Credit Score Basics > Where to get a caravan loan if you have bad credit

Where to get a caravan loan if you have bad credit

Wollit Team2 minute read · Updated 3rd July 2024

Owning a caravan can be a fantastic way to enjoy the great outdoors and create lasting memories. However, if you have bad credit, getting a caravan loan can be pretty hard. This doesn’t mean it’s impossible – let’s look at the options available.

What is bad credit?

Before diving into the options, let’s talk about bad credit. Bad credit usually refers to a low credit score, which can happen because of many factors, like missed payments, high debt levels, or even a lack of credit history.

A lower credit score, one in the “Poor” or “Very Poor” range, is generally considered bad credit. Experian, for example, has a credit score range from 0 to 999, and mentions that if you have a credit score in the “Very Poor” band you will be “more likely to be refused most credit cards, loans and mortgages.”

What are the different types of caravan loans?

There are three main options if you want to get a loan for buying a caravan:

Hire purchase (HP) finance. HP lets you borrow the full amount of the caravan and make monthly repayments over a set period. Once the final payment is made, the caravan is yours to own. This option is particularly useful for those who want to build their credit score over time.
Personal contract purchase (PCP) finance. PCP allows you to borrow a portion of the caravan's value and make monthly repayments. At the end of the agreement, you can choose to return the caravan, pay a balloon payment to own it, or use the value towards another deal.
Unsecured personal loans. These loans do not require collateral and can be used to purchase a caravan outright. However, they often come with higher interest rates and stricter eligibility criteria.

Where can I find caravan loans for people with bad credit?

If you have bad credit and are looking to secure a caravan loan in the UK, there are several lenders and brokers that can help. Here are some of the larger websites we could find that offer these sort of loans:

How much will I have to pay in interest?

Because these loans are usually secured by your caravan, the interest rate tends to be lower than for an unsecured bad credit loan. Here is how much you can expect to pay:

Pegasus Caravan Finance: 14.9% per year.
Bad Credit Motor Finance: 19.9%.
Refused Car Finance: 27.7%

However, keep in mind that "representative" APR refers to the rate offered to at least half of applicants. However, this is not the rate you will necessarily get. If your credit score is really poor, you will likely be offered much higher interest rates because lenders consider you a higher risk.

This is why it’s so important to improve your credit score. Luckily, now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies in the UK (Experian, Equifax, and TransUnion).

This builds your credit history, which is what matters for your credit score. Eventually, a better credit history will increase your approval chances – not only for affordable car finance, but also for other financial products, like personal loans, current accounts with large overdraft limits, credit cards with perks and rewards, mortgages, and much more.