The current scenario around interest rates may have some prospective RV buyers reconsidering their purchase timing. Whether they should put off buying a new caravan in the hope that caravan finance interest rates will go back down at some time down the line. Alternatively should they jump in quick at the current rates to avoid any further increases?
It’s not surprising that the current situation with interest rates may leave many perplexed to say the least. The RBA’s decision to raise rates at its May meeting was the first time that the cash rate had been lifted for nearly 12 years. So some buyers will only have been active in applying for loans in a downward trending market.
The decision also came off a 20+ month period of record, historic low interest rates put in place as part of the pandemic stimulus measures. Enough time for many to become complacent and acquire a certain level of expectation that such rates were ‘the norm’.
Now has come the reality check and a time for buyers seeking finance to be more diligent when sourcing caravan loans. We provide a guide to securing cheaper caravan finance interest rates and affordable, individually structured caravan loans while rates are in general on the rise.
Official Interest Rate Scenario
The RBA is tasked with establishing Australia’s Monetary Policy. To a great extent this involves setting the official cash rate. A rate which is a lender-to-lender borrowing rate and establishes the foundation from which banks and lenders set their lending rates.
As part of the pandemic stimulus measures, the RBA cuts the cash rate to a record low in November 2020 and left the rate at 0.1% until May 2022. As the economy rebounded better than expected from the economic effects of the pandemic and in response to global factors, the rate of inflation has surged. To dampen this rate, the RBA has acted by lifted the cash rate at both its May and its June 2022 Board meetings. From the record low of 0.1% the rate now sits at 0.85%.
The Board has signalled further rate rises would be required to continue this process of normalising conditions back to pre-pandemic times.
For caravan buyers planning to purchase with finance, that should be a green flag not a red flag. A signal to go and buy now before future rises.
Caravan Finance Rates
Banks and lenders across the board react to RBA decisions by adjusting their own lending rates, including caravan loan rates. Individual lenders make their own decisions based on their own company guidelines and policies. Some will pass on the full amount and some partially. With the June rise of 0.5%, the major banks passed on the full amount to their home loan customers.
But rates do vary across different lending sectors. Not all banks and finance companies actively offer a specific loan for RVs while others will specialise in this leisure sector. These specialist lenders, such as Jade Caravan Finance, can tend to be more competitive due to their greater interest in that market and their in-depth coverage of the market.
So buyers seeking the cheapest rates can benefit from looking further afield for finance and studying individual terms and conditions attached to the loan.
Another key aspect to watch for is fixed and variable interest rates. We source our Secured Caravan Loans at a fixed interest rate. With this type of loan, the fixed rate is in place for the full period of the finance term. It will not change with any fluctuations in the lending market as a result of RBA decisions.
Some lenders and some loans, such as Unsecured Personal Loans for caravans not accepted as security by lenders, can have variable rates. A variable rate will change in response to rate changes.
For those seeking assurances or insurance against future rate rises, a fixed rate caravan loan is the way to go.
Securing Affordable Caravan Finance
With the RBA effectively in a rising rate cycle, it has become more important than even a few months ago, for buyers to pay more attention to ways to secure a cheaper caravan finance interest rate.
The two basic ways to achieve that are to apply to multiple banks and lenders to find the cheapest or utilise the broker-style services as offered by Jade Caravan Finance to do all that hard work for you when looking for a caravan on finance. While we do offer a wide range of additional benefits, it should also be noted that making multiple loan applications for the same finance can negatively impact the loan applicant’s credit profile.
We not only specialise in RV finance, but have multiple accreditations with lenders which provides us with instant access to intel and connections with which lender is best suited to offer the cheapest rate for an individual customer’s requirements.
All applications are assessed individually and the rate offered reflects the quality of the applicant especially in regard to the credit profile. The caravan age and quality also is assessed.
While interest rates are key to cheaper loans, the affordability factor should also be addressed. By that we mean focussing on the monthly repayment amount to target a level that works with the household budget.
Calculate your Caravan Financing
Use our finance caravan calculator to see how you can best structure your loan to achieve that magic repayment target. This can be achieved by varying the total loan amount by paying a deposit to the caravan dealer or not opting for some of the extras on the van. A lower monthly repayment can also be achieved by requesting a longer finance term.
Will rates go back down again? Cutting rates by the RBA can be an indication that the economy needs propping up as happened with the pandemic. Not many would wish that to happen again! For the immediate future, based on the RBA’s recent statement, further increases not decreases lay ahead.
But inflation is expected to moderate from the current 5.1% to the 2-3% range in 2023. While not predicting RBA decisions, this may create conditions suitable for holding interest rates steady.
For now, rates may rise again in the coming months. So getting in quickly with that purchase could be advisable. Our consultants can respond swiftly and promptly to source quick quotes and fast approvals on cheaper interest rate caravan loans.
Contact Jade Caravan Finance on 1300 000 003 to discuss 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.