If you have visions of taking your family out in a caravan while on holiday, and you would like to make it a tradition, it often seems like purchasing a caravan is a good move. But securing a loan for a caravan isn’t necessarily the same as when you buy a normal vehicle like a car. Before you head out to the dealerships, here are some considerations of getting a caravan loan you need to think over in advance.
Good Credit is More Important
While having good credit means you’ll get more favorable loan rates in general, it is even more important when you look to purchase a caravan. Often, recreational vehicles of this nature are seen as luxuries, so many lenders aren’t interested in taking on the risk unless the buyer has a strong financial record and a solid credit score.
Before you begin looking for financing, take the time to review your credit report and obtain your credit score. If you find errors on your report, get them corrected before you apply for any loans to make sure your credit score is as high as possible. However, if your credit score falls into the fair category or below, you might need to wait to buy a caravan until you can improve it.
Always Shop Around
Once you know your credit score will allow you to obtain financing, it is important to shop around to find the best caravan loan available says loancentre.com.au. Check with a range of financial institutions, including your primary bank, to see who offers the best rates and most favorable terms. Outside of your main bank, check with local institutions, credit unions, and other large lenders. Often, you can get basic information about their available rates before applying, so you can choose the strongest options and only apply to them.
You can also apply for financing with the caravan dealer. They will typically know of numerous lenders who may provide you the necessary funds, so they can function as a resource in their own right.
However, dealers are often compensated whenever they set up a loan, so this may influence who they decide to work with as well as who they ultimately recommend.
Consider Non-Traditional Approaches
If you don’t have good credit or aren’t finding the kinds of interest rates you were hoping to, you can look at non-traditional approaches to get the needed funds. For example, if you own a home and have suitable equity, a home equity loan might be a good option. Often, the interest rates on home equity loans are lower than certain other options because the value of your house functions as collateral.
However, even if the rates are good, it is important to remember that you are pledging your home as backing for the loan. That means, should you fail to repay the home equity loan funds used to purchase your caravan, you can be putting your home at risk.
When buying recreational vehicles, it is always important to review your options carefully before making a purchase. That way, you can make sure it is a purchase you can actually afford and that you are getting the best financing rates available.