Caravan finance and loans

Yes, you have several options when it comes to financing a caravan. A new caravan will typically set you back more than £15,000, and some cost at least double that. If you’re planning on a string of caravan holidays on the coast, or perhaps in the countryside, but you’re not sure how you can afford to turn your dreams into a reality, a loan is one way that could help. The options available to you are:

• Personal loan. A personal loan is when you borrow a certain amount of money from a specialist lender, and pay it back in monthly instalments over an agreed period of time. With a personal loan, you can pay for your caravan with the money you receive upfront, and re-pay the cost over a period of time.
• Hire purchase (HP). With hire purchase plans, you’ll spread the cost of the caravan over an agreed period, paying a fixed amount each month. During this time you’re effectively hiring the caravan at the same time as purchasing it, and at the end of the period you’ll own the caravan outright.
• Personal contract purchase (PCP). A PCP is much like a hire purchase, except you’ll pay less each month, at the end of the agreed period make a one-off payment in order to own the caravan outright.
• Credit cards (for part-financing). If you have a good credit score and are able to get approved for a card with a high credit limit, you could use it to fund at least part of your caravan purchase. With a credit card, you can spread the purchase of your caravan over an extended period of time, with a minimum amount required to be re-paid every month. You could consider a 0% purchase card to give you an interest free period.
• In-store finance. Most caravan dealerships offer in-store hire purchase or personal contract purchase finance options when you buy your caravan with them. In fact, a huge number of people simply sign on the dotted line there and then without comparing their options. While these deals sometimes boast an enticing 0% interest promotion, make sure you compare the overall cost of the finance with options from other lenders. Shopping around only takes a moment and almost always saves you money.

While it may be possible to finance a caravan with 0% interest, most finance providers will charge at least some interest if you use a loan to cover the cost of your caravan. Some lenders will offer caravan finance with £0 deposit, which means you won’t need to pay anything upfront, but you’re still likely to pay interest as part of your loan repayments going forward.

To compare loans, you should focus on the important features of each loan, and how they differ from one another. We’ve listed some characteristics for you to consider:

• Loan amount. The amount that you can borrow will differ between lenders, so make sure you have a value in mind when choosing your loan.
• Interest rate. There are some loans available that are interest free, which will save you some money. If the loans you are considering are not interest free, make sure you take the interest rate into consideration.
• Fees. You may be required to pay upfront or ongoing costs that will add to the cost of your loan.
• Eligibility criteria. Whilst you may be eligible for some loans, you may not meet the criteria for others.
• APR. The Annual Percentage Rate is designed to provide consumers with an annual summary cost for the loan, including any setup fees and interest. Different loans will have different APRs, but it is important to remember that they are only representative, and your costs may be more expensive.
• Loan terms. The length of the loan period may differ between providers, as well as the terms and conditions of taking out the loan.
• Overall cost. As well as the loan amount, you should also take into consideration any startup costs and any interest.
• Early repayment. Although you may find yourself in a position to pay off your loan early, some loans charge extra costs if you repay your loan too early.

You should only apply for a personal loan to finance your caravan if you are certain that you can meet the repayment terms. Otherwise, you will face additional costs and it may impact your credit rating.Before you apply for a personal loan, make sure you meet the following criteria:

• You are over the age of 18.
• You will be no older than 70 when the loan term finishes.
• You have been a UK resident for over 3 years.
• You have a regular income above £12,000.
• If you are self-employed, you have been so for over 2 years.
• You must have a good credit rating, with no history of bankruptcy or county court judgements.
• You hold a UK bank or building society account that is able to pay direct debits.

If you have decided that a provider’s loan is right for you, simply fill in the application form for the loan via its website. You will need proof of the following:

• Your ID
• Your address details for the past 3 years.
• Your bank details if provider uses Open-Banking.
• Your current income and employment details in the form of payslips and bank statements.