Motor home finance

Thanks all, in the end we got a deal on the finance through Black Horse because it was a new motorhome so 6.9% was good enough we thought. 

That sounds a heck of a high rate.......especially with the base rate at 0.25%

Sainsbury bank loans as low as 3.1% depending on the amount, term etc.  Black Horse was 9.9% but more like HP than a personal loan.

Out of interest, why would HP (where the lender has far greater security) cost more than three times as much as an unsecured loan?

Is it because Black Horse are present at caravan shows and so people just go to them without really thinking about it?

I suspect the reasoning is that the loan is secured against the item purchased. The finance company have no guarantee they will be able to recover the full value of the outstanding loan if they have to repossess the purchased item as they won't know the condition. A personal loan is secured against your assets, ie a house which has a more certain value, From memory Hire Purchase rates have always been higher than bank loans but banks tend to ask more questions!!!

David

Yes, the personal loans stop at 25k and are usually 5 year deals. This was for 10 years and well in excess of 25k! Its flexible in that we can overpay etc and not get penalised. I did check around a bit but maybe should have done a bit more on it

Gordon

If you are happy with the deal that is all that matters. The problem that caravan/motorhome dealers have is that they don't have the same buying power in terms of finance that say motor manufacturers have. As with cars they is always a limit to the total deal and you have to look at the deal in its total. So paying a slightly higher interest rate may well have been offset by any extras/part exchange etc.

David

Sainsbury bank loans as low as 3.1% depending on the amount, term etc.  Black Horse was 9.9% but more like HP than a personal loan.

Out of interest, why would HP (where the lender has far greater security) cost more than three times as much as an unsecured loan?

Is it because Black Horse are present at caravan shows and so people just go to them without really thinking about it?

I suspect the reasoning is that the loan is secured against the item purchased. The finance company have no guarantee they will be able to recover the full value of the outstanding loan if they have to repossess the purchased item as they won't know the condition. A personal loan is secured against your assets, ie a house which has a more certain value, From memory Hire Purchase rates have always been higher than bank loans but banks tend to ask more questions!!!

David

Not so, David.

A personal loan from a bank is an unsecured loan. You would not normally put up your house (or anything else) as collateral for this type of loan.

If you default due to inadequate funds, a bank loan would be a non-priority debt and they would take their place in the queue along with all other non-priority debtors.

I suspect that a bank would be less willing to lend a large amount of money on a depreciating asset, like a M/H. Black Horse obviously do, but charge a serious premium for the priveledge.

 

I suspect the reasoning is that the loan is secured against the item purchased. The finance company have no guarantee they will be able to recover the full value of the outstanding loan if they have to repossess the purchased item as they won't know the condition. A personal loan is secured against your assets, ie a house which has a more certain value, From memory Hire Purchase rates have always been higher than bank loans but banks tend to ask more questions!!!

David

More likely the reverse David...Although some are unsecured loans, dealer finance can also be HP or Conditional Sale, which means the lender can repossess in certain circumstances.  Bank personal loans are usually unsecured, but the acceptance criteria may be tighter.

The main driver of the higher rates on dealer finance is their commission.

Sainsbury bank loans as low as 3.1% depending on the amount, term etc.  Black Horse was 9.9% but more like HP than a personal loan.

Out of interest, why would HP (where the lender has far greater security) cost more than three times as much as an unsecured loan?

Is it because Black Horse are present at caravan shows and so people just go to them without really thinking about it?

Write your comments here...that's what I thought, must be a captive market there does not seem to be any competitors to challenge them.

Perhaps also worth pointing out that the actual size of the market is quite small compared to say the car industry and this must influence to rates as there is little competition to drive rates down?

David

Point to note when discussing / considering finance / loan/ hp, etc., the interest rate can be expressed either as a flat rate or an APR (though the APR must be included somewhere).

As a rough rule of thumb the APR is twice the flat rate.

Always make sure you're comparing like for like, and don't forget to include the impact of any fees, e.g. 0% balance transfer, subject to a 3.9% fee.

Reading teh small print can make a big difference to what you pay.