What Does Bad Credit Mean for Motorhome Finance?
When you apply for a loan, part of the process is for lenders to access your credit score, how much you earn and your general finances. If you’ve got bad credit it typically means that lenders are hesitant to approve your loan as your finances indicate a risk with your ability to repay it. Although your chances of getting a loan approved are reduced, it’s still possible but you will encounter some challenges including:
- High Interest: Higher interest rates mean you’ll be paying back a larger amount than what you borrowed in an attempt for lenders to mitigate the potential risks of lending to those with bad credit.
- More Upfront Costs: Many lenders will ask for a higher down payment upfront to balance out any potential risks of failed payments.
- Smaller Lender Pool: Many lenders will avoid lending to those with bad credit altogether which limits the amount of options you have to choose from.
- Strict Loan Terms: You might not be able to acquire flexible loans with things like longer repayment dates and instead may be confined to shorter repayments of a few years for however much you borrow.
How to Secure a Motorhome Loan with Bad Finance
Having bad finance isn’t the end of the world, and there are a few steps you can take to increase the likelihood of getting a loan:
Try to Improve Your Credit Score
One of the ways to help increase your chances of securing finance is by increasing your credit score. While it takes time to build your credit score back up, there are small steps you can take before seeking motorhome financing that could still improve your prospects.
- Check for and address any errors on your credit report
- Update details (name, address) on your report
- Increase payments on loans, credit cards, etc.
- Find ways to build your credit, such as using a regularly paid credit card
Consider Joint Hire
Most motorhome loans don’t need you to have a guarantor which you might think is a good thing it also means that you’ve not got that extra layer of support if you do have bad credit. To counter this issue, you can do something called a joint hire.
Joint hires are offered by the most reputable motorhome financing companies, and allow you to take out a joint loan with another person. This is especially ideal for couples seeking a motorhome, as joint hires are a great way to prove affordability, even if one or both of you have a poor or bad credit score.
With two people and two separate credit scores, the chances of acquiring a loan will increase.
Choose a Specialist Lender
If you work with a specialist lender who has experience in motorhome loan bad credit, you’re more likely to have a higher chance of securing a loan package that suits you. When you choose experienced lenders like us at Auto Finance, you’re working with experts who know the steps necessary to secure motorhome finance despite bad credit.
Our trusted advisors can also guide you towards the best loan options, the lowest interest rates, and the best possible deals despite credit setbacks. Working with someone who understands bad credit loans can also significantly reduce the stress of this experience, enabling you to more quickly and easily set off in your motorhome at last.
Save for a Down Payment
If you know there’s a high chance you’ll have to pay a larger down payment in order to acquire a motorhome loan then you need to ensure you can afford this upfront cost. Start saving up for a higher down payment in advance and aim to save about 10 to 20% of the vehicle’s asking price so you’re ready to pay should your loan terms be approved.
What Motorhome Finance Bad Credit Options Are There?
Whilst having bad credit does limit your finance options, there’s more than one way to finance a motorhome, and understanding your options allows you to settle on the best loan despite having bad credit.
- Hire Purchase (HP): Hire purchase loans are a popular finance option that gives users ten years to repay their lender, after which time they own their motorhome.
- Personal Loan: Personal loans offer a more generalised form of finance that’s not linked specifically to your motorhome. Lending like this allows for selling or part-exchanging a motorhome as required.
- Personal Contract Purchase (PCP): PCP provides lower repayments and the flexibility to either return your motorhome at the end of an agreement or pay off any remaining balance to secure ownership.
Don’t Let Bad Credit Crush Your Dreams! Get a Quote from Auto Finance Today
We know bad credit can be a hard thing to manage, but here at Auto Finance, our lending experts are on hand to help you drive away in your ideal motorhome, regardless of your credit. We’re known for our high acceptance rate so even if you’ve been rejected for finance before, we’ve got the knowledge and know-how to help get your motorhome finance bad credit loan approved.
When you contact our team, we’ll do everything you can to make the finance application process as stress-free and easy to navigate as possible. If you want to see how much you could be repaying and the rates before you apply, we’ve got a budget calculator for finance that gives you an estimate for rates based on your credit score and loan duration.
