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Australia is renowned for having some of the most beautiful road trips in the world, from the Great Ocean Road in Victoria to the Red Centre Way in the Northern Territory. 

If you’ve been daydreaming about hitting the open road and seeing the best our country has to offer, you may have also wondered what the best way to finance a new caravan might be. When it comes to buying the caravan of your dreams, one option to consider is taking out a personal loan.

Learn more about personal loans

What caravan types can you finance with a personal loan? 

Depending on the lender, you’ll be able to finance a range of new or used caravans so you can live out your vagabond goals, including: 

  • Classic or conventional caravans
  • Motorhomes and recreational vehicles (RVs)
  • Camper trailers and teardrop trailers
  • Pop top or pop-out caravans
  • Fifth-wheelers
  • Campervans

What should I consider before choosing a caravan loan?

Caravan loans are not totally dissimilar to car loans, in that there are a range of product rates, features and fees you’ll need to carefully consider and compare before choosing the caravan finance option that’s right for you.

What to consider

About

Caravan loan interest rate

Consider utilising caravan personal loan comparison tools (such as comparison tables and personal loan calculators) to ensure you’re not paying a higher interest rate than you need to. It's also worth considering the comparison rate, which factors in the product's main fees.

Caravan loan type

Fixed rate caravan loans allow you to lock in an interest rate for a set loan term (often 3 to 5 years), which can mean more simplicity in your budgeting and avoiding rate fluctuations.

Variable rate caravan loans allow you to take advantage of drops in lender interest rates, however you’ll need to be financially prepared for fluctuations to interest rates.

Caravan loan features

Some personal loans allow borrowers a range of features, such as the ability to make extra repayments. Check what features, if any, a lender can offer in their caravan loan product to make it more competitive.

Secured or unsecured caravan loan

Secured loans allow you to use the caravan as collateral, often meaning you’ll pay a lower interest rate, or be approved to borrow a higher amount, as you’re considered to be a lower financial risk.

Unsecured caravan loans may incur higher interest rates, but if you default on the loan the lender can’t claim the caravan as security.

Fees and other costs

It’s important you factor in the additional costs to financing your caravan, such as fees (late payment fees, administrative fees etc.), caravan registration and insurance.

Are there caravan personal loans for pensioners?

If you’re thinking about investing in your own caravan for your retirement years, or are already a pensioner, you might be wondering what options are available when it comes to caravan finance for pensioners.

Lenders won’t necessarily discriminate against you based on being a pensioner looking for a caravan loan. However, each lender’s eligibility criteria differs, with some requiring a minimum income, which can include age pension, and some lenders not allowing age pension to be considered income. 

To ensure that you can still live out your caravanning dreams, check the lending criteria for your preferred loan product, and be sure to read the product disclosure statement as well as any other disclaimers before you submit an application.

What do I need to know before applying for a caravan loan?

To help increase your chance of caravan loan approval and ensure you’re choosing a caravan loan that suits your financial needs and budget, there are a few key steps to follow. 

1. Work out how much you want to borrow

When searching for and comparing caravan personal loans in Australia, one of the first steps is researching how much you want to spend, and therefore borrow, from a caravan loan provider. Caravans can cost you anywhere from $10,000 to $600,000 and even higher depending on the size of the caravan, its make and its features. Have a look around caravan sale websites to get a feel for the price range you’re comfortable borrowing to finance the caravan you want. 

2. Research caravan loan types and features

Before applying for a caravan loan, you’ll want to decide on the type of loan and/or features that would best suit your financial needs and budget. Whether you choose a fixed or variable interest rate, secured or unsecured loan or a caravan loan that allows for extra repayments, all of these factors will influence which loan you apply for and your overall caravan loan cost. 

3. Utilise caravan personal loan comparison tools

Much like with any loan, you should compare your loan options with comparison tools to help you make an informed choice that best suits your financial needs. RateCity's caravan loan comparison table on this page showcases a range of caravan loans that you can filter through to find the most competitive rates available for you. Allowing you to shop around without the hassle, you’ll also be able to see product ratings to help you make an informed decision. 

RateCity’s personal loan caravan finance calculator also helps you to work out your estimated weekly, fortnightly or monthly repayments based on your required loan amount, preferred loan term, interest rate and your credit score. This can help you avoid choosing a loan that's out of your price range, and help to prevent your application from being rejected.

Consider reaching out to a finance broker or financial advisor for information specific to your personal circumstances.

Frequently asked questions

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.

Can I get guaranteed approval for a bad credit personal loan?

Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application. 

It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit because there’s a higher likelihood that the personal loan will be repaid. 

So a borrower with good credit is more likely to have a loan approved and to be approved faster, while a borrower with bad credit is less likely to have a loan approved and, if they are approved, may be approved slower.

What causes bad credit ratings/scores?

Failing to repay loans and bills will damage your credit score. So will falling behind on your repayments. Your credit score will also suffer if you apply for credit too often or have credit applications rejected.

How long does it take to get a bad credit personal loan?

In the best-case scenario, an application for a bad credit personal loan can be made within minutes and then be approved within 24 hours. However, if a lender needs more information or needs more time to verify the provided documents, the application process may take longer.

How are credit ratings/scores calculated?

Different credit reporting bodies may use different formulas to calculate credit scores. However, they use the same type of information: credit history and demographic profile.

They’re likely to look at how many credit applications you’ve made, which lender the applications were for, what purpose they were for, how much they were for and your repayment record. They’ll also look at your age and postcode. They’ll also look to see if you’ve had any bankruptcies or other relevant legal judgements against you.

Your score can change if your demographic profile changes or new information is added to your file (such as a new loan application) or existing information is removed from your file (i.e. because it has reached its expiry date).

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.

How do I consolidate my debt if I have bad credit?

The worse your credit history, the harder you will find it to consolidate your debts, because lenders will be less willing to lend you money and will charge you higher interest rates.

However, people with bad credit histories can make debt consolidation work by following this three-step process:

  1. First, find a lender willing to give you a bad credit personal loan. This process will be simplified if you go through a finance broker or use a comparison website like RateCity.
  2. Second, make sure the interest repayments on your new loan are less than the repayments on the loans being replaced.
  3. Third, instead of spending those savings, use them to pay off the new loan.

What interest rates are charged for personal loans?

Lenders aren’t allowed to charge interest on loans of $2,000 and under. Instead, they make their money by charging a one-off establishment fee of up to 20 per cent and a monthly account-keeping fee of up to four per cent. Lenders might also ask you to pay a government fee.

For loans between $2,001 and $5,000, lenders can make their money in only two ways: a one-off fee of $400 and annual interest rates of up to 48 per cent.

For loans of $5,001 and above, or for loans that have terms longer than two years, lenders can charge annual interest rates of up to 48 per cent.

Those fee caps don’t apply to loans offered by authorised deposit-taking institutions such as banks, building societies or credit unions, although such institutions are highly unlikely to charge interest rates of anywhere near 48 per cent.

What are the pros and cons of personal loans?

The advantages of personal loans are that they’re easier to obtain than mortgages and usually have lower interest rates than credit cards.

One disadvantage with personal loans is that you have to go through a formal application process, unlike when you borrow money on your credit card. Another disadvantage is that you’ll be charged a higher interest rate than if you borrowed the money as part of a mortgage.

What is a credit rating/score?

Your credit rating or credit score is a number that summarises how credit-worthy you are based on your credit history.

The lower your score, the more likely you are to be denied a loan or forced to pay a higher interest rate.