Histronics RV’s & Caravans

Caravan Finance

Caravan finance is just like any other financial aid, except that this is taken to finance the caravan you want to buy. Caravan finance is a loan you take to pay for the caravan of your dreams and it could be fora partial or total payment. At Histrionics RVs &  Caravans, we do not offer caravan financing services. However, we will walk you through the process of learning about caravan financing, and recommend spending on the best caravan financing brokers in Australia.

Caravan Finance and How it Works

Caravan finance is a loan you take specifically to buy a caravan. It is just like any other loan, for building a home, buying a vehicle, and schooling. When you get the loan and buy the caravan, it is fully yours even before you repay the loan. That’s the upside to getting a loan to finance your caravan purchase. Caravan finance, like every other loan, comes with an attached interest rate. This interest rate varies from one caravan finance broker to another. It is in your best interest to compare the various interest rates before drawing up an agreement with a caravan finance broker.

Here’s how it works

Most caravan finance brokers offer online and offline services. You can opt for the online service, which you can work on from the comfort of your home. You fill out an application form and submit it. The application form includes questions like your full name, your residence, where you are from, your source of income, a comprehensive list of your valuable assets, and your credit score. This is the first step you take when you want caravan financial assistance.

Your caravan finance broker goes through your form, verifies your identity, and determines if you are eligible for a loan or not. A bad credit score might make it difficult for you to get caravan financing, but it doesn’t make it impossible. If you are eligible for the loan, then you proceed to the next step.

Drawing up the Agreement

The agreement between you and your caravan finance broker is binding, and you have to be very mindful of what you decide on. Failure to meet up with the requirements in the agreement can lead to a legal tussle, or even to the loss of your caravan. So you have to take your time when drawing up and reading the terms of the agreement.

What does a Typical Agreement Entail?

Caravan finance agreements vary from one caravan finance broker to another, however, some things remain constant. Some of them include:

Loan Amount

A constant requirement for the caravan finance agreement is the loan amount. The loan amount has to be clearly stated so that both parties can know what they are going into. You can choose to borrow the total amount you need to buy your caravan, a percentage of it. It all depends on your budget. You also do not want to borrow the money you won’t be able to pay back when it is due.

Interest Rate

This is what throws a lot of people off. The interest rate most times determines if you will end up taking a caravan finance loan. There are now numerous caravan finance brokers, and because of this, interest rates are not as high as they used to be. You have access to many options so you can choose the rates that would most benefit you. You can use a caravan finance calculator to calculate the total amount of money you would be paying your broker. Interest rates are usually paid annually, however, don’t let the percentage disarm you. You might end up paying a lot, depending on how much you want to borrow.

Some caravan finance brokers hide exuberant fees behind friendly-looking interest rates. You have to be picky enough while making a financial decision as hefty as this. Deal only with credible caravan finance brokers.

Caravan Finance Calculator

A caravan finance calculator is a calculator that lets you calculate the total amount you would be paying back after taking a loan. It calculates both the loan amount and the interest rate. Each time you make a repayment, you can calculate how much you have left to pay. The total amount does not include other fees that your broker could impose on you during the loan period or if you fail to pay all the back on time.

Loan Period

You determine the loan period. It is entirely up to you to decide how long it will take you to pay back the loan. This is usually influenced by your source of income. Loan periods can be long-term or short-term. Short-term loans have a timeframe of a month to two years. Failure to pay back the full loan and interest before that time lapses can result in legal consequences. Longer-term loans have a timeframe of two to five years, it can be longer. It all depends on the agreement between you and your broker.

Repayment Method

You can choose to repay a loan by paying fortnightly, monthly, or yearly. Your source of income determines how this happens. The repayment method has to be clearly stated in your agreement, so you and your broker are on the same page.

You can also choose the balloon payment method. Most people opt for this option because it means that they can pay a specified lump sum towards the end of the loan period. A balloon payment means that you don’t have to worry about making regular payments, which can be stressful. The loan agreement can state the particular amount you intend to pay and the most convenient time for you.

The downside to taking a caravan finance loan is that the interest can accrue over time, the longer it takes you to pay it. It keeps accumulating and can later become too much of a financial burden. And failure to meet up with your end of the agreement can lead to severe legal consequences.