caravan finance

Your options for financing a touring caravan

If you're interested in investing in a caravan of any kind, you have multiple options open to you in terms of how you pay for it. Just like buying a car, there are options to either buy outright or to use a finance agreement or loan to cover the cost. They all have their individual advantages and drawbacks for you to think about.

Here's what you need to know about purchasing a caravan.

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What are the options open to you?

You have three main options when it comes to buying a caravan. You can get caravan finance, which spreads the cost of the caravan out over a period of time. You can get a different kind of loan for the purchase price and use that to buy the caravan. Or you can simply buy the caravan outright using your savings/capital.

Which is right for you? It depends entirely on your circumstance.

Touring caravan finance

Caravan finance companies offer very specific caravan loans, designed to make buying your caravan much more accessible. Touring caravan companies offer a variety of loans all offering unique rates and repayment terms, depending on your circumstances. This gives you a lot of options when it comes to tailoring your finance deal.

The advantages of caravan finance are:

  • Many different finance deals available
  • Tailor your repayments to your circumstance
  • Limit your exposure to depreciation

The disadvantages of caravan finance are:

  • You don't "own" the caravan until it's paid off
  • Limited options if you have bad credit
  • You're tied into a long-term financial commitment

Different kinds of caravan loans

The other way to purchase a caravan using a loan is to get a general bank loan and use that for the purchase price. You can get a final figure of the cost of your caravan, then get an independent loan to cover that cost. Depending on your financial history and relationship with your bank several options might be open to you.

The advantages of this are:

  • More options to tailor your loan
  • Potentially more attractive interest rates
  • Option to consolidate with other loans with same lender

The disadvantages are:

  • No caravan-specific support available
  • Still a large financial commitment on your part
  • Potentially more complicated to arrange

Buying a caravan outright

You may prefer to simply buy the caravan outright, which you can do using either your general capital or your savings. Most dealers will allow you to simply pay the full amount using a bank transfer. Remember that cash can only be used for relatively small amounts, many dealers will not legally be able to sell more expensive caravans for cash.

The advantages of this are:

  • Simple, easy, and comparatively hassle-free
  • No finance checks or applications are required
  • You will own the caravan outright from the outset

The disadvantages of this are:

  • Finding that level of capital can be difficult
  • You may trigger a fraud warning from your bank during transfer
  • You will have completely invested in a depreciating asset

Can you get caravan finance with bad credit?

Yes. Caravan finance companies will generally still have finance packages available for those who have bad credit. The drawback of this, however, is that you will be comparatively limited in your options compared to someone who has good credit. You may encounter roadblocks such as higher interest rates or caps on the maximum borrowing limit you're allowed. The best thing to do is be honest about your situation from the outset, and see what your finance company can do to help you.

Is buying with finance better than buying outright?

The first thing to remember is that there's no "right and wrong" way of buying a caravan. If you see the caravan you want and you can afford it, there's nothing wrong with buying it outright.

The issue with that, however, is that you will have invested a lot of money in a depreciating asset. So, for example, if in five years you decide you want to sell it, you may have lost more in depreciation than you would if you had just been making payments on the financing. It's also possible to set off a fraud warning when attempting to make the bank transfer, even if you pre-warn the bank of your transaction, which can make the buying process stressful.

With financing, on the other hand, you will have a more approachable and accessible path to purchasing your caravan, but the drawback will be that you don't actually "own" it until the final payment is made.

What you need to do is assess your needs, your budget, your current financial situation, and use this information to make a decision about which path to caravan ownership is going to be right for you.

There's no right and no wrong, only what works to get you the caravan you really want.