How to Buy a Motorhome on Finance in New Zealand

Does it feel like the right time to own a motorhome, but your savings aren’t quite where they need to be?

Perhaps you’re expecting a future windfall through a property sale or inheritance. Maybe you’re thinking about a lifestyle change to travel for an extended period of time. Or you may be a first-time buyer needing additional funding to cover the full cost of your dream RV.

Purchasing a motorhome is unquestionably a significant investment. However, there's a way to get the model you want sooner than you think — by buying it on finance.

In this blog, we discuss the types of finance options available, the importance of comparing interest rates with loan terms and how to set a realistic budget. We also cover what you need before applying for motorhome finance. Plus, we speak to an industry expert from Stadium Finance about how to complete your purchase and finalise your application for a loan.

What is motorhome finance?

Motorhome finance is a way to buy an RV without paying the entire cost upfront. You generally borrow money from a lender, such as your bank or a finance company — and repay the loan with interest over time.

The main benefit of financing your motorhome purchase is that it lets you hit the road now yet pay off the vehicle’s cost over manageable monthly payments. The price tag of many motorhomes can be a barrier to purchase.

Motorhome finance in NZ often differs from a car loan because the:

• Term tends to be longer — to reflect the higher purchase price and longer lifespan of recreational vehicles

• Interest rates may be slightly higher — due to the greater perceived risk of depreciation and potentially lower resale value if you default on the loan.

You may also end up dealing with a lender that specialises in motorhome finance and can offer specific expertise and tailored options when purchasing a recreational vehicle.

Choosing motorhome finance can help you afford your preferred RV, access your lifestyle dreams sooner and maintain financial flexibility.

The different types of motorhome finance

Secured loans, unsecured loans, dealer financing and personal loans are the options available when financing a motorhome. Spend time researching each to determine which one will work best for you.

Secured loans

A secured loan, also known as asset finance, leverages your motorhome as security.

Under a secured loan, the motorhome acts as collateral and reduces your risk in the eyes of the lender. This is ultimately good for you, the purchaser, as it’s another option for buying on finance.

A secured loan may be of interest if you’re a first-time motorhome buyer, have a strong credit score, want a longer repayment term or plan to buy a higher-priced RV.

The pros of taking out a secured loan to buy your ideal recreational vehicle are:

• Lower interest rates — helping you to pay the loan off faster and spend less money overall
• Longer repayment terms — allowing you to manage your monthly payments more easily
• Higher borrowing limits — a secured loan often lets you access a more considerable amount of funding so you can buy a higher-priced RV
• Easier approval — if you have a low credit score or an unestablished credit history, the lender may be more willing to approve your loan with collateral.

The cons of taking out a secured loan include:

• The initial costs — you may have to pay a deposit plus application or valuation fees upfront
• Minimal flexibility — the loan may not have options for refinancing or onselling your motorhome until you’ve paid it off
• The risk of repossession — failing to make payments can lead to late fees, hurt your credit score and ultimately, see your motorhome repossessed.
  
  

Although you should be aware of repossession, it won’t be a problem if you continue making timely payments.

Unsecured loans

An unsecured loan doesn’t use anything as a guarantee. This means that your motorhome isn’t secured by collateral and doesn’t come with the risk of repossession. Instead, the lender will approve your loan based on your financial history and creditworthiness.

An unsecured loan may appeal if you want the flexibility to use the loan for various motoring expenses. Likewise, if you have a good credit rating, intend to buy an older RV and prefer to avoid risking your motorhome as collateral, an unsecured loan may suit you.

The advantages of purchasing a motorhome with an unsecured loan are:

• Peace of mind — your motorhome can’t be repossessed if you fail to make payments because the loan isn’t tied to it as collateral
• Fewer restrictions — you have the option to sell or refinance your motorhome
• Easier application process — unsecured loans usually have less paperwork and fewer requirements than secured loans.
  
  

Disadvantages of purchasing a motorhome with an unsecured loan include:

• The overall costs — without collateral, the lender takes on more risk, so you pay higher interest rates and more money over the loan term
• Higher monthly payments — unsecured loans often come with shorter repayment terms, so you’ll probably have to pay back more each month
• Strict eligibility criteria — you may have difficulty qualifying without a good credit history and a high income.

Dealer financing

Purchasing a motorhome directly through an RV dealership and arranging finance through them is known as dealer financing. With this option, the dealership acts as the lender — or connects you with their preferred loan company or broker.

Dealer financing could be for you if you’re a first-time buyer who values the expertise and guidance of a dealer finance manager. It may also be ideal if you’re looking for a special deal or prefer having everything handled in one place.

Dealerships may also have access to a wide range of lenders or brokers that cater to various credit profiles.

A few benefits of buying a motorhome using dealer financing are:

• Convenience — completing the motorhome purchase and loan application at one location streamlines and simplifies the whole process

• Easier finance approval — some dealers may have more flexible lending criteria compared to banks or other lenders

• Expertise — utilising the specialised knowledge in RV financing at the dealership to help you reach a loan decision

• Optional trade-ins — the dealer might allow your existing motorhome to be part of your purchase as a trade-in, reducing the amount of finance you need

• Special deals — promotional rates or incentives on financing are possible.

Approaching a dealer may also lead to an opportunity to buy a used motorhome on finance. Motorhomes are built to last much longer than cars, so it’s worth considering motorhomes with high mileage through dealers.

Dealer financing also has drawbacks, some of which are:

• Missing out on a better deal elsewhere — you might be limited to the lenders that work with the dealer
• Higher interest rates — a dealer’s motorhome finance rates may be higher than those offered through banks or finance companies
• Additional costs — some dealer financing agreements may have hidden fees or extra costs, so read the fine print carefully.
  
  

Personal loans

A personal loan can be used for various needs — like purchasing a recreational vehicle. However, this type of general-purpose finance isn’t explicitly designed for a car or motorhome loan.

If you prefer predictable monthly payments and a clear timeline for paying off your loan, or you’re thinking about purchasing from a private seller, consider a personal loan. With a good credit score and a stable income stream, you may be able to obtain one.

You can get a personal loan from:

• Banks — like ANZ and BNZ

• Community-based credit unions — such as Unity and First Credit Union

• Online lenders — including Harmoney and Squirrel Money.

These types of lenders offer fixed interest rates and repayment terms — making it easier to budget for monthly payments. The pros of purchasing a motorhome with a personal loan include:

• No risk of repossession — personal loans are free from this threat because your motorhome isn’t used as collateral

• Easy application process — expect less paperwork and faster approval times when applying for a personal loan compared to a secured one

• Early repayment without penalties — most personal loans don’t have early repayment fees so that you can pay off your debt sooner

• Versatility of use — your loan could be used to buy an ex-rental motorhome, make a deposit on a new RV or cover some accessory costs.

Some cons of buying a motorhome with a personal loan are:

• The overall cost — expect higher interest rates on personal loans compared to secured loans

• Higher monthly repayments — because personal loans have relatively shorter loan terms

• Stricter eligibility requirements — you’ll need a good credit history and a reliable income stream to qualify for a large personal loan to buy an RV.

If you value flexibility and prefer to avoid risking repossession, a personal loan may be worth investigating. However, ensure you compare the loan terms, eligibility criteria, fees and interest rates of all your options before choosing a lender.

Comparing interest rates and loan terms

Now that you know what type of finance options are available, it’s time to compare prospective lenders' interest rates and loan terms.

Research each potential lender’s reputation, customer service and experience in financing motorhome purchases. This will help you to make a more informed decision and secure the most favourable finance option.

Comparing interest rates and loan terms is crucial for several reasons, such as:

• Keeping costs down — the total cost of paying back your loan over time will be significantly impacted by its interest rate
• Finding the right loan term — a longer term can lower monthly repayments yet cost more overall, while a shorter term may have higher repayments but less total cost
• Avoiding excessive interest — by finding a loan that fits comfortably within your budget
• Weighing up optional extras — like a flexible repayment schedule, a redraw facility or the ability to make additional repayments without penalty
• Identifying hidden fees — so you can choose a lender offering transparent pricing.
  
  

By comparing available lenders and what they offer, you’ll be more likely to find the one that best suits your financial situation. You may also enjoy significant savings and a more effortless repayment experience over the long run.

Setting a realistic budget

Budgeting is vital when buying a motorhome on finance because it helps you determine whether you can comfortably afford the initial purchase — and the ongoing costs of ownership.

The benefits of budgeting meticulously are that it can:

• Help prevent financial strain

• Allow you to thoroughly enjoy your motorhome adventures — without worrying about unplanned expenses.

The initial purchase price is just the beginning — as far as costs go. You’ll have ongoing expenses just like you do with the family car. If you haven’t factored them in, they can quickly add up.

Aim to find a realistic budget that aligns with your financial capabilities and motorhome aspirations.

Research the motorhome landscape

Knowing the range of recreational vehicles available on the local market will help you narrow down which makes and models may best suit your family — and your budget.

Check online dealerships in the major cities and motorhome rental operators with opportunities to try before you buy and Trade Me Motors.

While browsing, you’ll have time to work out:

• What you really want in a motorhome
• What you can compromise on — and equally, what you can go without
• How much the price of a recreational vehicle may rise with certain additional features.

Read our guide about buying your first motorhome.

Review your financial situation

Take the opportunity to review your income, expenses, debts and savings.

Buying a motorhome may end up being the second largest purchase in your lifetime — after a house. If you can consolidate or pay off debt, reduce your living expenses and band together some savings, you’ll take a giant step towards successfully applying for finance.

Work out a monthly payment amount that:

• Won’t stretch your finances to breaking point
• Will clearly show you can pay for the motorhome you want over time.

Set aside a maintenance account for unexpected repairs and upkeep — as you would with your house.

Be aware of ongoing costs

Take into account the ongoing costs of owning a motorhome, such as:

• Depreciation — have a clear picture of how much your RV will likely depreciate each year
• Insurance — from a provider that specialises in RVs like Covi Insurance
• Registration — your motorhome will need to be registered so you can legally drive it on New Zealand roads
• A warrant or certificate of fitness — motorhome WoFs and CoFs are critical for staying safe on the road
• Maintenance and repairs — as with owning any vehicle, your motorhome will require regular maintenance checks and occasional repairs
• Fuel — an obvious necessity that will most likely be diesel
• Campsite fees — depending on whether you prefer to freedom camp or stay in commercial campgrounds.
  
  

See our comprehensive guide on the costs of buying and owning a motorhome.

Preparing to apply for motorhome finance

After reviewing the types of motorhome finance options available, figuring out a realistic budget and comparing current rates and loan terms, you can get ready to apply for finance.

Improve your credit score

The amount you’re able to borrow depends heavily on your creditworthiness. Lenders use this assessment, known as a credit score, to determine how risky it is for them to lend you money.

If you’ve avoided excessive debt, paid your bills on time and reliably managed past loans and repayments, your credit score is probably good.

The higher your credit score, the greater your likelihood of attaining favourable loan conditions — like preferable repayment terms and lower interest rates.

Checking your credit score

In New Zealand, you can check your credit score for free. However, you may have to pay for a report if you want the information as soon as possible.

It’s wise to check your score well before applying for finance — to gain insights into how likely you are to get approval for a loan.

How to strengthen your credit score

You may need to increase your credit score to enhance your chances of securing a loan. If it’s too low, take immediate steps to improve it by:

• Paying down existing debt — consider selling smaller unwanted assets to help reduce what you owe
• Reviewing all your bills and existing loans — to ensure they’re always being paid on time
• Avoiding any enquiries into new lines of credit — at least during the short term.

It may take time to improve your credit score, but it can also greatly enhance your ability to obtain finance to purchase that dream recreational vehicle.

Get a loan pre-approval

Gaining pre-approval on your motorhome loan brings several advantages, including a crystal clear understanding of your budget. This will help empower you to shop around confidently while making you a more attractive buyer from the seller’s perspective.

You’ll be in a stronger position to negotiate with sellers because you:

• Have leverage — a pre-approved buyer is a more likely sale, so you may be able to use this status to negotiate a lower price or even a few extras
• Offer minimal risk of your financing falling through
• Come across as a serious and potentially quick buyer — who’s already been vetted and has access to funding.

How to get pre-approval

Although a pre-approval doesn’t guarantee a loan, it’s an excellent indicator of your buying power.

To gain pre-approval for a motorhome loan, choose your preferred lender and fill out their loan pre-approval application form. The lender will then complete a credit check to assess your ability to repay the loan.

The lender will evaluate your financial situation, decide whether you’re eligible and establish the maximum loan amount you can borrow. You’ll then receive a conditional pre-approval indicating your borrowing limit and the estimated interest rate.

Your pre-approval may come with certain conditions — like confirming the details of the motorhome you plan to purchase.

Gather together the necessary documentation

You’ll want to work swiftly through the loan application process to avoid delays. It’s therefore vital to get all your paperwork organised — and ready to be submitted to your chosen finance lender.

The most common documents needed for a motorhome loan application are:

• Identification — in the form of a New Zealand driver licence or valid passport

• Proof of residency — such as a recent utility bill or bank statement that displays your name and address

• Evidence of income — like your three most recent payslips or bank statements showing your last regular wage deposits.
  
  

Specific documents may also be required depending on which lender you choose. For instance, you’ll likely need proof of full motorhome insurance coverage before the lender approves and pays you the loan.

You may not need a deposit, particularly if you can offer another asset as collateral for your motorhome — but this also depends on the lender.

Understanding your loan responsibilities

Buying a motorhome or campervan on finance involves several financial and legal obligations — that require thorough understanding to ensure you're making the right decision.

Financial obligations

Carefully consider your budget and be sure you can comfortably afford the monthly payments and ongoing costs associated with ownership. Protect your financial well-being by staying on top of your loan responsibilities, which will be:

• Repayments — your primary concern is to meet the payment schedule you agreed upon with the lender and to avoid missing payments
• Interest — repaying the interest on your loan is just as important as paying the principal
• Insurance — you’ll need comprehensive insurance coverage in place to protect both yourself and the lender
• Maintenance — be sure to budget for unexpected repairs and regular maintenance work.

Legal obligations

Aside from your financial responsibilities, you must also meet some legal obligations.

Like any loan, you must provide the lender with accurate and complete information during the loan application process. There may be legal consequences if you don't.

You may not have full ownership rights until you’ve repaid the loan, which means the lender will hold the title of your motorhome until that time.

You’ll also need to comply with the terms and conditions of your financial agreement. These could include restrictions — like being unable to sell or modify your RV without the lender’s consent.

Completing your motorhome purchase

You’ve already pre-approved a loan from your preferred lender, understood your responsibilities and found your ideal motorhome. It’s now time to complete your motorhome purchase.

Review the purchase agreement with the motorhome seller to ensure:

• All terms meet your expectations

• There aren’t any hidden costs

• The motorhome is in the condition stated by the seller.

If you’re happy with the sales agreement, sign the paperwork and, if necessary, make the deposit. Be sure to keep a copy of the agreement for your personal records.

Finalising the loan application — the final steps

This last part of purchasing a motorhome on finance can make both you and the lender anxious and excited. But if all goes well, your application will meet the lender’s criteria — and you’ll receive a formal loan approval.

Remember that pre-approval is only conditional approval based on the information you initially provided. You still need to collate what the lender requires to secure your motorhome loan.

Typical steps that take place at this stage are:

1. Getting back in touch with your lender

2. Sharing the motorhome seller’s information — including the price you’ve agreed upon and relevant documents, like the sales agreement

3. Waiting for the lender to carry out a final assessment — which involves looking closely at your pre-approval and the motorhome information.

Once you have formal approval and sign the paperwork, your lender will likely transfer the funds directly to the seller of your new motorhome.

Tips for buying a motorhome on finance in New Zealand

Getting knowledgeable advice as you journey towards owning your dream motorhome is vital. Some essential tips to consider when buying on finance are to:

• Save for a deposit — any deposit is better than none as it can lower the interest rate you’ll pay and improve your chances of a loan approval

• Compare loan terms and interest rates from at least three to six lenders — to find the best interest rate to suit your needs

• Take into account additional fees — such as application fees and early repayment penalties

• Read the fine print — and understand all the terms and conditions of your loan agreement

• Check if the loan allows for penalty-free early repayments — so you can save on interest

• Negotiate — use your pre-approval to bargain with the seller for a better price

• Seek professional advice from a financial advisor or a finance broker — about what the loan process involves.
  
  

Check out our top ten questions to ask dealers when buying a motorhome in NZ.

FAQs about purchasing a motorhome on finance in NZ

Purchasing a recreational vehicle on finance is a highly viable process that requires taking one step at a time. Researching the market thoroughly, budgeting and preparing well before meeting a potential lender will ensure a great chance of approval.