The cash rate increase by the RBA in May and the expected future rises may have some caravan buyers re-assessing purchase decisions or more specifically, caravan finance options. Banks and lenders across the lending markets react to RBA decisions by increasing their interest rates. Coming from an extended time at record low interest rates, this new era of rates actually rising for the first time in over a decade, may leave some buyers in a state of indecision.
But despite the rising interest rate scenario, cheap interest rates can be achieved on caravan finance and RV loans structured to achieve affordable repayments. Keep the dream of owning a new caravan with affordable finance alive by working through the loan options and assistance available to new caravan buyers.
With any financial decision it is important to have clear goals and objectives. This includes being clear on how buyers would prefer their caravan loan to be structured. For many, that can mean prioritising the caravan loan repayment figure rather than fixating on interest rates.
Setting a target for finance repayments is an important first stage. Establishing what will work for individual monthly budgets and be sustainable over the term of the caravan loan. These decisions are personal and individual. Jade Caravan Finance consultants source and negotiate finance but advice around personal financial decisions should be sought from a financial advisor if required.
Once the caravan loan repayment goal has been established, it’s on to seeing how the loan details can be tweaked to achieve that target. For a clear illustration of what we are discussing, open our Caravan Finance Calculator in a separate browser so you can make your own calculations as we go through the different loan details.
Tweaking Finance Terms
The finance term is a good place to start. The number of months/years that the caravan finance is taken over, the loan term, has a direct effect on the monthly finance repayments. We can arrange up to 7 year caravan loans depending on lender guidelines and specific details of the loan application.
In simple terms – shorter caravan finance terms result in higher finance repayments and longer terms result in lower monthly finance repayments. You can see that clearly if you’re using the calculator.
In opting for a longer finance term to reduce repayments, be mindful that total interest on the loan may be greater for longer loan terms. Balance that with the prospect of your Jade consultant achieving the cheapest available RV interest rate for your loan.
When deciding on finance terms, buyers may be wise to also keep in mind how long they intend to keep this caravan before upgrading to a newer model. When that timing is in sync with the finance term, the loan may be finalised prior to selling or trading in the RV. Meaning no money to pay the outstanding loan and thus no break fees. The full proceeds of the sale could go towards the new RV.
Deposit Decisions and Total Finance Amount
It is stating the obvious but borrowing less will result in lower repayments than on a higher finance amount. Putting that into perspective, rather than scale down to a lesser priced or lower optioned RV model, buyers can consider the deposit decision. To deposit or to no deposit?
Jade Caravan Finance can arrange no deposit finance (dependent on lender approvals etc) which allows buyers to include the caravan purchase price in total in the finance. This can also include any optional extras which are usually offered by caravan manufacturers.
When interest rates have been at record lows since November 2020 this has been a very popular choice for many caravan buyers. But if reducing the finance repayment is the priority, then reducing the loan amount by foregoing no deposit finance may be an option.
Use the calculator to see how paying upfront to the caravan dealer to reduce the finance amount may reduce the monthly caravan loan repayments on the model you are considering to assist with this decision.
Reducing the overall finance amount will also reduce the total interest that the loan will attract over the finance term.
Bringing it All Together
Caravan buyers seeking finance have a number of options as to how they can aim to shape their finance in order to achieve their targeted repayment figure. Use the calculator to work varied finance terms and finance amounts to arrive at the ideal combination. The next stage is getting that preferred loan approved.
Caravan finance lenders work within their own guidelines when assessing individual finance applications. In addition, lenders including Jade, as Licensed Credit Providers must abide by the Responsible Lending Guidelines as established by ASIC.
Loan applicants can improve their prospects of achieving both the cheapest interest rate and the finance arrangements preferred by maintaining a good credit score. This is critical to achieving the best finance outcomes.
Also critical can be using professionals to source the cheapest caravan finance rates offer and negotiate with lenders on the term and the total loan amount to achieve that preferred repayment goal. Your Jade consultant handles all that on your behalf.
Important to note in rounding out this discussion is fixed interest rates. Jade Caravan Finance offers a fixed interest rate on our popular Secured Caravan Loan. The interest rate achieved remains constant and unchanged for the full finance term regardless of any moves by the RBA and lenders.
Contact Jade Caravan Finance on 1300 000 003 to discuss achieving cheap caravan finance which achieves your repayment goals
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.