How to finance a motorhome

So you’ve decided you want your own motorhome – awesome! But if you don’t have the funds to buy outright, how do you manage to buy one? Luckily, there are heaps of options for  motorhome loans in New Zealand. Learn how to finance a motorhome with our simple guide.

Disclaimer: While we’re savvy on all things motorhome, we’re not finance professionals. This is just a general guide to financing a motorhome purchase in New Zealand; please do your own research into specific loans that might suit you!

What is a motorhome loan?

A motorhome loan is exactly how it sounds – borrowing money for purchasing a motorhome. It typically refers to formal, long-term financing, i.e., not something you’d pay off in a few months or with payments here and there. They’re separate from vehicle loans (aka auto loans) as they’re usually bigger purchases.

Motorhome loans are offered by banks, credit unions, motorhome dealerships and online lenders, with the motorhome purchased usually serving as collateral for the loan. As with all loans, you’ll likely need a good credit score, proof of income and a demonstrable ability to cover payments, as well as be over 18 years of age. However, as motorhome loans are usually for a higher amount, finance companies may impose other terms, similar to a mortgage.

You can use your loan for a new motorhome in all cases, or a used one in some – check with each lender. (If you’re buying a smaller, used, motorhome, it might make more sense to get a personal loan from your bank instead.)

Typical terms of a motorhome loan

Specific terms of your own motorhome loan will depend on your finances and the terms of your lender, but something like $50-60,000 payable over three or four years is fairly common for a motorhome purchase. If you’re splashing out on a brand new, state of the art motorhome costing a couple of hundred thousand, your repayment period could be up to 20 years.

Like with a house, motorhome loans need a down payment, usually 10%. There may also be associated costs, such as a motorhome inspection or loan establishment fee. Each lender will also have a minimum and maximum amount you can borrow.

Finance brokers may also impose a minimum term for repayments, in other words not allow you to pay the loan off early without substantial costs to recover lost interest. If you think you might have significantly more disposable income in a year or two, avoid this type of loan.

How to finance a motorhome in New Zealand

1. Figure out your budget

A motorhome can cost from under $10,000 for a small used model to over $500,000 for a huge home on wheels. There are also associated costs like adding kit (kitchen, electronics or security equipment), interior decoration, fuel and buying insurance. See ourhow much does a motorhome cost or how much does it cost to insure a motorhome? guides for an overview.

To figure out your motorhome loan costs, think about what you want from a motorhome/how you’ll use it. A smaller vehicle for occasional holidays is affordable to most, but maybe you want to travel full time? Will you travel in winter or off-road? And what are your must-haves and nice-to-haves?

Jot up all the costs and see if the motorhome you want fits within that budget. Or look at your monthly outgoings, figure out how much you could pay on a motorhome loan each month and for how long.

2. Check your credit score

Sadly, there’s no point drooling over motorhome sales pages if you know your credit history is poor, as lenders are unlikely to finance your loan.

If this applies to you, look at ways of improving your credit history and score, such as a short-term high-interest credit card. Some lenders will approve loans for poor credit scores, but the interest rate is likely to be considerably higher.

3. Save your down payment

You’ll likely be asked to pay anything between 10% and 20% of the full loan cost before the remaining money is released.

If you’re lucky enough to have more than this stashed in the bank, and if your lender allows, make a higher down payment to reduce the remaining cost of the loan. Either way, have this amount saved before applying for your loan.

4. Gather your paperwork

Different lenders require different documents, but as a minimum, you’ll have to provide proof of address, usually a utility bill or two; proof of identity, such as a passport or driving licence; and proof of income, including bank statements and details of other debts like a mortgage or credit card.

Lenders can ask for several months’ worth of bank statements, so be prepared.

5. Find your motorhome

Whether you want a secured or unsecured loan, over three years or 20, a lender for a motorhome loan will want basic info on the vehicle you intend to buy.

How old is the motorhome, what’s its value and mileage, and does it need updating or repairs? Have all this to hand before the next step.

6. Sort insurance

Most lenders will need proof of insurance for your motorhome before they approve a loan or release funds. Make sure to research motorhome insurance rates before approaching a lender, choosing the provider best for your needs.

7. And finally… approach your lender

From the information and motorhome loan comparison sites above, you should now know which lender to choose and how much to ask for. It’s time to apply for your motorhome loan!

New Zealand interest rates for motorhome loans

At the time of writing, interest rates for a motorhome loan in New Zealand tend to range from just under 9% to just over 20%, with an average rating of about 12%. Bear in mind too that your monthly payments could go up if interest rates fluctuate, although some providers, for example, RV Super Centre in Auckland, offer a fixed interest rate for the duration of the loan.

Here’s a selection of motorhome loan interest rates for New Zealand providers, based on borrowing $60,000 over four years. Interest rates could be higher or lower depending on your individual finances:

MTF

• Average motorhome loan interest rate: 12.70%

• Weekly repayment: $373.74

• Total loan cost: $77,737.92

CreditOne

• Average motorhome loan interest rate: 9.95%

• Weekly repayment: $349.94

• Total loan cost: $72,787.52

Stadium Finance

• Average motorhome loan interest rate: 10.95%

• Weekly repayment: $360.25

• Total loan cost: $74,929.13

Nobilo Finance

• Average motorhome loan interest rate: 8.95%

• Weekly repayment: $355.77

• Total loan cost: $73,999.20

How to qualify for the best motorhome loan

Because motorhomes are considered expensive items, lenders can be cautious about covering them. Increase your chances of getting a loan, and at competitive rates, by proving regular employment and income as well as permanency at your address. Having the same job and address for 2+ years is a big tick for most lenders, as are owning your home and being employed full- rather than part-time.

Other ways to qualify for a good motorhome loan include reducing other debts, a history of regular saving, not going into constant overdraft, and showing an excellent payment history for credit cards, store cards and similar lending.

But how to get the best deal on your motorhome loan? The easiest way is to use a loan comparison site likeFinder orVehicle Loans for an overview of lenders, their interest percentage range and their loan terms. And if you opt to use a motorhome dealership for your loan, you might be able to negotiate on a motorhome price or loan deal.

FAQs on motorhome financing

Can I use an auto loan to finance my motorhome purchase?

In most cases, no. This is because motorhomes are generally seen as luxury items and therefore expendable to borrowers if a financial crisis hits. Motorhomes are generally more expensive than cars too.

Can I have my motorhome loan co-signed?

You might want to sign for the motorhome loan with another person, like a partner. As with all other types of finance, whether you can do this depends on the guidelines of the individual lender.

Think carefully if you’re asked to co-sign a motorhome loan! The loan will show up on your credit reports and you’ll be equally liable for the debt.

How do I know which type of motorhome to buy?

If you’re new to the whole concept of # vanlife, the huge range of motorhomes out there might be a bit overwhelming! Try before you buy with a Kiwi road trip in one of our motorhomes for hire.

You get to see what works best for you, and you get a holiday – it’s win/win! Our best motorhome to buy andbuying a motorhome blogs have heaps more info too.

Ready to get your motorhome loan?

Now that you know how to finance a motorhome, you can take the next step towards buying your own. And when it's all yours, you can make a return on your investment by renting it out on Camplify! We cover expenses like hire insurance and breakdown cover, so all you have to do is list your motorhome, sit back, and enjoy the dollars rolling in.

Why Camplify?

Each year, heaps of Kiwis earn up to $10,000 by renting out their motorhome through Camplify. It provides a quick and easy way to generate long-term passive income and earn a return on their investment.

And the best part is, Camplify takes care of many of the expenses involved in hiring out your vehicle, including:

• Comprehensive hire insurance.

• 24/7 AA nationwide breakdown cover for hirers.

• Dedicated customer support.

If you’re interested in joining Camplify as an owner, try our earnings calculator and see how much income you could generate each year if you rent out your motorhome!