Looking to finance your next caravan purchase? John Sootheran outlines your options
The caravanning lifestyle offers one of the best investment returns around: not necessarily in terms of cash, but you’ll definitely profit from more freedom, greater pleasure – and priceless memories.
But this is still a major investment, whether you’re a first-time caravan buyer or you have a tourer to part-exchange for a newer model. So choosing carefully how to finance your purchase could save you a small fortune.
The options include using savings, a personal loan, personal contract purchase (PCP), hire purchase (HP), personal contract hire (PCH), or a dealer/broker finance package. The key to getting the best deal is understanding all of those different ways to pay.
For starters, if you have enough cash sitting in the bank to purchase your caravan outright, that will almost certainly be the cheapest way to buy, so let’s begin there.
Paying in cash
With most new caravans costing north of £20,000, cash purchases typically occur when a buyer receives a substantial boost in their financial situation, such as an inheritance.
However, cash sales might also be funded by a purchaser borrowing money against the equity in their property, or using a tax-free lump sum taken from their pension fund, once they’ve reached 55 years of age.
Whatever the source of the money might be, paying for your caravan in one hit means that you won’t be charged interest on the purchase, making this the cheapest option over the long run.
There was a time when cash was king for large purchases, although that seemed to end when vendors discovered that they could also generate significant revenue from arranging finance deals for their customers.
So if you’re in the fortunate position of being able to pay cash, do bear in mind that you still need to make that payment securely. It’s not recommended to rock up at your dealership with £25k in crisp new £50 notes! Always pay by bank transfer or banker’s draft.
Caravan finance
The term ‘caravan finance’ basically covers all of the ways in which you can purchase a van if you don’t have sufficient financial resources to pay for it in one go.
There are various avenues to explore, and your dealership might have several options for you to consider.
First, note that most, if not all, will require some form of deposit. This will typically be a substantial initial payment of 10% or 20% of the value of the caravan, perhaps £5000 or more, depending on the price of the tourer.
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