Taking holidays with a caravan is a great way to explore parts of Australia and can save you a lot of money on accommodation and restaurant bills. With everything you need in your home away from home, you can set your own pace when travelling, staying for longer in places you like, or moving on if you're not too keen on an area. A caravan doesn't need to be expensive but, as with anything, much larger ones with higher specs can give you more space and comfort. Caravan loans can help you buy your first caravan or upgrade to a classier model.
How do caravan loans work?
A caravan loan is a personal loan that can be unsecured or secured. Unsecured loans are generally for smaller amounts, and to be eligible for one you'll go through a credit history check so a lender can be as sure as possible you will be able to pay the money back. For larger amounts (caravans at the top end of the market can cost tens of thousands of dollars), you're more likely to be offered a loan that is secured on the vehicle you are buying. That means if you fail to honour the loan agreement and repay everything, you are likely to lose the caravan and all the money you have repaid previously. Caravan loans work in the same way as other types of personal loans, in that you pay back the money you have borrowed plus interest on top of the principal sum.
Why do people use caravan loans?
Caravans can be expensive when you go upmarket, but you can also find plenty of caravans at the lower end of the market, especially if you are just starting out caravanning and want to see what it's like. Nevertheless, a caravan, even a second-hand one, could still be out of reach of your budget, which is why people take out caravan loans. They are a way of stretching out repayments that are affordable, but give you the immediate availability of the vehicle.
What are the main features?
Although you could consider your caravan a travelling home, you're unlikely to be offered a home loan to buy one, as this longer term form of borrowing is intended to buy houses. Though if you wanted to buy a static caravan that could be quite expensive, you might find a lender willing to discuss this with you. For a caravan loan, you should compare the types of personal loan available, especially in terms of the interest rates. Secured loans will usually have lower interest rates than unsecured ones, so do your research before making an application.
What are the pros and cons of caravan loans?
If you don't have all the money you need to buy a caravan, then getting a loan is the best way to get what you want, when you want it. The larger the deposit you can put down, the less you will pay back in interest charges. If you default on the loan, it's likely that the lender will repossess your caravan.