With winter approaching, many Australians are getting ready to head north in search of warmer weather.
Whether you’re planning a lap of Australia or a weekend escape, owning a caravan or camper can be a great investment in lifestyle. But with some models costing $100,000 or more, it’s no surprise that many buyers turn to finance to make the dream a reality.
If you’re considering a caravan loan, here are five key things to keep in mind.
Interest rates vary widely
Just like car loans, caravan finance comes in a range of products and rates. Interest rates vary wildly, depending on factors like your credit history, loan type, and lender. One major factor is whether your loan is secured (backed by the caravan) or unsecured. Secured loans usually offer lower rates but come with the condition that the lender can repossess the caravan if you default. It’s important to compare options to make sure you’re selecting the right option to suit your needs.
Loan terms affect more than just repayments
Loan terms typically range from two to seven years. While longer terms mean lower monthly repayments, you’ll likely pay more interest over the life of the loan. Shorter terms mean higher repayments, but faster ownership and less interest paid. You’ll also need to choose between fixed and variable interest. Fixed rates offer predictable repayments, while variable rates can fluctuate. Some variable loans offer greater flexibility, such as extra repayments or early payout options, so weigh up what suits your budget and lifestyle.
Optional extras can add up quickly
The price tag you see on a caravan often doesn’t include the bells and whistles. Many buyers upgrade their caravan with extras like air-conditioning, off-road packages, solar panels, upgraded kitchens or toilets. These add-ons can significantly increase the overall cost of your loan. Make sure to factor these into your total loan amount, and double-check what’s included versus optional when securing finance.
Bad credit doesn’t automatically disqualify you
If your credit history isn’t perfect, don’t assume you’re out of options. Some lenders specialise in helping borrowers with past credit issues, although you may pay a higher interest rate. Rebuilding your credit by making timely repayments on existing loans and bills can improve your chances. A finance broker can help compare options.
Compare in-house and external finance options
Many caravan dealerships offer in-house finance, but that doesn’t mean it’s your best option. These loans are often white-labelled products from external lenders and can come with higher interest rates or stricter terms. The dealer may receive a commission on the finance, which can add to your costs. By comparing lenders ahead of time, you can often find more competitive rates and flexible loan structures. Speak to a finance broker before signing anything, and they can help compare your options that work for your personal needs and budget.