Interest rates have now been increased three times in the three past months as the Reserve Bank acts to curb the surge in inflation. While the rationale is accepted monetary policy, for RV buyers planning to take on finance for that next purchase and those who already have caravan loans, RBA rate increases can be quite unsettling.
The increases have been quite significant for the size – two at 0.5% but also for other reasons. Coming after the extended period of record lows where the RBA held the cash rate at 0.1%. And because the RBA had not actually called a rate rise for over 12 years. While that may put a different perspective on the current scenario, it does not change the fact that interest rates are in a cycle of rises.
The major concern for RV buyers will be what will be the outcome for caravan loans and caravan finance interest rates? As specialists in leisure market finance, we provide clarity for buyers and loan holders with this explainer.
Response from Lenders to RBA Increases
The interest rate that is set by the Reserve Bank is the cash rate. This is not an interest rate for consumer or business finance, but the interest rate for overnight lending for banks. From that base, the banks and other lenders will establish the interest rates that they will offer on the portfolio of loans. When the RBA lifts rates, the lending market responds with their own individual decisions.
The response to the recent increases has seen the Big 4 banks quickly pass the full rate increase onto their customers and other lenders have followed. Lenders will have their guidelines in regard to this issue and any rate rises they enact can also depend on the source of the funding. Lenders acquire their funding from many sources both in Australia and internationally. That is another reason why we see variations in interest rates across lending markets.
To ensure we are always in a position to source the cheapest caravan loan interest rates, we have accreditation with a large selection of banks and non-bank lenders.
Existing Caravan Loans
The impact on current caravan loans resulting from an increase in the cash rate, depends on if the loan has a variable or a fixed rate. Most secured consumer loans will have a fixed interest rate that is fixed for the complete loan period.
Caravan loans with a fixed rate should not be impacted by RBA increases. Variable rate caravan loans can be varied when there are changes in the cash rate. In the case of increases, this would mean an increase to the rate and the caravan loan repayment. Lenders typically contact their customers to advise of any changes to their loan in this respect.
Our most popular loan for new and some used caravans is the Secured Caravan Loan. These feature a fixed interest which is fixed and remains unchanged over the full loan term. Where the caravan is not suitable as security against the loan, buyers may opt for the Unsecured Caravan Loan. This may be acquired with a fixed or a variable rate.
Finance Quotes and Applications Being Processed
RV buyers that have requested a quote through Jade Caravan Finance, your consultant will be sourcing the cheapest interest rate quote based on the rates at the time. Quotes that have been accepted and the application is currently undergoing final process should remain at the rate as offered in the quote.
If a quote or application has been made to a lender other than Jade, the lender should be contacted to discuss if any amendments would apply in the light of the rate increase.
New Caravan Finance Applicants
We will be adjusting our rates based on the interest rates of our lenders. Those applying for new caravan loans will receive a quote which reflects the current and cheapest rate we can achieved.
For those wondering about future increases, the RBA Board will next meet on August 2 and another rise is highly likely to be announced at that meeting. If possible, buyers are encouraged to get their purchase decisions made and loan application submitted prior to that date to avoid a higher rated loan.
Using the Caravan Finance Calculator can assist in calculating the difference in loan repayment estimates at different interest rates.
Tips for Receiving the Cheapest Loan Offer and Rates
Securing a caravan loan offer which is still within your budget may still be achievable even as interest rates are in this current rising cycle. To find the cheapest caravan loan interest rates, consider these options in preference to having to defer that caravan purchase and your travel plans due to the higher interest rates.
- Choose a caravan which has a lower price tag so the loan amount required is less and hence the repayments less.
- Make a more substantial deposit on the RV which would reduce the amount of the loan.
- Make sure your credit score is in the good range so our lenders will offer the cheapest possible interest rate.
- Utilise the broker-style lender services of Jade Caravan Finance in sourcing the lowest interest rate loan from our vast lender choices.
Your Jade Caravan Loan consultant will work with you to secure the cheapest rate and negotiate with our lenders to best structure the loan to meet your requirements.
Contact Jade Caravan Finance on 1300 000 003 for assistance in sourcing cheap interest rate caravan loans
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.