How to Finance a Caravan

Caravans give you the opportunity to get out on the open road and explore at your own pace, creating memorable experiences. However, caravans don’t come cheap, and deciding on the right way to finance your caravan can be tricky. Understanding the different options available to you will help to make the whole process simple, and make sure you find the most affordable solution.

That’s why we put together this guide; to explain the various options you have to finance your caravan and look at some of the frequently asked questions on caravan finance.

Options for financing your caravan

When it comes to financing your caravan, you have a few options.

Personal contract purchase

Personal contract purchase, also known as PCP finance, is popular option for caravan finance. PCP caravan finance will involve paying a deposit, usually around 10% of the total value, followed by monthly installments for a set period, usually 3-5 years. At the end of this period, you can either choose to pay a final “balloon” payment so you own the caravan, or you can return it to the lender without paying this final fee.

PCP finance is popular for financing a caravan because it’s flexible. If you decide after the payment period that you no longer want the caravan, you can simply choose to end the agreement without paying the balloon payment. However, if you decide you want to keep hold of the caravan, and you have the funds available for the final payment, you can do so.

Monthly payments for PCP caravan finance are usually lower than other methods, but the final balloon payment will be sizeable. Often, you’ll end up paying more interest over time, but the smaller monthly payments can help make having a caravan more affordable, especially if you’d like a luxury model.

Hire purchase

Hire purchase finance, also referred to as HP finance, is another common option for financing caravans. With this finance type, you would pay a deposit, usually around 10%, but some lenders might not require any deposit at all, and then pay monthly installments.  After the finance period, which is typically between 1-5 years, you’ll own the caravan. Sometimes, you’ll be able to return the caravan after you’ve paid off half the amount, if you decide you no longer want it.

HP finance often have fixed interest rates, so you’ll know exactly what you’ll have to pay over the period, which can make it easier to plan and manage your finances. The longer your finance period, the more interest you’ll usually have to pay, although often it means you’ll pay smaller amounts each month. You can decide for yourself whether you’d like to pay over a shorter or longer period, depending on your circumstances.

Personal contract hire

Personal contract hire, also known as PCH finance, is a type of caravan lease agreement. It’s essentially a long-term rental, where at no point will you own the caravan outright. This would mean that you may have certain restrictions on usage of the caravan. If there’s any damage to the caravan at the end of the hire period, you will likely have to pay to get this fixed.

With PCH caravan finance, you’ll pay a deposit and then you’ll pay monthly installments. These will typically be lower than other types of caravan finance where you’ll own the caravan after the agreement period. However, with this type of agreement, you won’t be able to build any equity into the caravan, as it will always need to be returned.

Personal loan

Another option to finance your caravan is with an unsecured personal loan. With this type of loan, you can use the money to purchase whatever you want, including a caravan. However, the amount and interest rates you get will typically be heavily dependent on your credit score. If you have a bad credit score, you may find that you’re unable to access the amount you need for the caravan you want.

When you buy a caravan with an unsecured loan, you’ll own it outright straight away, even as you continue to pay of the monthly repayments. This can be a benefit, but you won’t have the option of returning it to the lender if you decide you no longer want to keep it. Instead, you’ll have to go about selling it, either to a dealership or to a private buyer.

Do you need to pay a deposit to finance a caravan?

Many caravan finance options will require you to pay a deposit, which will usually, be around 10% of the caravan’s value. However, this isn’t always the case. Some lenders may be able to offer you no deposit caravan finance, meaning you’ll just need to be able to make the monthly repayments.

This can make it more accessible to get a caravan if you don’t have a lump sum available, but it will often mean you’ll pay higher monthly payments than if you paid a deposit. You’ll have to plan ahead to ensure you can continue to cover the payments for the entire payment period.

Can I get caravan finance with bad credit?

Applying for caravan finance will mean the lender will conduct a credit check. Often, people with poor credit scores can find they don’t qualify for finance, as lenders see them as too high a risk. However, at GetCarFinanceHere, we don’t think your past should stop you from securing your dream caravan. We offer bad credit caravan finance, working with your current situation and budget to find the best caravan finance offering available to you, including hire purchase, personal contract purchase, and personal hire contract options.

Can I buy new or used caravans on finance?

Most dealerships will offer car finance on both new and used caravan models. Some might have stipulations on the age of the caravan though, i.e., they won’t lend on caravans that are older than 10 years. You may also find lenders that can offer caravan finance from private sellers, if you find a particular model being sold that you’d really like.

GetCarFinanceHere can help you achieve your dream of owning a caravan with our caravan finance deals. Our expert team will do the hard work for you, looking through our network of lenders to find the best finance option for you, and will be able to guide you through the entire process. Apply for finance online today or take a look at our showroom to see the great second-hand caravans we have available.