How to finance buying a motorhome
Considering buying a new or used motorhome for the first time?
RV Sales Centre has a range of quality KEA, Roller Team and Jayco motorhomes, with prices ranging from just over $60,000 to around $130,000.
But purchasing an RV is a big investment. So here’s a guide (and a few tips) on how to finance a motorhome.
The most popular forms of motorhome purchase are by:
- Mortgage redraw
- Bank loan
- Superannuation redraw
- Dealer finance
- Broker finance
Obviously with cash, you get to buy what you want when you want, but it may restrict your spending power in other areas. A mortgage redraw may potentially increase the life of your home loan and lead to higher interest payments.
An unsecured bank loan or personal loan may attract a higher interest rate than motorhome loans offered by specialist qualified finance brokers. And a superannuation redraw can compromise your ‘nest egg’, while dealer finance may limit the choice of credit providers.
BANK OR BROKER?
Meanwhile, an increasing number of motorhome buyers are turning to finance brokerages that provide competitive interest loans. Most have close connections with trusted lenders (including banks and major finance companies), allowing them to tailor a ‘best interest rate’ solution by comparing options from a host of Australia’s leading financial institutions.
You can call a broker or apply online – obligation-free - for a pre-approved loan. And whether you’re working full time or self-employed, these financiers can tailor repayment options to suit individual circumstances.
Banks generally only offer their own products and will normally be geared to either home loan redraws or personal loans, but brokers can arrange finance specifically tailored to motorhome buyers and still process an application on your behalf if you wish to use your own bank.
Buyers usually take out a secured loan, which generally attracts a lower interest rate, or an unsecured loan that can even be used for debt consolidation. No security is required but interest rates are slightly higher.
Showing you’re a ‘good risk’ increases your approval chances, and a good risk will generally be offered a lower interest rate.
Many motorhome loans offer flexible repayment structures over one-year to seven-year terms, with no deposit and 100 per cent finance available depending upon your application details. But you should always consider the interest rate, term of loan, repayments structure, fees and insurance.
It should be noted that interest rates can vary significantly with the purchase of either a new or used motorhome, and that your credit history, stable employment record, income and mortgage equity can determine a better deal.
One prominent ‘leisure loan’ provider lists important questions (abbreviated below) you must ask before committing to purchasing a caravan, which can also be applied to a motorhome.
1. How much?
Before you start searching for your dream motorhome, you need to sit down and examine your budget to determine your spending limits, the type of motorhome that is most suitable for you and whether you will need to look at specific motorhome finance.
You should also ask a sales person about the estimated annual costs of running the motorhome as well as maintenance ̶ they should be able to provide you with a breakdown of annual running costs.
It also doesn’t hurt to find out if the price is negotiable. If you don’t ask, you will never know and it could save you a little cash.
2. What is your motorhoming experience?
This is a question for the sales person at the dealership or the private seller who is trying to convince you that this is the motorhome you should buy.
It is essential that sales staff have had previous personal and professional motorhome experience. You need to be getting the right information from their product knowledge so that you can get the appropriate motorhome for your lifestyle and budget.
3. Is there a ‘buy-back price’?
You need to consider your options to sell your motorhome just in case you fall on difficult times after you purchase it. Some dealers will enter into a contractual agreement in case of illness or tragedy in which they can guarantee a buy-back percentage based on the agreed value of the motorhome.
4. How reliable is this motorhome going to be?
Consider the warranty that comes with your chosen motorhome ̶ this will be a good indicator of the manufacturer’s faith in the product. The longer the warranty, the better. It can also help to do some research online and look at some reviews from actual people who have purchased the make and model of the motorhomes you are interested in.
If you remember to ask these questions, you will gain a wealth of information that will help you to making an informed decision.
Additionally, think carefully about the amount of money you wish to borrow and always enlist the help of experts. Generally speaking, new vehicles are better than older vehicles but warranty and ongoing costs are also important considerations.
Common requirements for motorhome financing often include signing privacy forms, providing identification such as copy of your driver’s licence, as well as proof of income such as payslips, bank statements, credit record, and a rates notice or rental details.
Comprehensive motorhome insurance is also required on the motorhome for the duration of your loan. A broker can also help arrange insurance for your purchase.
Travelling around the country in a motorhome is a truly special experience. Best of luck with the search for your dream home away from home!