20,000 (y). I guarantee that you'll be as excited in that first week away in it as the first owner was 15 or 18 years ago. (y)
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I bought mine (a 1998) 7 years ago for £13,000 cash (my first m/h), a 'Boy's toy' as an experiment to see if I enjoyed motorhoming. It has and does everything I need.
I've travelled extensively throughout Europe, faultlessly, except for normal vehicle consumables/servicing. It owes me nothing and provides more or less pocket money travelling. I love it and the fun it gives.
It wouldn't suit me any better if I'd paid 30, 40 or 50k but of course it would look 'posher' if that was of the slightest importance to me.

RH side.jpg
 
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Note to the OP.

Could I respectfully recommend that you visit the excellent MSE site (Moneysavingexpert) site.

On there you will find a whole section devoted to Borrowing and loans.

Here are their 'Need to Knows;

The seven need-to-knows​

  • 1.Only borrow as much as you NEED to. Then pay it back as quickly as you can​

  • 2.'Credit card loans' under £5,000 can be cheaper – though you'll need to be disciplined to pay it back​

  • 3.Credit history's important, but income guides how much you can borrow​

  • 4.Beware of 'representative' APR – you could get a MUCH higher rate​

  • 5.Bizarrely it sometimes costs less to borrow more – but be careful​


    While generally you should try to minimise borrowing, a peculiar quirk means with loans sometimes you pay less by getting a slightly bigger loan. This happens because rates decrease at set thresholds.
    For example, if you wanted to borrow £4,900 over 5yrs, the cheapest loan is 8.2%, so in total you repay £5,990. Yet borrow £5,000 and as the rate drops to 3.2%, the total repayment is £5,417 – that's £573 LESS repaid even though you borrowed £100 more.
    So if you're borrowing close to a threshold (£2,000, £3,000, £5,000 or £7,500) use our Loan Cost Calc to see if you're better off borrowing a tad more (assuming you're accepted for the advertised rate). You could even use the 'extra' cash towards your first loan repayment(s).

  • 6.You can usually overpay or settle your loan early for free​

  • 7.Sub-prime loans – why we don’t cover them​

    https://www.moneysavingexpert.com/loans/cheap-personal-loans/#accordion-content-023703852-6​

    Well worth a read. (IMHO)​

  • ​

 
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Coolcats said:
When you think about it, that wasn't really a £5,500 loss you could have spent double or triple that on hotels over seven years so good on you.
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Considering I was (imo) amazingly good at being a FLT at the time, the grand cost of all my holidays in that period were the cost of a ferry and diesel. (tax and insurance)
 
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I got a personal loan at 2.8% and a 0% credit card deal with no fee just because it was available. Saw no point in paying the finance charges offered by dealers for their "specialist" products.

Good luck with your purchase. We also traded up from a VW but kept the VW for local rallies and love the contrast.

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DandG5515 said:
Bought our new 11years ago with some black horse dealer finance, (not going to say on here how much borrowed), we were asset rich and cash poor at the time, 4 years later when we sold a property, cleared the remainder of the 10 year finance, so save a fortune in interest. I did simular with solar panels on house, financed then for 2 years before settle early. This gave me a much higher feed in tariff than if I save up.

One thing to remember buying with a finance company give you better protection against
”not fit for purpose”.
Click to expand...
We built up gradually over the years, from old second-hand vehicles needing work to buying outright and selling privately, or getting good deals in the first place. Saying that our last one cost us a packet but around half of the price was paid from savings, the px being the other portion.

If you are able to meet loan repayments then do it BUT do NOT overstretch yourself to get one, its not worth having it if it's gonna cause you worry.

The cautions about being sure you are going to be able to pay a loan in the future are very important, if you end up without a job, or some other issue that means your income drops, how will you pay it?

As an experienced MHer, if I had to start all over again, I'd still do it the way we did, saving and buying what we could afford, or possibly with a small loan, but certainly not a massive one.

As for where to get your loan, personally I'd avoid any loan secured on the vehicle itself which is what Black Horse etc tend to do, as it means that if you change the MH in the future you end up having to settle that loan and then take out another to cover the balance for your new purchase, thus paying interest on interest, and often have to pay settlement/admin fees too - we've only ever had one of those on a new car with 0% finance and paid it off very quickly and have never had one since.

If it's a loan secured on your home, or a mortgage advance, you don't have to repay it if you decide to change MHs so much easier and cheaper to change, and the rates are usually a heck of a lot lower than other types of loans, especially 'vehicle' secured ones.

Always check how much it is to take out a loan just above and just below certain limits, eg a loan for £9,999 may cost more in interest than one for £10,000, it's just the way the do it.
 
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We used our fully paid up caravan which was just a couple of years old, along with some savings and finance from our bank. We made sure that we had sufficient funds to enjoy our purchase and cover running costs etc. We also traded in our tow car and purchased a small run around. My wife and I are 68 and decided we wanted part finance to reach our goal rather than continuing to save while the prices increased.
This all happened in August last year and even with the Covid restrictions we still managed 6 weeks staycations.Quotes from Tesco, M&S and Bank of Scotland had goods rates over the short term that we chose. We decided to go with our own bank ( Bank of Scotland)
We are mortgage free so that did help and we have no dependents .
We feel life is to short so we went for it but there is a lot to consider.
The Blackhorse rates advertised then seemed to be a lot higher.
 
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When I bought my last car, the dealers were decidedly disappointed that I was not interested in finance. I assume it was because there was a significant cut in it for them. The finance company does not do it for free, either. It's all additional cost and, should you want to finish early, you're not likely to get anything back until after the bonuses have been subtracted.

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two said:
When I bought my last car, the dealers were decidedly disappointed that I was not interested in finance. I assume it was because there was a significant cut in it for them. The finance company does not do it for free, either. It's all additional cost and, should you want to finish early, you're not likely to get anything back until after the bonuses have been subtracted.
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I think the days of money off for cash went a long time ago because there's a nice earner in selling finance.
 
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I was advised always have a small amount on dealer finance in case you end up with a turkey and need help to reject it
 
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Saved half, borrowed half from a pier to pier system (ZOOPLA). Knew I had a bit of money coming my way within 12 months and paid off loan part in full as soon as it came through with no penalties. But then we purposely bought a lower priced MH knowing we needed to spend £2K to renovate it. Worked for us.
 
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RAS keep in mind the average age here is about 84 and most have sold off their 4 bed detached, down scaled and bought a £100k MH with their appreciated homes equity (i'm joking of course).

We financed ours as we decided a MH was a great family asset when we were 40ish yrs old and now way did we have a spare £50k.

In reality we started with a tin tent (financed) paid it off, sold it and used that as the deposit to get an ex-rental MH as a way to get started. Then once we knew we were hooked we bought a better van (also financed). To balance this we have cheaper cars than most people we know and we live "carefully" (each persons interpretation of what that means).

But we can go away at the drop of a hat and be by a lake, BBQ on with fishing rod in hand in a few hours and stay for the weekend for little money(y)

Just avoid the trap of getting in a position where you look at the van on the drive and see it as a cost and NEVER calculate the real costs of ownership (ie factor in the monthly payments) as numbers rarely stack up when emotions and human life quality values are being calculated.
 
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I think loan rates are so low at the moment. 20k over 5yrs with tesco cost about 21500 . Whereas interest rates on savings is garbage. I would still take a loan even if I had the cash to pay for it. Then keep the cash as a safety net. Then when you've paid it off you'd still have the 2ok. You could use the option of a remortgage as your safety net if you don't have the cash.

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In 2019 we put £16000 deposit down and took a bank loan from Tesco at a low interest rate for £12000. We have been fortunate and have paid it off this week with monies from my mums estate. We were paying £233.60 over 5 years. We were comfortable with this as the house was paid for and it was only a third of what we paid on our mortgage. We would just like to use it now :giggle:
 
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RAS said:
Dear members,

As a VW Campervan owner looking to upgrade to a motorhome, could I please ask and I am not looking for any personal details.

Purely for my benefit and hopefully this is not taken as being too intrusive or rude. I am looking to understand how I go about funding such a large investment as a motorhome.
Could I please ask the members as to how you have financed their motorhome purchase and whether you would do the same again.
If it was via financial loans or lease purchase then which finance organisation did you use, rate did you get?
Was it via the MH dealer or done separately?
The interest rates quoted by some brokers is as high as 8.9% which puts a lot on a loan over 10 years.
If you would prefer to share information but not on a general thread then please do make contact on a private conversation.





Re
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If you have enough equity in your home and your existing mortgage is a capital repayment one then you ma6 be able to either do a top up loan or remortgage your home. Whether it’s right for you depends on your ages length of existing mortgage and obviously the new interest rate. Speak to your mortgage lender or broker
 
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We purchased our van last February, taking out 11 zero % credit cards between the two if us, with repayment periods of up to 27 months, and repaying the minimum amount each month. The total borrowed was £90,000.

We then sold the house and put the proceeds in to 'high' interest accounts (not that any are high theses days), meaning that we will earn approx £2,000 in interest over the 2 year period.
 
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Interesting thread👍
trade up gradually because more than likely your first one will not be your suitable layout.
Borrow up to 10k, keep for 3 yrs then Trade up again would be my advice 🤝🚐
 
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Ridgeway said:
RAS keep in mind the average age here is about 84 and most have sold off their 4 bed detached, down scaled and bought a £100k MH with their appreciated homes equity (i'm joking of course).

We financed ours as we decided a MH was a great family asset when we were 40ish yrs old and now way did we have a spare £50k.

In reality we started with a tin tent (financed) paid it off, sold it and used that as the deposit to get an ex-rental MH as a way to get started. Then once we knew we were hooked we bought a better van (also financed). To balance this we have cheaper cars than most people we know and we live "carefully" (each persons interpretation of what that means).

But we can go away at the drop of a hat and be by a lake, BBQ on with fishing rod in hand in a few hours and stay for the weekend for little money(y)

Just avoid the trap of getting in a position where you look at the van on the drive and see it as a cost and NEVER calculate the real costs of ownership (ie factor in the monthly payments) as numbers rarely stack up when emotions and human life quality values are being calculated.
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If Funsters average age is 84 he won’t have to wait long before there will be loads of cheap MoHos for sale 😜

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Higher street lenders are generally the cheapest (2-3% possible) but they tend to cap at £25k so you’re either looking at specialist brokers, re-mortgaging or whacking some on 0% credit cards (as well as a loan). Dealer finance rates are far too high, especially over a long time frame.

Talk to your own bank. If you have good credit and a history with them they may be more flexible with the loan cap and rates.

Nothing wrong with finance if used correctly and you read and understand all the paperwork and implication.
 
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