Borrowing to Buy

LoanWith interest rates at an extremely low level, borrowing cash appears to be a more attractive prospect every day. For many prospective owners, the expense of buying a motorhome up front is the only thing preventing them from getting out there on the road. Does it make sense to borrow cash to buy a motorhome? Could it save you money in the long run?

Doing the Maths

For most people there is a limit to where borrowing does make some sort of sense. For most people taking out about 50% of a motorhome’s value and making the rest up as a deposit is a good starting point and, depending on your income and motorhome use, it can go up or down from there. You should also think carefully about the sort of motorhome you need and what you can afford – the interest on small differences in price can be vast.

Saving on Hire

There are plenty of families who hire a motorhome every year for four or five weeks and have never considered the additional costs of hire. If you’re someone who uses a motorhome for that period, borrowing money and buying your own motorhome could actually cost you less than the normally inflated hire costs. It’s worth adding up how much you normally spend on hire and extrapolating that over, say, ten years.

Depreciation Costs

In theory you should be able to sell your motorhome when you’re done and recoup some of the money. You can pay off the remainder of your loan with this or invest it in a new vehicle. Don’t forget to factor in the costs of things like repairs and motorhome insurance to your calculations, they’ll all affect your ability to pay.

Everyone is different when it comes to borrowing against a motorhome and different financial circumstances mean the point where it stops becoming efficient to buy comes quicker for some than for others. The only way to figure it out yourself is to do the maths and to make sure you have a good understanding of your own circumstances.