While it had been pre-empted for quite some time, the rise in the official cash rate by the RBA at its May Board meeting might still have some people wondering what it means for them. Caravan buyers and prospective buyers will want to know the effect of the RBA rate rise on existing, pre-approved and new caravan finance. The effect of this rise and any potential future impacts of future rises. In particular, is the possibility of cheap caravan loan interest rates now a thing of the past? The quick answer to the latter is no. Jade Caravan Finance continues to seek to achieve better and cheaper interest rate caravan loans.
In response to queries around the effect of the current RBA rate decision on caravan finance, we have covered the key issues in this article. This is intended as general information and of course, for information in regard to individual loans, please contact us and discuss your specific query with one of our consultants.
RBA Rate Increase
The interest rate that is set by the RBA is the official cash rate. While not the rate that applies to personal, individual or business loans, it does form a foundation from which banks and non-bank lenders do set the rates for loans and finance.
The cash rate hit record lows in November 2020 as the RBA slashed rates as part of monetary policy to address the economic effects of the pandemic. This resulted in a period of record low borrowing rates over the past 20+ months across many lending markets.
But as the economy rebounds, inflation is surging upwards and unemployment downwards, the RBA considers now the right time to start returning monetary conditions to more normal settings. In other words, raising the cash rate. In May by 0.25% and indicating further increases are to come. These increases will flow on to lenders increasing their borrowing rates.
Immediate Effects on Caravan Finance
Banks started increasing home loan rates straight after the RBA announced the rise in the cash rate. Increases to rates for consumer finance including caravan finance would be expected.
The effect of the rate rise for individuals with caravan finance or intending to apply for finance will be varied. We detail some examples of the effect on different types of loans.
- For existing caravan loans with a fixed interest rate, any changes to interest rates during the loan term will not change the loan. Jade Caravan Finance arranges our Secured Caravan Loans at fixed interest rates. This ensure certainty for our customers over the full term of their loan.
- For existing loan holders where the loan was arranged with a variable interest rate, that rate may increase with general rises in interest rates. Some lenders will offer variable rate caravan loans and we do offer our Unsecured Personal Loans for some caravans at either a fixed or a variable interest rate.
- Many buyers will be preparing to attend and potentially purchase at one of the upcoming caravan shows and will have obtained a pre-approved caravan loan. These pre-approved loans would have been priced and quoted based on the interest rate which was current at the time of offer.
- Pre-approved caravan loans are offered with an expiry date. If the offer is acted on within that timeframe, the interest rate offered would not be expected to be changed.
- If a pre-approved caravan loan is not activated within the time of validation, the offer will expire. When finance may be required at a later time, a new quote would be sought which would be based on the caravan finance interest rates at that time.
- Applications for new caravan loans are quoted on the interest rate which is available at the time of application. Our consultants source the cheapest interest rate caravan loan that best meets the requirements and profile of the loan applicant.
If you have any specific questions about a pre-approved, existing or new caravan loan, please contact us to discuss.
After the Rise – How to Secure Better Caravan Finance Rates
The general trend across lending markets is for lenders to respond to RBA rate rises with their own rate increases. In a rising rate market it is more significant than when rates are at record lows to do all you can to find the cheapest loan with the lowest interest rates.
That process can start and essentially finish by selecting a specialist RV lender such as Jade Caravan Finance to source, negotiate and finalise the loan on your behalf. With our vast network of lenders and industry-level know-how and access, we have the proven capabilities to achieve better interest rates. We know which lenders are offering the best interest rates at a particular time and we have the skills to negotiate with them to fine-tune the loan conditions to specifically suit our customers.
But prior to applying, there are a few things that caravan buyers can do to put themselves in an even better position to be offered the cheapest interest rate and secure the most suitable loan offer:-
- Keep your credit rating in the range of ‘good’. Reviewing credit profiles is a key part of the loan assessment process by lenders. The better the credit score, the better the chances of being offer the lowest rate. It’s all about risk and credit worthiness.
- To improve the credit worthiness factor, make sure payments for loans, utilities and other bills are made on time. This sets a good track record for lenders to review.
- Reduce the amount owed on loans, credit cards and other debts where possible. This can improve the personal balance sheet which can be a positive contributor to being offered the loan conditions you want. Conditions such as no deposit caravan finance.
Rate rises doesn’t mean the end to affordable caravan finance at better interest rates. But it does mean buyers may need to be more diligent and astute to ensure they source the best caravan finance.
Contact Jade Caravan Finance on 1300 000 003 to discuss how we can assist in sourcing you a better interest rate caravan loan.
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.