The surge in inflation and pressure on general household living expenses may have caravan buyers doubting if a purchase of a new RV is a realistic goal. Add to that reports that caravan prices are also on the up and interest rates on all forms of lending include caravan finance are also increasing as a result of RBA decisions. Caravan buyers requiring finance may face their own budget balancing act.
But hold on to that dream! Despite rising prices for caravans and rising interest rates, affordable caravan finance is still achievable through specialist lender, Jade Caravan Finance. We cover off on some of the reasons behind caravan price and interest rate rises as explainers and provide guidance and direction as to how buyers can take steps towards achieving affordable caravan finance.
Caravan Price Increase Reports
Reports in industry channels have prices for some caravan brands on the way up. This is being attributed to many of the issues which are impacting the prices of many goods across the economy. Supplier costs and freight costs for components and other materials coming in from overseas head the list. Blown out delivery times are also apparently contributing. For potential buyers, securing the best caravan loans can help in mitigating some of these rising costs.
Despite the wait times for some brands, ‘ready to deliver’ and faster delivery times are available through some manufacturers and for demo vans. Tip: look for what is available to go even if it means compromising on some wish list items.
Interest Rates Set for More Hikes
We have covered the interest rate situation in a number of our articles and have been constantly urging buyers to get in as fast as possible with their purchases before the RBA started to increase rates. The rate rise started in May, continued at the RBA June Board meeting and there are more hikes to come.
Contributing to the rises is the unemployment level of 3.9%, a 40 year low. Steady at this rate for May ABS figures, this is seen as further pressure on the Board of the RBA to further raise the cash rate.
Inflation is of course the major topic of conversation in most circles. In the RBA’s June Monetary Statement, Governor Lowe’s expectation was for inflation to hit 6% later this year. But within a week, in an interview, he had revised that figure to 7%. A further sign that more and faster action by the RBA on rates is on the cards.
The decision on the minimum wage was brought down in the past week and while the 5.2% increase is much-deserved and required, it may further fuel inflation. Businesses that employ workers in that category, which may include caravan manufacturers, will likely need to pass on increases to their own costs to their buyers.
International events are also playing into the situation in the Australian economy. Inflation in the US is over 8% and their Fed Reserve (central bank) has recently hiked rates by a significant amount. The war in Ukraine as well as supply chain disruptions are also continuing to impact prices in some Australian markets.
Achieving Affordable Caravan Finance
The effect of rises in the cash rate by the RBA on caravan finance are that banks and lenders across the markets increase their own rates in response. While we are focused continually on achieving better and cheaper caravan finance interest rates, it is all relative to what is available across the leisure lending market.
While our consultants work hard to negotiate interest rates down for our customers, there are some aspects of the finance process that customers can address themselves, which may contribute to a more workable and affordable caravan loan.
Here are a few hints and guidelines to consider:-
- Establish a caravan finance repayment amount that works with your budget. Use our Caravan Finance Calculators to help with the calculations.
- When calculating repayment estimates, vary the total loan amount until the desired repayment amount is reached. This can provide an indication of the price range of caravan you should be targeting to achieve the preferred loan repayment.
- Insist on a fixed rather than variable interest rate. We arrange our Secured Caravan Loan at a fixed rate and that ensures the rate and the repayments remain unchanged over the entire finance term. Variable rate loans have the potential to increase when the RBA increases the cash rate. Something which is highly expected in coming times.
- Be diligent in selecting a lender and utilise the professional services available to secure the cheapest loan offer. Services such as offered by Jade Caravan Finance. We have access to multiple lenders and the expertise to know which is best suited to offering the cheapest loan for specific customer requirements at a particular time.
- If offered dealer finance, avoid rushing to sign-up in fear that you may miss out on the sale. Having our calculator on your phone will allow quick comparison calculations and we can move quickly to arrange cheaper finance.
- Reconsider including the full caravan purchase price in the loan – no deposit finance. Paying the deposit to the caravan dealer will reduce the total amount of the loan and as such reduce repayments. No deposit finance is great when rates were at historic lows but as they start to increase, it is a tool which can be used to achieve more affordable finance.
- Keep your credit score in the ‘good’ range. This is an important part of the application assessment process and lenders typically offer the cheapest rates to applicants with good credit ratings. Refer to Moneysmart for where to secure a copy of your profile and directions as to fixing any errors.
Achieving an affordable caravan loan is possible despite the challenging economic conditions currently being experienced.
Contact Jade Caravan Finance on 1300 000 003 to start the process towards achieving affordable caravan finance for your dream van purchase.
DISCLAIMER: THE DETAILS AND INFORMATION IN THIS CONTENT ARE PREPARED AND PRESENTED PURELY FOR INFORMATION AND NOT INTENDED IN ANY WAY AS THE SOLE SOURCE OF FINANCIAL ADVICE FOR CARAVAN PURCHASING. IF ADDITIONAL FINANCIAL ADVICE IS REQUIRED, READERS SHOULD REFER TO A FINANCIAL ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY ERRORS, PRODUCT DESCRIPTION VARIATIONS, OR OTHER MISREPRESENTATIONS OF INFORMATION AS PRESENTED.