Financing a Caravan (Everything you need to know)

💵 Financing a Caravan in Australia – Everything You Need to Know!

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Caravans, motorhomes and recreational vehicles (RVs) are a great way to get out, explore Australia and travel for less (well… excluding the caravan purchase that is). Since the 2020 shift in worldwide travel habits, it’s said that 1 in every 10 households now owns a caravan.

In fact, Jayco reports that they’ve had a sales increase of almost 80% in the last few years!

It’s fair to say that caravans are extremely well-equipped these days, which is very much reflected in their price tags.

With the rise in demand to be fully self-sufficient in order to comfortably enjoy campgrounds outside of caravan parks, you really do get bang for your buck with these modern caravans. Toilets, showers, LED lighting, fans, washing machines, charging ports, off-grid solar setups – the country really is your oyster!

But the reality is, most people don’t have a lazy $30-100k (or more!) to throw at a fancy new caravan. And if you’re not sure what the going rate is for a brand-new van these days, have a read of these…

So, how are people funding their purchases?

While some people are opting to sell the house in order to fund a Big Lap (then sell the van afterwards), others are highly uncomfortable with such a big financial move. Selling other assets and saving is probably the smartest way to fund a caravan, although that’s not always feasible for everybody.

Financing a caravan is another common way to fund the dream. Whatever your personal situation, it’s not a decision to be made lightly and requires a solid amount of research and due diligence.

To help you along your way with the decision-making process, I’ve put the hard questions to Shaun from money.com.au, who’s all over the ins and outs of financing a caravan. Read on to have your questions answered before jumping into anything. It’s a big decision!

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Financing a Caravan

Caravanning

Can you buy a caravan on finance?

Yes, you can buy a caravan on finance. If you can’t buy your caravan with savings, a secured or unsecured vehicle loan can often be used to fund the entirety of your purchase. Caravan finance is available from a number of different lenders in Australia.


How does caravan finance work?

Caravan loans work like personal loans and car loans, except with small variations due to how you plan to use the funds. Caravan finance allows you to borrow money to finance all or part of the costs when buying a caravan. 

You borrow the amount you need, then repay this over an agreed length of time in regular instalments with the added cost of interest (the cost of which reduces as your loan balance does).

Caravan finance options:

  • LOAN – Secured or unsecured
  • INTEREST – Fixed rate or variable rate
  • FEATURES – Early payout, redrawing and/ or ballooning (smaller repayments with a lump sum at the end)

Can you get a secured loan for a caravan? 

Yes, you can get a secured loan for a caravan. Most specific caravan loans work just like a car loan. In the event of non payment the lender is able to repossess your caravan. Because of this, lenders will generally offer you a lower rate of interest.


How much deposit do you need to buy a caravan? 

You don’t technically need any deposit to buy a caravan. Whether you use a deposit for your caravan loan will usually depend on whether you plan to use the caravan for security, and how much of the funds you are using to purchase the vehicle itself.

Basically, anything that you use the borrowed money for that isn’t directly associated with the value of the vehicle (insurance, on-road costs, roof racks, repairs to fix it up, your first few tanks of gas, breakfast that morning, etc.) are the things you should be (at minimum) using your deposit or savings to cover. 

If you plan to use the caravan as security, you’ll also want to consider making a deposit relative to how you and the lender estimate the value of the caravan decreasing over time with the loan amount.


Can you lease a caravan?

As with using a secured or unsecured loan, you can technically lease a caravan if it meets the conditions of a lease. Generally, there are better options available, but under certain circumstances, a lease may be more suitable for your situation and needs.


Can you use a car loan for a camper or caravan?

You could use a car loan for a camper or caravan, but generally you wouldn’t due to the distinction between a car and a caravan as reliable value to a lender.

More people drive cars than caravans, there are more cars than caravans, and there are more experts and greater interest in cars, their use and available parts, than for caravans. As a result, it’s easier to track and determine the value of a car and its resale value at any moment if needed than it is to do so with a caravan. 

For lenders, car loans are an easy product to offer because the loan equation is easy to match across a wide number of borrowers. 

Caravans are more niche, which means while there are lenders who will offer specific caravan loans (due to their knowledge of caravans as an asset), the majority will find it more reliable to simply offer car loans and secured or unsecured personal loans.

At the end of the day, you’re better off going for a specific caravan loan from a reputable caravan finance lender if it’s available to you. A car loan is a similar product to a caravan loan but is generally only used for cars.


What is the process of applying for caravan finance?

The basic process of applying for caravan finance involves finding the caravan you want to purchase, deciding how much you need to borrow and can borrow, then applying with a lender who advertises the type of loan and amount you need. From there, you provide them with the required information (bank statements, proof of income, identification) that they need to say yes or no to lending you the money.


Is it hard to get caravan finance? What kind of credit score is needed to finance a caravan?

You can finance a caravan with almost any credit score, although obviously it’s easier to get approved with a higher credit rating. Having a better credit score means there’s a lower risk in lending you money, which translates to lower interest rates and cost to you overall.

Lenders will often decline you for a loan if you are unable to meet the servicing costs or if you have had trouble repaying previous debts, in particular to finance companies.

How difficult it is to apply is just following the basic process of applying and understanding the requirements needed to get the money you need. Thankfully there are both a wide number of lenders and services available to match you with the best ones available.


How long can you get caravan finance for? 

Most caravan finance is between 2 and 7 years, which will vary between lenders and is also partially determined by your risk level and how financially trustworthy you are.

Caravan Buyers Guide (15-page)

Caravan Buyers Guide

Take the stress out of buying a caravan with this interactive step-by-step guide!

  • 15-page Guide
  • Checklists to tick off
  • Interactive prompts to fill out
  • STEPS INCLUDE: Budget, Set-up, Towing Weights, PPSR Check, Handover, Hitching Up & more!
  • DIGITAL & PRINTABLE

Can you pay monthly for a caravan?

You can pay monthly for a caravan, but as with the length of your loan, this varies between lenders. Most lenders will offer repayment options of weekly, fortnightly or monthly instalments, depending on the amount you borrow, the length of the loan, and your profile as a borrower.


Dealer Finance vs Personal Loan

Should you just go with the dealer finance that the caravan salesman pushes or are you better off with a personal caravan loan?

At the end of the day, the decision is yours. It’s certainly much easier and more convenient to sign your life away at the sales yard, however their interest rates and options may not be comparable as with other lenders.

I’d recommend shopping around first for the best loan terms and interest rate before signing on the dotted line. After all, you’re the one who will be paying this off over the next 5 or so years, so you are the one who needs to be happy with that decision.


Things to look for when choosing caravan finance

It can be super confusing when you’re cross-checking lots of different lenders.

Here are the main things to look for when financing a caravan:

  • Your budget
  • Interest rate being offered
  • Whether they offer secured/ unsecured loans (depending on your needs)
  • Length of loan (which affects your repayments and total interest paid)
  • Loan features (early payout, final balloon payment, redraw option)
  • Loan fees (ongoing or one-off)

How to use money.com.au to find the right caravan finance

Money.com.au Caravan Loans and the Money Matchmaker™ can help anyone looking for a caravan loan or vehicle loan see real rates, fees and repayments. Instead of the advertised rates you usually see online, you’ll see exactly how much you’ll pay with each lender, including any fees or restrictions included in the cost. 

With a few simple questions, you can match your requirements and needs for a loan to the lenders you can apply with, and get real, personalised rates from Australian lenders that can give you approval on the loan. Start your journey with the Money Matchmaker™ today.


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