You will naturally do your research and take time to ensure that you choose the right caravan to meet all your needs. However, unless you are buying outright, it is also important to find the best caravan finance which allows you to spread the cost.
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.
5. 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!
Financial Ombudsman Service
If you’re thinking about purchasing a caravan or motorhome in the coming year you may be considering taking a credit agreement to help you spread the cost of payments. Or maybe you’re storing your vehicle over the cold winter months and rely on an insurance policy to keep you covered.
The good news is credit agreements and insurance policies are regulated in the UK – but where can you turn if something goes wrong?
The Financial Ombudsman Service is the free service set up by law with the power to sort out problems with financial businesses – such as banks or insurance companies. Every year the ombudsman sees a range of complaints involving caravans – from problems with insurance claims to keeping on top of increasing credit payments.
If you have a money-related problem, you should be able to sort things out direct with your bank, insurance company or finance business. But if things don’t go smoothly and you’re still unhappy, the Financial Ombudsman Service may be able to help, on 0300 123 9 123 or www.financial-ombudsman.org.uk.
Top tips from the ombudsman on getting a financial problem sorted out
If you need to make a complaint about a financial product or service, here are a few tips to help get your complaint is taken seriously:
- What are you unhappy about? – Be clear in your own mind what the problem is and how you would like it to be sorted.
- Try to stay calm – No matter how upset you might be, try to be calm and polite. This can help you get your points across more clearly and effectively.
- Get in touch – First, contact the business you think is responsible and explain what has gone wrong. Try to have any relevant information to hand, for example statements or policy documents.
- Write or phone? – If you’re putting your complaint in writing keep a copy of your letter or email. If you prefer to call, make a note of the time and date of the call, the details of what was said and the name of the person you spoke to.
- Taking things further – The business will have a complaints procedure – if the person you are dealing with isn’t able to sort things out, say you want to take things further. And remember, if the business doesn’t get things sorted, the Financial Ombudsman Service may be able to help
Top tips for caravaners
- Check the minimum security requirements when you take out caravan insurance– and ask the broker to explain if you’re unsure if your existing arrangements meet the policy terms.
- If you’re taking out a finance agreement to buy a caravan, always take a good look at the terms and conditions and make sure you understand how much you will be paying over the period of the agreement.
- If an insurance or finance contract is unclear, don’t sign up until the lender or broker has fully explained how the agreement works.
- If your caravan is damaged or stolen, remember to get a police report, evidence from the campsite owner and even visual evidence like photographs.
- If you’re looking to make a significant purchase don’t feel pressured to sign a contract there and then.
Contact the Financial Ombudsman Service on 0300 123 9 123 or www.financial-ombudsman.org.uk.