While never giving a specific date or timing, for many months during 2021, the RBA had signalled in its monthly Board statements that it did not see the conditions to be in place to warrant an interest rate rise until 2023 or possibly 2024. However, as the economy has recovered faster than many anticipated and inflation has risen sharply, it is looking extremely certain that the RBA will move on rates as soon as June 2022. An RBA rate rise will trigger rises in interest rates across many lending sectors. For those planning a caravan purchase with finance at some point down the track, the concern may be around the possibility of still securing cheaper caravan loans.
Be assured that Jade Caravan Finance will continue to focus on achieving the best rate caravan finance and cheap caravan loans as we always have. But also be mindful, that as our lenders raise their interest rates, the concept of ‘cheap’ becomes relative. The amount by which an individual bank or non-bank lender raises their interest rates on specific loan categories will be up to their operational guidelines.
Taking all those matters into consideration, there are key moves that RV buyers can makes to address the issue of rising interest rates and still achieve cheaper caravan loans. We take you through some of these actions so you can start preparing.
Purchase Timing
One of the major problems which has been affecting caravan buyers actually buying has been the lack of stock on the market. A horde of new buyers were drawn to the caravan market as other holiday and travel options became unavailable at the start of the pandemic.
This increased demand led to short supply and many caravan manufacturers are still catching up. So bringing forward that caravan purchase may not be realistic at this time. But if it is, if buyers can source a RV model which is available now, then buying sooner rather than waiting could be a money saver.
The rate rise is expected in June. So buying prior to the rate rise could result in a cheaper interest rate loan than would be achieved after any increase. It may mean settling for a ‘second choice’ model but that could be a compromise worth the money saved in interest.
Consider Repayments rather than only Rates
As lenders, we do focus very much on caravan finance interest rates and always securing the cheapest possible rate for our customers. But very often, the figure that is most significant to our customers is what the loan will cost them on a monthly basis. What low loan repayment amount we can achieve for them.
Repayments and rates are of course closely linked and the desired loan repayment may still be achieved even after rates rise by addressing other elements of the loan.
The caravan finance term in conjunction with the interest rate and the total amount of the loan work together to determine the caravan loan repayment. Vary any of those elements and the repayment figure changes.
In regard to the term of the loan, buyers may request their Jade Caravan Finance consultant to seek a longer loan term if possible. This would reduce the repayment but will mean more interest payable over the full term of the loan. But it could mean achieving the repayment level that works with your financial objectives and budget.
Achieving the target loan term will depend on individual lender guidelines and other aspects of each loan application.
The total amount requested in the caravan loan can be reduced. We do offer no deposit caravan finance and in times of record low interest rates, requesting this option can be a no-brainer. But if it means the repayments creep up beyond expectations when rates rise, then a re-evaluation many be in order.
Paying a deposit to the caravan dealer can reduce the total loan requested and as such reduce the monthly repayments. Use our free Caravan Finance Calculator to see how varying the loan elements varies the repayment amount.
Keep an Eye on Credit Rating
Be mindful that interest rates advertised by caravan finance lenders will, unless otherwise stated, for new goods and for good credit rated applicants. So ensuring a good credit rating is maintained is always a key to achieving the cheapest interest rate offer.
The loan applicant’s credit profile is assessed by lenders when considering loan applications. Checking this profile and credit score prior to applying for finance is strongly advised. Individuals can acquire information on credit profiles including how to access a free copy and fix any errors at the Moneysmart website.
To keep a good credit score, ensure payments for credit cards and other bills are made consistently by the due date.
Improve Individual Balance Sheets
Balance sheet is usually a term associated with businesses. But individuals also have their own balance sheet. This is essentially the current state of personal assets compared with liabilities or debts. What you own compared with what you owe.
This forms a part of the loan application process and the lender assessment. A good balance sheet may attract a cheaper interest rate and an overall better loan offer. Prior to applying for a caravan loan, buyers may look at how they can reduce liabilities. This may involve paying off some other loans including outstanding credit card balances.
Use the Assistance Available
Achieving the cheapest interest rate and best caravan loan offer can be a time-consuming and challenging task for individuals to approach by themselves. Using our services to handle the process can ease the time involved and remove many of the challenges.
We utilise our expertise and lender connections to negotiate the cheapest possible interest rates and loan conditions for our customers. There is no obligation to accept any loan offer which we source for our customers so utilising the assistance on offer through our broker-style service can deliver far-ranging benefits. Especially in achieving cheaper caravan finance regardless of the interest rate situation.
Contact Jade Caravan Finance on 1300 000 003 to discuss your caravan loan requirements
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.
