Keith Gooden
Welcome back to the Motorhome Matt podcast. I’m Keith Gooden. Good to have you here, and with me as usual, our expert – it’s Motorhome Matt Sims.
Matt Sims
Hello, Keith, how are you doing?
Keith Gooden
I’m fine. You too, Matt?
Matt Sims
Yes, very well. Yes, good to be here again.
Keith Gooden
Fantastic. We made it! Good to have you here.
Market news with Jason Mawdsley from TMC
Keith Gooden
Now, you might have noticed if you’re watching on video, there are not just the two of us for this week. There’s three – hear no evil, see no evil, speak no evil. Who’s our special guest today, Matt?
Matt Sims
This is Jason Mawdsley. Hi, Jason, how are you doing?
Jason Mawdsley
Hi, Matt. Yes, very well. Thank you.
Matt Sims
It’s a very good friend of mine from the North. Tell us where you’re from, Jason.
Jason Mawdsley
Tottington Motor Company. So TMC Motorhomes up in Manchester.
Matt Sims
Brilliant. Good to have you here. So Jason, you have kindly joined us today to share with me-, we’ve known each other a long time. And we compare notes on the industry and our experiences. Jason, so you know, at Tottington they sell motorhomes and cars and hire them as well. And we thought it’d be great to get Jason’s view on some of the stuff that we’ve been talking about over the last few months. So what’s your current experience like of the industry?
Jason Mawdsley
Well, new motorhome supply is still extremely difficult. We’ve still got customers that ordered motorhomes with us back in the summer of 2021 – still not taken delivery, they’ve still not been built yet. They’ve been now rolled over by the manufacturers into season 2023. It’s tough. It’s very tough.
Matt Sims
Yes, it is tough, isn’t it? And we’ve got the show coming up at the NEC in a few weeks’ time in October. It’s September still as we record this. What’s going to be the visitor experience, do you think, with stock and future availability? What’s your view?
Jason Mawdsley
I think the manufacturers are certainly working hard to make sure there’s a good selection of stock on the stands. I was speaking to one manufacturer only this week who was saying they’ve got eleven motorhomes on the actual stand, which is not far off the full range. I think there’ll be lots to see. I think the issue will come around-, if you’re going to the show and you want to order something, the uncertainty around the pricing and the delivery dates, I think that’s going to be the real issue.
Matt Sims
So you say uncertainty around the pricing. What do you mean?
Jason Mawdsley
We’re being told at the moment as dealers that, for most manufacturers, due to the rising costs of the chassis and indeed the components and the parts that make up the motorhomes, they can’t offer any price protection. So the forecasts at the moment are that the chassis in particular will keep rising.
Matt Sims
What you’re saying is it’s back to Brexit tariffs, or the potential of.
Jason Mawdsley
Potentially.
Matt Sims
You’re going to buy it and the price is going to go up before you pay for it at the end of it.
Jason Mawdsley
I think it’s a given.
Matt Sims
Would you buy one? Keith?
Keith Gooden
Well, I was just thinking on that basis if I want a motorhome, I’d go along, go to my dealer and he or she wants to sell me that motorhome and give the best service they can. But Jason, as I understand it, from what you’ve just said, I can order it, the dealer will sell it to me in good faith. I’ll put up some money as a deposit to show my good faith. But actually, it’s the manufacturer who might come back and change the terms of the contract that I’ve already entered into with the dealer. Am I thinking right on that basis?
Jason Mawdsley
I think the actual contract as such will be rubber stamped that there is no price protection unless some manufacturers are running some show offers, for instance. And one of those show offers potentially could be price protection.
Matt Sims
Wow. We’ve never seen that before.
Jason Mawdsley
We’re hoping as dealers that that might be the case.
Keith Gooden
So you can go along – and let’s forget about motorhomes. If I was going along to buy a car, I could go along and buy a car, but the dealer can say to me, ‘Well, I’m advertising it at £25,000, but actually it might be £35,000 by the time you get it.’ As I understand it, that’s what you’ve just said. Are people going to buy on that basis?
Jason Mawdsley
You know, as I was travelling this morning, I took a call from the office about exactly that. A customer wanted to order a new motorhome and that’s what we’ve had to tell the customer. ‘We will quote the price today but we can’t guarantee that will be the price at the point that the motorhome is built and ready for delivery.’
Keith Gooden
And what was the response of the potential customer.
Jason Mawdsley
The customer has paid the deposit.
Keith Gooden
So they’ve gone ahead?
Jason Mawdsley
They’ve gone ahead and ordered, yes.
Keith Gooden
Because the desire to have the motorhome overcomes the uncertainty?
Jason Mawdsley
Yes.
Matt Sims
Yes, and that’s a big driver, isn’t it? We’ve practised this already. As I say, I referred to Brexit, that distant memory. And there was a risk of tariffs and I remember the show where people were ordering on the basis that this could go up and you could see a 10% increase and it would be Brexit driven. So we’re kind of used to it.
And it’s like COVID, isn’t it, and lockdown? We know what to expect. We’ve done the dress rehearsal, we’re prepared. But I think with pricing on motorhomes, we’ve been there before. And people know and I think accept that this is the reality. And the other issue besides the price is also when it will arrive. The dealers will give an expected delivery date based on what they know now, but that could change, couldn’t it?
Jason Mawdsley
Absolutely. And I think it’s important to get across that this is across leisure as a whole. It’s caravans, it’s static homes, it’s motorhomes. Everybody’s in the same position.
Keith Gooden
So as a consumer that desire to have that motorhome or caravan, whatever you’re buying, should trump perhaps the uncertainty of the manufacturers, because as we’ve been discussing for the last year really, Matt, this purchase isn’t usually going to be a depreciating purchase. You are making investment not just in your holidays, but perhaps for the future as well. No guarantees, but actually the market isn’t as unstable as some might have you believe.
Matt Sims
No, and Jason I both know and have both seen how used prices have just risen and continued to rise. We could buy a motorhome today and probably in March it would be worth more, wouldn’t it, next year?
Jason Mawdsley
Like most dealers, we’ve been busy buying back motorhomes that customers purchase from us. We’re seeing customers that purchased in 2020. We’re actually giving them their money back that they paid for the motorhome today.
Matt Sims
Yes, absolutely. Oh, I’ve got a customer from 2018 who’s just done that.
Keith Gooden
And they’ve had their holidays, they’ve enjoyed their motorhome. And they’re getting the money back that they paid for it.
Matt Sims
They’ve had four years of holidays. And actually they get all their money back.
Keith Gooden
And with your customers now, Jason, how are they paying for things? Because this is a finance episode. We will be hearing later on from an expert talking about how you can finance your dream. But as a dealer, how have you seen people coming in? Are they demanding finance because of the financial uncertainty? Or are they buying in a different way?
Jason Mawdsley
Well, if we just look at the last few weeks, out of the sales that we’ve seen over the last few weeks there’s been very, very few requests for finance. They’ve been cash purchases, often with a part exchange. That’s good to see.
Keith Gooden
Because inflation now is running at just below 10% – it has taken a little bit of a dip in September, but not much. But I suppose if you’ve got savings, you’re thinking, ‘Hang on a second, I’ve got £50,000 saved up,’ or, ‘I’ve taken my pension tax free payment. I don’t want to see that being eaten away.’
Matt Sims
No. And at 10% it’s now worth 45.
Keith Gooden
‘I’m going to spend it.’
Matt Sims
Yes, invest it in something that’s going to go up in price. And that’s a challenge, isn’t it, for many as the prices go up. But then of course, there are many who do need some finance. You’re not seeing them in your business. I think people are holding back a little bit at the moment. But there are undoubtedly people that will look at the price at the show -the screen prices, as we’ve said before – and I think they’re going to be in for a shock. It was £60,000 a few years ago. And now it’s going to be £75,000 easily.
Jason Mawdsley
Well, I’m seeing that the average price increase on new products is running at around 20%.
Matt Sims
So there we are. Yes, exactly. And that’s going to happen again, isn’t it, into next year?
Keith Gooden
And you have to understand the manufacturers aren’t necessarily profiteering on this.
Matt Sims
No.
Keith Gooden
Their raw materials have gone up. If they’re getting the wires or getting the steel or the aluminium for the chassis, all those prices have gone up and they’re paying more to their suppliers. So don’t think it’s profiteering. It’s not.
Matt Sims
No, they’re just reacting to their supply chain and having to pass it on. I think many manufacturers have now reached a point where they have no choice but to pass it on. They swallowed it, didn’t they, for a while at the beginning of this chapter we’re in. Prices were fixed, and were guaranteed but that is dissolving, isn’t it? You were telling me how one manufacturer’s started-, their tone of their letters has changed from, ‘Yes, price fixed, no problem,’ to, ‘We can’t guarantee the price anymore.’
Jason Mawdsley
Very much so.
Keith Gooden
But it must be said the dealer will do their best for you.
Matt Sims
Of course. Well, we’re in business. We’re on the end of this. We’ve got mouths to feed. And on that, Jason, what is the future for the businesses at the front end of this? Yours and mine are family owned and run businesses. We’re family and friends teams. We’re SME businesses with a team of people with mortgages to pay and rent to pay. And at the end of every month, we look at the payroll and there are real people on the end of that.
And that’s the case for most of this industry, isn’t it? At the risk of crystal ball gazing, what’s your view, do you think, of the future over the next eighteen months or two years, that short term for those businesses in our industry?
Jason Mawdsley
Well, I’m very pleased that my business, like yours Matt, is a diverse business. We have lots of things going on in our business. I would be extremely concerned if my business was just new, or indeed used motorhome sales. I’d be extremely concerned. The fixed overhead doesn’t change. The supply and the supply issues, I feel, will be continuing certainly well into the second half of next year.
Matt Sims
Yes, undoubtedly. And I think hire – we both have hire operations as part of our offering. I think that’s in for a boom next year. I’m feeling very buoyant about it for 2023, given the inquiries we’ve had. And I think the price of new, the purchase price and the price of used will mean people consider hiring one instead. Do you agree?
Jason Mawdsley
I do agree. Certainly thinking about hiring and looking at our businesses and the asset cost, as we’re seeing the asset costs rising, it rises for us as well as operating hire fleets. And I think my advice would be that if you are considering hiring, then book early. Try and lock the price in because as the asset cost is going up no doubt the hire fee will go up.
Matt Sims
Yes, and it’s very unusual for hire companies to put the price up once you’ve booked, isn’t it?
Jason Mawdsley
It is.
Matt Sims
Unlike when you’re buying one, by the sound of it.
Keith Gooden
And it must be said as well if you’ve got that motorhome sitting at home and you haven’t considered getting in touch with a business such as Matt’s then you could make some money out of your motorhome by hiring it out. And of course as you said yourself with this problem with supply and demand, if you want that motorhome holiday, actually next year it looks like the only way to get it if you haven’t got a motorhome already or even if you’ve got one on order is to hire.
Matt Sims
We have a customer at this moment who is in a hired motorhome from us with one on order, which they’ll get next year. And it’s their third holiday they’ve hired because they have to wait for their own one.
Jason Mawdsley
We’re in exactly the same position. We’ve got customers that have hired this season just because theirs hasn’t been delivered but they’ve planned the holidays.
Matt Sims
Well, Jason, thanks ever so much for heading south. It’s been great to have you here.
Jason Mawdsley
You’re welcome. It’s good to see you.
Matt Sims
It’s really good to look inside your crystal ball. It’s a mixed bag, isn’t it?
Jason Mawdsley
It is.
Matt Sims
We don’t want it to be doom and gloom, and it’s not. We’re both very excited about next year. It’s a challenge and it’s a bumpy road. But it’s such a great pastime, isn’t it? And we both get to do it ourselves from time to time – sometimes with the wives and kids!
The Motorhome and Caravan Show 2022
Keith Gooden
It’s the Motorhome Matt podcast. I’m Keith Gooden. Here’s our expert – it’s Motorhome Matt Sims.
Matt Sims
Hello, Keith!
Keith Gooden
Today’s podcast is all about finance – financing your purchase of a motorhome and all the intricacies of that purchase. Buying into your dream.
Matt Sims
Making the dream affordable.
Keith Gooden
And talking about making the dream affordable and just looking at the dream, the big show is at the NEC in October, isn’t it?
Matt Sims
Just a few weeks away.
Keith Gooden
Is it called the Motorhome and Caravan Show?
Matt Sims
The Motorhome and Caravan Show, yes.
Keith Gooden
We have got two ways where you can get tickets. Way number one is that we can get you a discount on the tickets. All you’ve got to do is go onto the show website – not Motorhome Matt’s.
Matt Sims
No, www.mcshow.co.uk.
Keith Gooden
When you buy your ticket, put EX1 in the little box that says, ‘Discount code.’ Is that right?
Matt Sims
That’s correct, EX1.
Keith Gooden
So Echo, X-ray and a number one and you will receive a discount.
Matt Sims
A few pounds off!
Keith Gooden
Fantastic. You can pay the electricity bill with it! Okay then, Matt. There’s a second way, a more exciting way of getting a ticket and you don’t have to pay a penny.
Matt Sims
No, you can win them. We’re giving them away. We still got pairs to give away. This is the last week we’re going to announce this, because then we’re going to start announcing our winners. You can do that by going to our website, www.motorhomematt.co.uk/askmatt. Now, we want you to record or enter your funny or sad but memorable motorhome caravan or campervan story. Make us laugh, make us cry.
We’ve had a couple that have made us shed a tear, haven’t we? Quite a few have made us laugh. Whatever your story is, we want to hear it. If you’re brave enough to record it, hit the orange button, record your story and we will play them out on the podcast. And we will pick the best. We’re sort of making up the rules as we go along with this, aren’t we? But the best one is one that makes us laugh or makes us have an emotional response – is that fair?
Keith Gooden
I think that’s very fair. And when we say best, we don’t necessarily mean best we mean the one, as you say, that makes us laugh or makes us cry or you makes us do those things after a bottle of wine, eh Matt?
Matt Sims
Careful.
Keith Gooden
So we’ve already picked one winner, haven’t we Matt? Who was that?
Matt Sims
We have. It was the lucky Donna. Donna submitted her story which I have to say was rather moving. And Donna shared her story as to how her caravan holiday saved her life.
Our second competition winner
Keith Gooden
It really is a remarkable story. Winner number two is Scott. We’ve got Scott’s story here. We’re going to share it between us. Scott says, ‘Just a quick little story for you as I really do hate the sound of my own voice.’ Scott, we wanted to hear you!
‘About five years ago, my wife and I were going to buy a caravan so that we could stop over when we were travelling around the country delivering things that we make. We went to a place in Leeds that had a good selection of used vans and started checking them out to find a layout that would suit us. After we saw that the first dozen or so were just too small – we’re talking about caravans here – we spotted a tag axle Bailey and headed inside.’
Matt Sims
‘Wow! We couldn’t believe how much room there was. Even the bed looked luxurious. So I barged past my wife, climbed on it, lay down and then it all went horribly wrong. It seems that when it had been parked, the legs at the back of the caravan hadn’t been lowered. Have you any idea how long a tag axle caravan is when it’s pointing up to the sky?’
Keith Gooden
They did a wheelie in the caravan! He got in bed and the front of it went, ‘Wahey!’ Luckily Scott goes on to say, ‘My wife was quick thinking and ran to the front of the caravan. You can imagine that uphill. This image is best presented if you insert the running sound effects from a cartoon right here.
‘The front end shot down with such speed that I wonder to this day if we did any chassis damage. Boing! Needless to say, this really put me off caravans and hence we’re going to buy our first motorhome at the NEC.’
Matt Sims
I’ve actually done that. I got in the caravan, went to the back just to grab something – on a hill as well. And I didn’t realise it had been unhitched from the car by a friend of mine who was being very helpful. And I promptly fell over in the back and ended up pegged to the back window.
Keith Gooden
Like those Garfield things people used to put in the back of the car.
Matt Sims
Honestly! And then it started rolling down the grassy hill as well. Oh my goodness. Anyway, I’m still here.
Keith Gooden
Whew. The Benny Hill theme.
Matt Sims
Yes, well done Scott. Great story – made us chuckle. A pair of tickets is going to you. We’ll be in touch.
Keith Gooden
And remember, we’re not paying for your travel. We’re not paying for your accommodation, but we are giving you two tickets. So just one more time, how do people win, as they’ve heard Scott’s story?
Matt Sims
Yes, you can enter! Go to the website, www.motorhomematt.co.uk/askmatt, hit the orange button and record your story. Or if like Scott you’re not brave enough to hear your own voice, you can enter the words on the page and press submit.
Keith Gooden
We really would like to hear your voice. And also, when you’re putting your details in, tell us where around the UK you are from.
Motorhome Finance: how does it work?
Keith Gooden
Now, we’re talking about finance in this podcast, Matt, and you’ve been talking to somebody who’s a real expert.
Matt Sims
I did. I caught up with an old friend of mine. This is Steve and I caught up with Steve just to ask him a bit more about how leisure vehicle finance works as people head to the show and when I think they’re in for a bit of a shock with some of the screen prices. Steve, welcome to the podcast. How are you?
Steven Blake
I’m very well indeed. Thank you very much.
Matt Sims
Thank you for giving us some of your time and for sharing your expertise with our listenership. We’ve got the big NEC show coming up, haven’t we, in October – just a few weeks away. You guys have a stand. We’ll come to that in a bit. We’ll find out where people can come and say hello, but I think people going to the show are going to be in for a bit of a shock.
The screen prices are going to be significantly more than they might have seen before. We were taking photos of screen prices back in 2019. I think we’re going to see 20%, 30% 40% more on some of those prices this year. And finance of course is a great way, isn’t it, of people being able to afford that screen price. How do people go about finding finance and how does it work?
Steven Blake
I suppose the first thing I’d say is I absolutely agree with you about the screen prices at the show. There are going to be some shocks with supply because of the war in Ukraine, and of course COVID as well has meant that there’s been some challenges with supply not only of motorhomes, campervans and caravans but the whole vehicle sector.
You’ll have heard this with cars, and we see it on commercial vehicles as well. There are some real challenges around supply and that as you rightly say has driven up prices significantly. So there’s no doubt there’s going to be some large increases this year. In terms of whether customers will be surprised – yes, I think they will. But in terms of how they can finance a motorhome, it is pretty straightforward Matt, if I’m honest with you.
People can speak to the dealer. If it’s a main dealer, they will likely have their own finance option available through one of the main funding suppliers or manufacturer financing. But through the likes of us as a finance broker, there are many, many solutions that we can provide. I’ll give you our details later in terms of our website and how customers can contact us.
But finance on a leisure vehicle is commonplace, particularly on more expensive vehicles where most people don’t have the sort of outlay that’s required to buy. You know what the numbers can be on these vehicles – £50,000, £60,000, £100,000 plus quite easily on motorhomes. And campervans are more expensive at the moment as well. So yes, it’s finding solutions, perhaps low deposit options for customers. And manageable monthly payments are critical.
It’s always useful to go into one of these shows knowing roughly what a monthly budget could look like for a potential customer. Through our websites, a customer can go on and have a look at how much they can borrow and how much that monthly payment equates to. So they can go to a show or go into a dealership knowing roughly what they’ve got to play with. Can they buy a £40,000 unit? Can they buy a £60,000 or £70,000 unit? ‘These are the monthly payments. Is it affordable?’
It’s a fairly straightforward process. There are lots of options out there. We’d be delighted to give advice to customers.
Types of financing
Matt Sims
So you are a broker. So just explain to us what that means compared to the other players in the market.
Steven Blake
There are two types of ways to transact, really. So you can go directly to a funder that funds leisure vehicles. Clearly many dealers are affiliated to one or maybe a couple of particular funders directly. But of course, the customer is then restricted to the options that the dealer is offering, unless the customer takes it upon themselves to look at the market outside of the dealer’s arrangements.
We’ve got a huge panel of funders. So we are a broker who works with a panel of funders. We refer the customer to the funder that we believe is most suitable on our panel. And we’ve got over 60 funders on the panel at the moment, many of whom fund leisure vehicles of all shapes and sizes and all customer circumstances as well which is important.
Clearly, customers are looking for different solutions. Some customers might have extremely strong credit and are looking for the very keenest deals. Some customers looking to purchase might have a slightly more challenging credit profile which needs a different solution.
But with a whole of market choice, we can provide customers with hopefully the best solution tailored for them. We have many, many funds that do fund leisure vehicles of all types and we can find the best solution depending on the customer’s profile, the profile of the finance, the vehicle, whether it’s new or used. There are several nuances which determine which funder might be the most appropriate for the customer.
Matt Sims
One of them is left hand drive as well, isn’t it? Some funders, I know, don’t fund a left hand drive motorhome. It’s odd, that, even though it’s got UK plates on it. But you’re able to do that. Horseboxes as well. I know from my own experience of working with you that you fund horseboxes too.And caravans of course. We’re talking about motorhomes, but caravans too and campervans as well.
Steven Blake
Our leisure proposition for us incorporates motorhomes, campervans, caravans and, as you say, horseboxes as well. And we fund hundreds of units of each of those. But yes, we’ve got a strong proposition across the entire leisure space. And I know we’ll discuss it later. But we’re looking forward to showcasing those products at the show in October.
Matt Sims
Yes. And do you fund a vehicle that someone’s converted themselves that someone’s looking to buy, so it’s not a factory conversion, but a kind of a back street conversion? Let’s call it that.
Steven Blake
A campervan would perhaps be the product more in that space. Yes, we’ve got options there. They are more niche options. We have got one or two HP providers. We do have other loan options as well which customers can avail themselves of. Unlike, for example, a VW California that comes off the production line as a camper, we can fund post production line conversions as well. Yes.
The impact of rising interest rates on finance
Matt Sims
Interest rates are on the climb at the moment. We’re surrounded by news of the increased cost of living and so on. What impact is that having on the proposition of finance for the consumer at the moment?
Steven Blake
There’s an upward trend in rates. There’s no question about that. And we’re seeing that across all our sectors. We deal with a large number of consumer funders which will be suitable of course to leisure vehicles. But in other areas that we work in, we have a large number of corporate funders as well for businesses. We’re seeing those rates increase as well.
Interestingly at the moment, obviously, there’s a lot of talk in the news and in the papers regarding the cost of living and energy bills, etc. But in terms of whether that’s stymieing the market – at present, we’re not seeing that. We’re seeing the leisure sector continuing to be buoyant at the moment. Now, maybe things will kick in in the next few months and we will see a downturn perhaps, but at present, we’re not seeing that. Of course, where people have got savings, they will now be starting to see a little greater interest coming through on their savings.
Maybe people will now be less willing to use those savings and perhaps put them into a hire purchase agreement or to fund a vehicle perhaps outright. In the past, people’s perception has perhaps been, ‘The interest rates are so low on my savings, I’m not going to leave them in savings. I’m going to use them for a purchase of a motorhome,’ or whatever it may be. But as they start to creep up, perceptions may change. People’s thought processes may change in that regard.
Personal Contract Purchases
Matt Sims
You used the phrase there, ‘Hire purchase.’ Now, we’re used to – if people listening have bought a car – PCP where it’s a monthly payment, a Personal Contract Plan. Is that right? Is that what it stands for?
Steven Blake
A Personal Contract Purchase.
Matt Sims
There’s a monthly payment and there’s a balloon at the end. That’s now available for motorhomes, although only recently in the last few years, really, that has become an option. Can you talk us through the ways that people can finance a motorhome? So the size of deposit, is it just a monthly payment and you’re done, or is there a balloon at the end? What are the options with a leisure vehicle?
Steven Blake
All of those and more. I suppose I’d start by saying that by far the most popular arrangement remains a straight hire purchase arrangement. 80% to 90% of leisure vehicles we fund would be on that basis.
You can spend up to a 10 year term, which is more generous than the vast majority of the market for, for example, a car or commercial vehicle. The leisure products have the extended term which is going to be particularly of use going forward as, as you rightly said, the prices are increasing. So it’s getting more expensive in order to keep that monthly payment manageable.
Matt Sims
And that’s where you’re making a monthly payment. And then at the end of it, you’ve paid it off. There is no bubble to pay off or balloon to pay off at the end, is there?
Steven Blake
That’s just a standard hire purchase – fixed monthly payments. And that’s an important point, actually. Fixed monthly payments – the way the interest rates are going at the moment, who knows what’ll happen in years to come, but you know that there’s going to be no change on that hire purchase arrangement.
So if interest rates do go through the roof, that monthly payment will be fixed for the duration of the agreement. So that’s not been something that people have really considered much in the last few years where interest rates have been low for so long. But that’s now perhaps becoming a consideration that hasn’t been around for some years.
Matt Sims
Yes, that’s about budgeting, isn’t it, each month? You have the same payment every month.
Steven Blake
Absolutely. There are plenty of other options as well. You can do a shorter period with a balloon payment as well. And that balloon payment is based on the future value of the vehicle. It’s based on what the customer’s annual mileage is likely to be.
There are a number of products out there now with a balloon payment on the leisure vehicles. But even with the balloon payment, the monthly payments are not as low as they would be on the straight ten year agreement. So probably because of that as the main reason, we still see the vast majority of our business done on a straight hire purchase arrangement as opposed to a balloon payment.
Selling your motorhome with finance on
Matt Sims
An important point here is you mentioned that you can have a ten year agreement. Most people don’t keep a leisure vehicle for ten years. It’s possible, isn’t it, to have it for a year and sell it? Can you just explain how that works with the finance?
Steven Blake
If the customer wishes to settle after a shorter period of time than the finance is over, they get a settlement figure from the funder and that will be the amount required to settle. Without going into too much detail, for a consumer finance arrangement which is for an individual which is likely to be the vast majority of motorhome or campervan purchases, the finance is protected by the Consumer Credit Act and there will be set rules where the customer will not be penalised by more than a small amount if they settle the finance early. It’s very, very regulated.
So the customer will not be heavily penalised should they wish to settle the finance early, which is an important point. It’s very, very different to non-regulated finance for companies, for example, where for early settlement the penalties could be far higher. So the customer is reasonably well protected under the consumer regulations for settling if they wish to settle a finance early. Get a settlement figure.
If they wanted to sell the vehicle, if it’s on a finance arrangement, potentially the funder could settle off the existing finance as part of the deal. Or the customer’s buyer would settle the finance off and take title to the vehicle that way.
But getting a settlement figure from the funder would be the first stage. That’s a very straightforward process – speak to the funder and get the figure. In fact, if you’ve transacted through us or a broker like us, we can take the strain and get those figures for customers directly and help them through the process there.
Matt Sims
Yes. That’s a fairly quick and simple process, isn’t it, to go through?
Steven Blake
Very much so. We concentrate on this point quite often, which is that using a broker will take the strain of the liaison with a funder. We have so many customers that say to us it’s impossible to get through to their bank or to their funder. You’re at the end of a call centre for hours on end.
The other day, I heard an example that some businesses are still using COVID as a reason why service levels are poor, and we struggle to get our heads around that one slightly, if I’m honest, without wanting to go off the topic of your initial question. It’s an important point not only for settlement figures, but throughout the whole transaction – we can be the one stop shop and we’ll take all the strain so the customer’s not having to be on the end of the phone for an hour and a half for a settlement figure.
How to find finance
Matt Sims
I actually asked a few people some questions or asked them to ask some questions about finance on a motorhome. Somebody said, ‘Well, where would I even start to get finance on a motorhome?’ How would people start? Where would they go to research motorhome finance? If you go and walk into a dealership, they’re going to be tied potentially to a provider. How does somebody start when it comes to finance?
Steven Blake
So you’re right, if somebody goes into a main dealer, I’d be amazed these days if the funding conversation doesn’t come up. And obviously, of course, it’s part of a dealer’s process to talk to a customer about how they’re going to fund the vehicle. Online is obviously, of course, a great way to start. There’s loads of information online about funding motorhomes.
www.motorhome.finance, which is our dedicated site, has loads of information on there, which includes a calculation tool as well, actually. It’s very straightforward. The customer just puts in the amount they wish to borrow over what period, they give us a small indication of what their credit rating they feel is like from excellent to not so great. And from there, they can put in some details.
They can contact us by phone or by email. They can actually even do a full application online if they wish to. We’re not the only broker that does that, of course. There’s lots of choice out there in the marketplace. The website is certainly a great place to start, and not only for a quote but to build up your knowledge of the products that are available to leisure customers. But yes, it’s not difficult to get information about funding motorhomes, that’s for sure.
Matt Sims
But it’s worth noting, isn’t it, for the listener, they don’t have to take the finance from the dealer. They may choose to because that may be the best fit for them. But they don’t have to. They are free to go out to the market to a company like yours and seek your help to make the purchase. Is that fair?
Steven Blake
That is absolutely fair. Yes. And that happens. That happens on a daily basis for us. Many, many customers come to us because they have researched themselves. They haven’t just taken the dealer’s offering as definitely the best offering. They’ve researched the market. And on many occasions, we’ve been able to help the customer with a better solution – a quicker solution and often a better priced solution as well.
What makes motorhome finance different
Matt Sims
And certainly that’s true, isn’t it? People say, ‘Well, I can just go and get a bank loan or a Tesco loan,’ at the till almost these days. You pick up the leaflet and fill it in. But can you explain the big difference between somebody taking a loan like that or using a credit card to finance a purchase and possibly remortgaging. And that’s a very viable way.
But how is motorhome finance different? I know you have a set of bespoke products and an insight and understanding into the leisure vehicle market here. And someone could say to you, ‘It’s an Auto-Trail Apache 700.’ You would know what that is, whereas Tesco Bank and the call centre are not going to have a clue. But what’s the big difference, Steve, between motorhome finance, specific finance and the other forms of borrowing that are available to people day to day?
Steven Blake
Yes, absolutely. In answer to your question, yes, you could get a personal loan. Tesco and some other supermarkets, Money Supermarket – there’s thousands of options out there, as you know. But bear in mind, of course, that most personal loans have a cap of £25,000 as a maximum lend. Also, most will have a cap of a five year term as well. Some will do a little longer. I see six and seven years these days.
But in terms of a £75,000 or £100,000 lend over ten years, that’s not going to be a personal loan type of solution. If somebody only wants to fund a balance, they’ve got a large deposit, for example, and only want to fund £10,000 over five years as a top up to the purchase, yes, that’s a viable option for that.
But larger sums requiring funding over a longer period to make the monthly payments affordable are not-, the personal loan is not going to be always the best route there, that’s for sure.
Matt Sims
I guess the big thing is that the motorhome finance is pegged to the vehicle, isn’t it, as the security? Whereas the loan is pegged to you as the individual. The vehicle is irrelevant to the lender.
Steven Blake
Yes, it will be a fully unsecured personal loan if you went to Tesco for example. Yes, whereas a hard purchase-, the funder always owns the vehicle. This is no different to a car or another HP financing. The funder owns the vehicle until that last payment is made. And then the title transfers to the customer. But that’s common practice.
You mentioned secured finance as well on property. Now, this is another option. Of course, as it’s secured on someone’s residential property, that’s not everybody’s cup of tea, of course. They would perhaps choose a loan or hire purchase route before that. But if somebody wants to do a secured loan on property, they can do that of course over a much longer period. Twenty or twenty five years, potentially. We do do some of that.
But of course there is legal paperwork involved in that. There is a charge taken over somebody’s residential property in doing so. For some people, it is a good solution. Often for people who have little or no mortgage and their house is unencumbered, they don’t mind putting a £100,000 charge, for example, against their property to fund over a long period of time for the motorhome of their dreams. Then it is a solution available out there. And we do do some of it.
Matt Sims
But they take time to set up as well, don’t they?
Steven Blake
It’s certainly not as quick. Perhaps less time than you might think. But there is a process involved because there are charges, there’s legal documentation. And of course, it would need to be credit underwritten as well for those reasons. And the fact that obviously, a lot of people just don’t want to have to secure a vehicle on their residential property. It’s nowhere near as popular as the hire purchase choices that we have. It’s worth mentioning, certainly
Matt Sims
Going back to the term I mentioned, the ten year thing. Most people own a motorhome for maybe three or four years. But you can sell it though, can’t you, and just pay the finance off. You’re not tied to own the vehicle for ten years. That’s just the term, isn’t it, of the finance lend, which of course brings the monthlies down.
Steven Blake
Absolutely, yes. So the customers can settle and sell that vehicle at any point in the agreement. No problem whatsoever. It is purely an extended term for budgeting purposes.
The impact of overpayment
Matt Sims
What does an overpayment do? Explain that, because some people misunderstand the impact an overpayment makes. So you come into a few thousand pounds and decide to pay that into the finance – what does that do to the agreement?
Steven Blake
The rules are that with most funders you can settle up to £8,000-, or part settle, of course, up to £8,000 per annum without penalty.
Matt Sims
What happens to the monthly payments or the term? What’s the impact?
Steven Blake
Many funders give the customers the option. So you can either reduce the term and keep those monthly payments the same or the monthly payments can reduce. The agreement can continue to run for whatever the current remaining period of the finance would have been. There are one or two nuances with particular funders.
And that is a classic case – if that is a driver for the customer, ‘What happens in this situation and I want to be able to do this,’ then we know through the panel which funder is likely to be more suited to that scenario where of course for one funder through a dealer you’re perhaps you’re a little restricted. It’s either that process or you have no other option.
Matt Sims
For me-, I mean, we’ve worked with you in the past and that’s been the biggest benefit. Before you start you are able to discuss, ‘How do you think this is going to play out over time? How long are you planning to keep the finance running? How long do you plan to keep the motorhome for?’ That’s – for me in my experience – where working with a broker has been unique compared to funding it through a dealer because you’ve got that flexibility.
And certainly that’s what you guys have offered us in the past, which has been great. It’s a big benefit of working with a broker.
Defaulting on a payment
Matt Sims
Steven, we have a few other questions as well, if I may. What happens if you default on a payment?
Steven Blake
Defaulting on a payment – so that I suppose I’d qualify that slightly. If a customer is unable to make a monthly payment, as with all these things – and this is what the FCA would say, and this is certainly what we would say, as a broker as well – the key is for the customer to keep the funder in the loop of their circumstances.
If the customer doesn’t pay, doesn’t pick up the phone and there’s no communication, then that’s a problem. The funder will be concerned. The customer is probably going to start to get some difficult phone calls and letters through the post. If a customer is in difficult circumstances, they should speak to the funder and explain the situation. Most funders try to be amenable in difficult circumstances and will arrange perhaps a payment plan or give advice on how best to catch up if a customer does go into arrears.
Matt Sims
Because it can be scary, can’t it, as a consumer, if you find yourself in that place? And again, my own experience of working with a broker is that they will work with you to really help you remodel and find a way through that tricky time. That certainly for me would be a big thumbs up for using a broker.
And as you say, you’re not just in a queue in a call centre. You can actually go and speak to the person. You might have their mobile number and can have a real conversation about it. That is a big benefit.
Steven Blake
Definitely, we’d encourage a customer-, but certainly for a customer that came through creative financing, if they felt that they weren’t able to manage their payments, they should speak to us straight away. With us, all our customers would have a dedicated contact who they could get hold of quickly in that situation. We can liaise with the funder and try and help out as much as we could, certainly.
Visit Steven at The Motorhome and Caravan Show
Matt Sims
So you’re at the show, Steven. Just tell us quickly then – you’ve got to stand at the NEC. You’re in Hall 19, stand number three, is that right? Tell us where they can reach you.
Steven Blake
Come and see at the stand, of course, at the show. They can look at www.motorhome.finance – just .finance. A lot of people think that there’s a .co.uk at the end of that, but that’s not the case. Just very, very simply www.motorhome.finance. We don’t have a call centre. And we’re glad we don’t have a call centre.
You go through to a couple of our brilliant people at the end of the phone. They would then assess the customer in terms of whereabouts they are in the country. We get somebody to make a call to them. That might be to take a finance proposal. They might just want to talk through options that are available – similar to what we’ve done here today.
But we try and keep it, you could perhaps argue, a bit old school, but personable certainly. But for those that don’t have time or don’t necessarily want that phone call and want the technology to be able to put a full application through, there’s the technology to do that as well. Customers can put in all their details if they wish, all the vehicle details, their full purchasing application, and then we’ll give them a call.
Matt Sims
So we’re going to the show. Should we be like we’re buying a house where we get geared up before we go? Or is it a case of going to the show, seeing what you want to find and buy and then come to you? What order should people do it in?
Steven Blake
What I would suggest is it’s important for somebody to understand their budget at the very least, I would say, before the show. So use the quote tool, as I mentioned, on our website. So, ‘If I want to buy a £50,000 motorhome over ten years, what’s that going to cost me a month? Is that within my budget? Okay, so we can start looking at vehicles at that sort of price point.’ That’s a good place to start.
If somebody wants to see if they could get finance not on a particular vehicle but let’s say they want to buy a £50,000 motorhome and they want to see if they could be approved on their credit profile, we’d be happy to do that in advance of the show as well so they can go to the show knowing that funding is available for them fully. We can do that as well.
Or, of course, people at the show can come and see us at the stand. We’ll be all geared up to take finance proposals and talk customers through their options at the stand.
Keith Gooden
That was Steven Blake, a good friend of yours, Matt.
Matt Sims
Yes, he is. I’ve known Steve for a while – quite a while. He’s helped us with the business finance and he’s helped a number of our customers get finance as well. He’s a handy man to know.
Get tickets for the show
Keith Gooden
Okay, that’s us done and dusted. But first of all, discount tickets for the big show! This is the last week we’re going to be doing this because the show is in about four weeks’ time and we want you to get your tickets. Go on to the show website. What is it again, Matt?
Matt Sims
Keith Gooden
And put the discount code in – EX1. That’s Echo, X-ray and the number one – EX1. You’ll get a discount, but if you want to win free tickets…
Matt Sims
Go to www.motorhomematt.co.uk/askmatt and tell us your motorhome, campervan, caravan or tent story. Funny is good, moving is fine. We’ve had a few sad ones – memorable is key. So if you have a story or a tale from your camping or outdoor leisure holiday we want to hear about it! Come and engage with us on the podcast and we will pick the best.
Keith Gooden
We will. You’ll get two tickets – no accommodation and no travel. You have to sort that out for yourself. So there’s no point coming to us at the show-,
Matt Sims
You’re making it sound rubbish!
Keith Gooden
– and moaning. It’s not rubbish, it’s fantastic, but we’re just giving the tickets away. I’m just saying, okay, just in case you’re thinking of turning up and staying at the Ritz.
Matt Sims
The worst thing that could happen is they turn up and you’re there.
Keith Gooden
I might still be anyway! I’ll carry your bags for you.
Matt Sims
We’ll keep it a secret which days you’re going to be on site, shall we?
Keith Gooden
That’s a good idea.
Matt Sims
If you are going to the show, come and see us. We’re in the entrance to hall nine. We are recreating this little studio and we will be recording podcasts, won’t we, from the show all week – live! We’re going to be broadcasting live and Keith is going to join me for some of the show as well. But yes, we’ll keep the days that you’re there secret.
Keith Gooden
It is going to be great. I was being measured up today by one of Matt’s minions for the desk which is going to be set up there.
Matt Sims
Oh, I thought you meant for your tag!
Keith Gooden
I thought he was measuring me up for my coffin, to be honest! It’s going to be snug, let’s put it that way. So that’s us about done and dusted. Socials, Matt – how do people keep in and stay in touch?
Matt Sims
Get in touch on the website – www.motorhomematt.co.uk. We’re the same on Instagram – @motorhomematt.co.uk. And you’ll find us on Facebook as well @MotorhomeMatt. Join us on YouTube too, where you can watch the podcast at Motorhome Matt.
Keith Gooden
Thanks for listening to the Motorhome Matt podcast. Remember to check back here for more episodes full of hints and tips and helpful advice. We’ll see you soon for another Motorhome Matt podcast brought to you with www.thatleisureshop.com.
