Caravan finance

Looking to purchase a caravan? Finance options make ownership accessible through manageable monthly payments. Leading providers offer loans from £5,000 to £50,000, with terms ranging from 2 to 10 years. Interest rates start at 9.9% APR, making caravan ownership achievable for many budgets.

Understanding caravan finance

Caravan finance works like traditional vehicle financing. Lenders assess your creditworthiness and income to determine suitable loan terms. Entry-level touring caravans start around £15,000, while luxury static models can exceed £50,000. Your credit score, employment status, and income stability influence available rates and terms.

Monthly payments depend on three key factors: loan amount, term length, and interest rate. For example, financing a £20,000 caravan over five years typically costs between £400-500 monthly, varying with your APR and deposit size. Longer terms up to 10 years reduce monthly costs but increase total interest paid.

Most lenders require proof of regular income, with minimum annual earnings between £12,000 and £15,000. Credit checks form part of the assessment, though options exist for various credit profiles. Processing typically takes 1-2 business days for initial decisions.

Types of caravan finance

The market offers several financing solutions, each suited to different needs. Understanding these options helps you choose the most suitable arrangement for your circumstances.

• Hire Purchase (HP): Own your caravan after the final payment, with fixed monthly installments over 2-10 years
• Personal Contract Purchase (PCP): Lower monthly payments with flexible end-of-term options
• Personal Contract Hire (PCH): Long-term rental including maintenance
• Secured Loans: Use property as security for better rates
• Conditional Sale: Similar to HP but with stricter terms and potential rate benefits

Hire Purchase stands out as the most straightforward choice. You'll make consistent monthly payments between 24 and 84 months, gaining full ownership after the final payment. Interest rates typically range from 12% to 19.9% APR, based on your financial profile.

Applying for caravan finance

The application process starts with gathering essential documents. You'll need proof of identity, three years of address history, and income verification. UK residents aged 18 or over with regular income can apply. Supporting documentation speeds up approval, particularly recent bank statements and proof of earnings.

Initial assessments often use soft credit checks, protecting your credit score during the shopping phase. A hard credit check only occurs when you proceed with a specific deal. This approach lets you explore options without impacting your creditworthiness.

Lenders evaluate affordability based on your income, existing financial commitments, and living expenses. Quick decisions often come within 24 hours when you provide complete documentation upfront.

Repayment options

Most agreements feature fixed monthly payments throughout the term. Terms range from 24 to 120 months - longer periods mean lower monthly costs but higher total interest. Deposit requirements typically range from 10% to 20%, though some lenders offer no-deposit options with higher rates.

Early repayment options provide flexibility. Many lenders offer reduced settlement figures after a certain period. Additional costs might include arrangement fees and documentation charges, usually totaling £100-250.

Optional payment protection insurance covers circumstances affecting your ability to pay. Consider these extra costs when budgeting for your purchase.

Budgeting for your caravan purchase

Beyond finance payments, consider running costs in your budget. Annual expenses include insurance (£200-400), maintenance (£500-1,000), and site fees for static caravans (£2,000-5,000). Storage fees for touring models range from £300-600 yearly.

How much deposit do you need?

Standard deposits start at 10% of the purchase price. On a £20,000 caravan, expect to pay £2,000-4,000 upfront. Larger deposits secure better interest rates and reduce monthly payments. For example, increasing your deposit from 10% to 20% on a £25,000 caravan could save £50-100 monthly and reduce total interest significantly.

Some lenders offer no-deposit options for qualified buyers. While this eliminates upfront costs, it increases monthly payments and total interest over the loan term.

Caravan costs vs regular holidays

Compare ownership costs with traditional holiday expenses to assess long-term value. Initial purchase requires significant investment, offset by reduced accommodation costs over time. Static caravan site fees range from £2,000-5,000 annually, varying by location and facilities.

Regular maintenance keeps your caravan in good condition and protects its value. Budget for annual servicing, repairs, and insurance. Factor in storage costs for touring caravans during off-season periods.

Alisa Dan

17 February 2025