With international borders closed until 2021 and state borders starting to open, there’s never been more reasons to explore Australia with a trusty caravan or RV. Though most of us will need some kind of finance to get our dream…
With international borders closed until 2021 and state borders starting to open, there’s never been more reasons to explore Australia with a trusty caravan or RV. Though most of us will need some kind of finance to get our dream camper or caravan hitched to the back of our car or 4X4, we can drive home a great deal by following some time-honoured tips and avoiding pitfalls. Here’s some advice about securing caravan finance without costing the earth.
Before you can come up with a budget, you need to line up your income and your expenses and see how healthy your accounts are. Do you have other debts owing such as a mortgage, car loan, or credit cards? Are you working full time or are you a retiree? What’s your credit score? (You can check it for free once a year – check MoneySmart for details.) Your bank or lender will ask these questions, so it’s important you obtain the answers ahead of time. Gather your payslips, asset holdings, and other paperwork at this stage – it’ll save you a lot of time when it’s time to apply.
Once you’ve figured out how much you’ve got left after taking care of expenses each pay period, you’ll know how much you can spend each month in repayments. Working backwards using a caravan finance calculator (or a car loan calculator – they work on the same principle) you can come up with a budget figure. That will give you a price range and expectations on what you can reasonably afford. Remember to factor in insurance, after-market accessories, and the added fuel costs, too.
“But isn’t buying used cheaper?” you may be asking. Used caravans may have a cheaper list price, but the cost of financing may end up being higher. Lenders and banks are reluctant to approve finance for older caravans, motorhomes, or RVs. Why? Because they’re a higher risk due to their lower value compared with buying new. New caravans also have modern safety features and conveniences, so keep that in mind too.
As of writing (July 2020), interest rates across the board are at their lowest-ever levels. That can mean a bargain when it comes to caravan finance (often stated as leisure or RV finance). However, not all finance packages are the same. Some are listed as “comparison rates” while others aren’t (known as base interest rates.) Comparison rates add on most fees and charges in the percentage, while the other kind can catch you out after the fact.
Sifting through dozens of different loan options can be time-consuming and still leave you wondering if you got the best deal. As Savvy CEO and caravan finance expert Bill Tsouvalas explains, a broker can drive home a bargain on your behalf.
“A caravan finance broker is linked to dozens of lenders and can find you the most competitive loan among them. It saves you time and it can save you money. Some lenders offer pre-approval, which gives you an edge in negotiating. That’s because once you’re pre-approved, you have a price ceiling that a dealer must meet, or you walk away. It’s a powerful way to get a great caravan at a great price. When you find the caravan you want, you simply call your broker, and they’ll arrange the rest.”
Read next: How not to buy a lemon caravan, click here
