Caravan Loans

How do caravan loans work?

There are plenty of lenders offering personal loans that can help you buy a new or used caravan. In many cases, a caravan loan is a regular personal loan marketed towards caravan buyers. This means the interest rates, fees and features of a caravan loan are usually similar to what you get with a typical personal loan.

The mechanics of the loan will also work in much the same way. When you apply for a personal loan for a caravan, you enter an agreement with a lender to borrow a certain amount of money, and then repay that sum in regular repayments over a set period of time, plus any fees and interest charged at a fixed or variable rate.

You can opt for either a secured or unsecured loan. A secured loan is one where you use an asset (such as the caravan) as security against the loan should you default on payments. An unsecured loan is where a lender takes no security against the loan, and these generally charge higher interest rates than secured loans.

How can I compare caravan loans?

If you’re looking to take out a caravan loan, you need to know what sort of loan repayment you can afford. You can use Canstar’s personal loan calculator to see how much the repayments would be on a range of loan options, and how the repayments change when you adjust the amount you want to borrow, the duration of the loan, or the interest rate.

CIAA general manager Luke Chippindale told Canstar that loan applicants need to do plenty of homework to see what type of caravan finance options are available, and that includes checking the reputation and any reviews of potential lenders.

You can compare a wide range of personal loans for caravans by using Canstar’s comparison tool. You can tailor the results by changing the filters to suit your requirements.

When choosing a personal loan, factors to consider include:

• Is the interest rate fixed or variable? With a fixed rate, the interest rate and your repayments will stay the same during the loan. With a variable rate, the interest rate can go up or down during the loan, and your repayments will vary as a result.
• What is the comparison rate? The comparison rate on a personal loan takes into account both the interest rate and most upfront and ongoing fees and charges. It’s designed to give you a better idea of the total cost of the loan per year.
• What are the fees? As well as interest, lenders may charge fees on your loan. For example, personal loan fees can include an establishment fee, monthly service fees, missed payment fees, extra repayment fees and early repayment fees.
• What is the loan duration? By choosing a loan with a longer duration, you will typically get lower repayments each week, fortnight or month. But you will usually pay more interest in total over a longer loan term.
• What features are available? Some lenders offer different loan features, some of which may better suit your needs when it comes to managing your finances. For example, can you make extra repayments on the loan, and is there a fee for doing so? Is there a redraw facility so you can access extra repayments if you need to?

You can also view Canstar’s expert Personal Loan Star Ratings, which compare loans based on cost and features.

Read any terms and conditions carefully and consider the loan’s Target Market Determination (TMD) as this may help you understand if the product is suitable for your needs.

How do I apply for a caravan loan?

Once you’ve decided on which lender you prefer, you can usually start the loan application process online. Alternatively, you may be able to telephone the lender or visit a branch.

Check first to make sure you are eligible to apply for a personal loan for a caravan from your chosen lender. Typical conditions include being aged 18 or over and a resident of Australia or New Zealand.

If you don’t already have an account with the lender, you will need to provide some information to verify your identity. You will also need to show some evidence of your income, expenses, assets you own and any other debts you have.

A potential lender will likely check your credit score, which could affect the interest rate it’s prepared to offer you. It might be wise to check your credit score for free beforehand to see if there is anything that you need to address to help improve your credit score.

What a potential lender is typically looking for is to make sure that the caravan loan you’ve applied for is suitable for your needs, and that you’re able to repay the loan.

The Australian Securities and Investment Commission says lenders with a credit license have an obligation to make sure that any agreement is not “unsuitable for the consumer”.

What can I buy with a caravan loan?

There are plenty of options to consider when looking to buy the caravan of your dreams.

What caravan you can buy will depend on your budget, how much money you’ve already saved, and how much you can borrow with a caravan loan. But keep in mind that some lender may put restrictions on the type of caravan you can buy using the loan. For example, some lenders may define a caravan as being different from a motorhome.

To give you an idea of the options you may have, the Caravan Industry Association of Australia (CIAA), the not-for-profit peak national body for the industry, defines a recreational vehicle as anything from a trailer tent to a luxury motorhome.

• Tent trailer: A box trailer that stores cooking and camping equipment and a lift-out tent. This kind of trailer is usually small enough to be towed by a small vehicle.
• Camper trailer: A slightly larger trailer that’s easy to set up and typically includes a cooker, fridge, table and sink.
• Pop-top caravan: Similar to a fully-equipped caravan but with a lower profile. It includes a pop-out section you need to expand to use.
• Caravan: Your typical caravan up to 10 metres in length, with up to three axles and up to six or more berths, anything from basic to luxury fit-out
• Slide-on camper: Designed to sit on the back of a ute or light truck, allowing you to tow a separate trailer if you need.
• Fifth wheeler: Much larger and towed by a truck or pick-up and similar to a semi trailer
• Campervan: A small to medium van that’s kitted out as a mobile home with kitchen and sleeping area. Larger vans may even have en-suite.
• Motorhome: Usually the size of a larger van or truck and is typically fitted out for luxury living. You can compare motorhome personal loans with Canstar.

There are plenty of other mobile home designs and customised features that may be included.

How to choose the right caravan

When choosing a caravan, you need to know what you intend to use it for. Mr Chippindale told Canstar it might be a good idea to consider your travel plans and personal needs.

“There are a number of points we like to get people thinking about before buying a caravan,” he said.

They include:

• List everything you want in the caravan then classify them into ‘You Wish’ and ‘You Need’
• Where do you plan to go in your caravan in the next two years? Calculate how many trips and total distance.
• Where will you store the caravan? Check for any maximum height restriction in a garage or carport.
• What is the towing capacity of your vehicle? You need to match the caravan to your car.
• How much space do you need inside a caravan? How many people do you need to cater for?
• What is more important: the comforts of home or economy of light travel?

When you’ve narrowed down your wants and needs from a caravan, you can then begin the hunt for the mobile phone of your dreams.

Mr Chippendale suggests doing plenty of research to see what’s available. Caravan shows can be a great place to start as you can see a wide variety of options in one place.

The AICC recommends you look for any Recreational Vehicle Manufacturing Accreditation Program (RVMAP) accreditation when buying a new caravan, camper or motorhome.

When you’ve found the caravan of your dreams at a price you can afford, Canstar can help you find a lender that offers a personal loan of caravans that meets your needs.