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I am looking arounf for my first caravan and it will be a 'crappy' as my budget is just £1250. I would like to buy the best I can for this, it must e dry and clean. I have a young child and really wanted a 3/4 berth but have found that to get a decent van at this price considering 2 berths open up my options.

Could 3 of us plus my dog fit comfortably into a 2 berth caravan with a large doubel bed?

With a budget of £1250 you should have lots of choices. Obviously you won't get an ultra modern caravan for that but there are plenty of good servicable caravans on the market for much less than that.

A few years back I bought a caravan for £300 and it was a beauty...you just need to put in the time looking and don't be tempted to buy anything with any signs of damp anywhere, even if it doesn't look much and the rest of it is exceptional, because damp is a caravan killer and once it becomes visible it has already rotted the van.

My little caravan is only 5' 6" wide and can accommodate me and my 2 boys.
I would have thought a wider, more modern van could easily sleep 2 adults and a child.
However, the only problem you may find with a 2 berth is that once your child goes to bed, you have nowhere to sit and no floor space for the dog - something to think about!!

You will find some good late 80s or early 90s 4 berths within your price range.
How about a twin dinette which would give everyone their own space?