A Beginner’s Guide to Caravan Loans
Imagine you can travel where you want, when you want, without burning a hole in your wallet. Caravans turn this dream into a reality.
That said, caravans are becoming more and more expensive, which is why travellers and holidaymakers are hesitant to buy one. The best thing you can do is take out a caravan loan. Here’s a short guide explaining what caravan loans are, their types, benefits, and how you can acquire one:
What Are Caravan Loans?
A caravan loan is a special financing option specifically designed to help you buy a caravan, motorhome, campervan, or other recreational vehicle (RV).
The mechanism is pretty simple: You borrow a lump sum from a lender (instead of paying the full price) and pay the money back in instalments over an agreed loan term. It is an excellent option for those who don’t have enough funds but want to own a caravan immediately.
Key Features of a Caravan Loan
Lenders have varying caravan loan conditions, but there are some universal features. For instance, many people wonder, How much can I borrow? The amount depends on your credit score, income, and the cost of the caravan or camper trailer you intend to purchase. Some lenders offer loans up to $100,000.
Then comes the down payment. A majority of lenders offer a no-deposit policy. In simple terms, you don’t need any down payment for your caravan loan.
Types of Caravan Loans
There are two main types of caravan loans:
Secured Caravan Loans
This is the most common type. When you take out a secured loan, the caravan itself serves as collateral. So if you default on payments, the lender can repossess your caravan to recoup their money.
The benefits of secured caravan loans include lower interest rates and flexible payment terms.
Unsecured Caravan Loans
Unsecured caravan loans don’t require any collateral. These loans come with higher interest rates because they pose a greater risk to the lender. Unsecured caravan loans also have stricter eligibility criteria.
Benefits of Taking Out a Caravan Loan
Some benefits of caravan loans include:
- Immediate access to cash to buy a caravan. Some lenders finance you within 24 hours of applying.
- Potential for lower interest rates (especially with secured caravan loans)
- Preserved cash flow.
- Potential to improve credit score (if you pay loan amounts on time)
- Ability to buy new, upgraded caravans or RVs.
Get Started: How to Apply
Ready to apply for a caravan loan? Make sure you meet the following eligibility criteria:
- You are 18 years old or older.
- You are a citizen or permanent resident of Australia.
- You have a regular income from active employment (this includes self-employment).
- You don’t have a history of bankruptcy.
- You don’t have any outstanding or unpaid defaults.
- You don’t have bad credit.
The next step is finding a reputable caravan loan lender. Ask friends and family for recommendations. Assess independent reviews of different lenders before choosing one. Make sure the lender doesn’t impose unnecessary monthly fees.
