Written by Crunch the numbers
How do caravan loans work?
A loan to buy a caravan works in much the same way as a car loan. Here are the key points:
- Choose between a new or used model (make sure it meets your lender’s criteria)
- Borrow up to 100% of your caravan’s purchase price (subject to your borrowing power)
- You’ll have the ability to pay a cash deposit, while some lenders may offer residual payments as an option
- Take between one and seven years to repay your loan
- Choose between weekly, fortnightly or monthly repayments
- Have your loan secured by the caravan (asset collateral)
- Repay your loan with interest and fees (some lenders may not charge some or all fees) until its completion
- Early repayments may be available, but many lenders will charge a fee for breaking your agreement ahead of schedule
How much can I borrow?
As mentioned, you can borrow from as little as $5,001 up to as much as 100% of your caravan’s purchase price. Many lenders don’t have a maximum amount for these loans; instead, they’ll assess applications on a case-by-case basis and determine what they’re willing to lend.
In some cases, you may even be able to borrow more than 100% of your caravan’s value, such as if you wanted to include costs like insurance or stamp or vehicle duty.
However, the following factors will determine your borrowing power:
- Your income and expenses
- Your job stability
- Your credit score
- Your record repaying similar loans in the past
- Your assets, including savings
- Your liabilities (other outstanding loans)
- Your dependants
What type of RV or caravan is best?
This question is best answered with a question: what type of leisure vehicle do you or your family need? Here's a short sample of what's available:
- Full-size caravans – the traditional mobile home, coming in various sizes and with a wide range of features.
- Recreational vehicles (RVs) – perfect for people who want to combine their vehicle with their living space. It has many modern conveniences, though it's extremely hard to park.
- Pop-top/pop-out or wind-out caravans – caravans that drive compact but extend outwards. Good for saving fuel, but you sacrifice storage space.
- Fifth-wheeler caravans – the “big boss” caravans that offer ample space and creature comforts. Think Big Hollywood star or rock n' roll style caravans!
- Off-roaders – looking for something that can take you off the beaten track? Some caravan models are specially designed to tackle tough terrain.
Why compare leisure loans with Savvy?
Once you tell us about yourself and the loan you're after, we'll compare offers for you and prepare your formal application.
We're partnered with some Australia's leading lenders to bring you a range of competitive offers to compare in one place.
We're a Platinum Trusted Service Award winner with Feefo and our rating of 4.9 stars our of 5 shows our customers' satisfaction.
WHAT OUR CUSTOMERS SAY ABOUT THEIR FINANCE EXPERIENCE
WHAT OUR CUSTOMERS ARE SAYING
Savvy is rated 4.9 for customer satisfaction by 620 customers.
How to maximise your caravan finance approval chances
Show a verifiable borrowing history
Because a caravan or similar model is likely to set you back a considerable amount of money, lenders will look to borrowers who can point to a history of repaying similar loans. Those in this position come with a lower level of risk, as they’ve proven themselves disciplined enough to repay a sizeable loan debt in the past.
Work on your credit score
In addition, your credit record will play a major role in determining whether you’ll be approved. Even if your credit is already fair or good, continuing to pay outstanding debts and bills on time and lowering credit limits on your cards are ways to improve your score and your chances of approval as a result.
Show a strong savings account
Backing your application up with evidence of savings also shows your lender that you’re able to exercise financial discipline, which can boost your approval chances. Owning property with or without a mortgage has a similar effect on your application, with lenders leaning more towards those who are asset-backed.
Maintain job and income stability
Lenders want to be sure that the loan they’re granting will be repaid in full, so they aim to work with borrowers whose employment is safe and consistent. People with permanency and/or long-term consistency in their work hours are always preferred, as their income is less likely to fluctuate or stop than others.
Borrow within your means
You can boost the speed at which your application is processed by ensuring you only ask for an amount you can comfortably afford to repay. Fortunately, you won’t have to worry too much about working this out yourself when you apply with Savvy: your expert consultant will run a calculation and let you know the maximum you’re likely to be approved for.
Caravan loan eligibility and documentation
Frequently asked caravan loan questions
Yes – there are unsecured options when it comes to caravan loans. You may look for one of these if your caravan is too old or not in good enough condition to serve as collateral for your loan. However, while these loans are generally quicker to process, they come with higher interest rates and fees, as well as lower maximum borrowing ranges of between $50,000 and $75,000.
No – as long as it meets one of our lender’s qualification criteria, you can get a caravan loan approved for a model purchased from a private seller or auction house. You can choose from a wide range of options on the market when you apply with Savvy!
Pre-approval can be very helpful for several reasons. First of all, it gives you an idea of what budget you have to work with, so you’ll know what you can and can’t shop for.
A by-product of this is that it gives you a firmer hand in price negotiations with sellers, as they’ll know you can’t go above that amount.
Also, sellers will view you as a more serious buyer if they can see you’ve been pre-approved, as that shows you’re ready to make the purchase.
Lenders charge interest rates based on your profile. They’ll look at a wide range of factors here, from your credit score to your current financial situation and more. Essentially, the less risk they feel in approving you, the lower the rate they’ll offer. That’s why working on your score can help you not only boost your approval chances but also minimise the cost of your loan.
When you apply with Savvy, you can have your caravan loan approved as soon as within 24 hours of your application. However, factors like the time of day and week you apply, the complexity of your profile and your lender’s internal processes can all impact how long it takes to be approved.
Yes – you’ll have the option to refinance your loan after you’ve been paying it off for a while. This essentially means you’re replacing it with another loan, which could be because you want a better rate, to change your loan term or for another reason. However, many loans come with early repayment fees, so it’s important to make sure you’ll still get the benefit of refinancing if you choose to do so.
Interest is calculated based on your outstanding loan balance on an ongoing basis. For this reason, if your loan is repaid over five years instead of seven, your balance will decrease at a faster rate, therefore costing you less overall.
Yes – we’re partnered with a wide range of lenders, including those specialising in working with people who’ve struggled with their credit in the past. Get a free, no-obligation quote with us today and we’ll talk you through your options!
