Static Caravan Finance – A Guide

Buying a static caravan on a holiday park means that you’ll need a fair amount of capital. However, there is an option to spread the cost by financing the static caravan’s purchase. This guide will consider static caravan finance options and look at both the advantages and disadvantages. We will also discuss Vat and the implications of your holiday home purchase.

Arguably, buying a static caravan outright is the ideal situation. However, you may not have the resources for this and will require financial flexibility. Read on to learn more about how to obtain this flexibility whilst buying your next holiday home and your rights.

Can you get Static Caravan Finance?

Yes, it is possible to get static caravan finance. , Just as you would pay for a credit card, a mortgage or a loan, you can buy a static caravan and spread the cost over time. Static caravan finance is a common way to purchase a holiday home.

Static Caravan Finance Options

There are three ways to get finance for your static caravan, these include;

• Hire Purchase Agreement
• Secured Loan
• Personal Loan

What is a Hire Purchase Agreement?

Entering into a Hire Purchase Agreement is the most common way to finance a static caravan. However, this arrangement is different to what you would expect elsewhere. It is not the same as buying a car on finance or setting up a mortgage.

Once this agreement is in place, a caravan won’t be ‘owned’ until it’s is paid off in full. Until that time, you are only renting or hiring your holiday home. However, it may mean specific terms you need to comply with during your ‘hire’ period. 

As with most finance agreements, an additional fee may be due at the end if you want to own your caravan. Therefore, be prepared to clear one final payment with your financier and the park operator. After this, you will take full ownership of your caravan.

Hire Purchase Agreements and Your Credit File

As always, any purchases made on credit will rely on your credit score; this includes buying a caravan on finance. A credit score is a record of payments you have made to companies on credit or through borrowing. This gives lenders confidence whether they can expect the money back from you when you agree to an arrangement.

It is a good idea to make sure you have a healthy credit score before utilising static caravan finance and buying a caravan; otherwise, The finance company could reject your request to the finance company. Of course, this will also harm our credit file. Also, remember that you should always clear payments with your park on time and in full, or your credit file will take an immediate hit. 

Black marks on your credit file can affect your ability to borrow elsewhere. However, it is never worth the risk of delaying payments. However, before entering into a finance agreement on a caravan, make sure you have the money available to clear funds at each instalment with your operator.

Benefits of Static Caravan Finance

There are many benefits of paying for a static caravan on finance; these include:

• You won’t pay for your home outright in one lump sum.
• Most finance companies offer flexible repayment schedules. You will discuss this before purchase.
• The Financial Conduct Authority regulates companies that offer static caravan finance. This protects your rights and will give you greater confidence when choosing the right option for you.
• Rather than having to save up capital to pay for a static caravan outright, you can set up finance right away.  *However, read all interim terms and conditions, as these can differ depending on the park you choose.

For many people, static caravan finance is the best option for getting into holiday home ownership. Undoubtedly, it stands to reason that there are a few aspects you’ll need to keep in mind before you take out an agreement.

Disadvantages of Static Caravan Finance

When you buy anything on finance, there will be a risk. Finance overseen by the FCA should be reputable and ensure your best interests at heart. However, buying a caravan in this manner is a big commitment. You must make sure that it suits your financial situation and income.

Here are just a few reasons why buying a caravan on finance may not be suitable for you:

• The lender will apply a rate of interest which will be payable. This means that while you are spreading your caravan and pitch the cost, you will pay more in the long run.
• Financing is not a good idea when buying a static caravan if you have no fixed income.  If you can’t guarantee that you will have money available to pay for your caravan in the long run, you shouldn’t sign an agreement.
• While you can spread the cost of a caravan using finance into manageable amounts, you may pay it off for a long time.  For example, you may need to pay off a caravan for five or six years at a comfortable rate.
• Entering into a finance agreement for your caravan means agreeing to a legal, binding contract.  Failure to keep up with these payments may mean legal action against you.

As always, we advise that you review finance contracts for your caravan with a park operator thoroughly. If you don’t understand or disagree with anything before taking out the finance, it is vital to seek independent advice.

35 QUESTIONS TO ASK BEFORE BUYING A STATIC CARAVAN

Do you pay VAT when Buying a Caravan?

It is important to remember that you will pay VAT (Value Added Tax) within the price of your caravan at the park you choose. Most holiday parks are registered for VAT. We all pay VAT on many items that we buy in the UK. This is based on the government’s current rates. Static caravans are no different. The amount you pay will be told to you by your holiday park.

When you buy your static caravan, your Vat costs will be included in the overall purchase fee. You will see Vat added to your invoice as an additional cost, but you will not need to clear it separately from your final bill. Although Vat is currently at a flat rate of 20%, it can change from budget to budget. Vatable rates are set at the government’s discretion.

Do you pay Vat on Pitch Fees?

It is worth noting that Pitch Fee payments will also be affected by VAT and anything you are likely to pay to the park in terms of business costs. However, you may find that you can obtain relief at some level from the price. This will be something you can speak to an accountant about, e.g. energy usage; you will also need to discuss matters with your park operator. Depending on the meters you have in place for your energy, you may be able to pay less VAT. However, if you are unsure of the terms involved or what applies to you, seek specialist advice.

Your Rights when Buying a Static Caravan

It is also worth remembering that you will have some rights under UK law when you buy anything on credit. For example, most holiday parks will be working in line with a finance company, a third party, to handle repayment requirements. 

If you are concerned that your static caravan finance, pitch or the service you receive is not as expected, you should get in touch with your financiers. Feel secure knowing that hire purchase agreements are fully regulated and offer additional security to buyers.

For example, if your caravan develops a fault or a problem that isn’t through your wrongdoing or not your fault, get in touch with your park operator and caravan finance company in writing. You must send written letters to parties requesting action. You may never need to take such action; however, it is worth remembering. Feel free to exercise them.

Should You Enter into Static Caravan Finance?

For many people, buying a caravan on finance makes all the difference. It can be a helpful way to ensure that you have access to a holiday home sooner rather than later. It is beneficial if you don’t have enough money to buy a caravan and pitch outright.

However, when you enter into a finance agreement for a static caravan, you will be under the contract for an extended period o time. You must always clear payments when requested and in full. In addition, you may face legal action if you fail to do this and incur black marks on your credit file.

We recommend that you think carefully about financing your static caravan. Is it safer or more practical for you to save up the capital and purchase ou right? Discussing matters with a financial advisor before signing any documents is always good practice.

Now that we have discussed static caravan finance, you can read our guide to buying a static caravan.