If you’re planning to finance a caravan, you obviously want to give yourself the best chance of an approval.
Each financier has their own criteria on caravan loans. If you don’t meet their conditions, it could mean a quick end to your dream of caravan ownership.
Fortunately, there are steps you can take to set yourself up for the best chance of approval on a caravan loan.
Follow the tips in this article if you want to set yourself up for an approval. Of course, there are no guarantees. But these tips will put you in a good position.
If you’re planning to finance a caravan in the near future, it’s recommended that you avoid major changes that will affect your financial circumstances.
This includes changing jobs, taking on new debts or even moving to a new rental property.
Lenders often prefer applicants who have been in their job for at least six months. If you have only just started a new job, you might be viewed as less stable and higher risk. That could affect your chances of an approval.
Even if you have received a pre-approval on a caravan loan already, you should still avoid making big changes until the loan is settled. Pre-approvals are conditional and can be withdrawn if your circumstances have changed by the time you’re ready to make your caravan purchase.
When applying for a caravan loan, lenders are going to check on your credit score. A poor credit score will dramatically reduce your chances of being approved for a loan. If you still qualify for finance, a lower credit score will likely result in you paying a higher interest rate on the loan.
If you’re not sure what your current credit score is, there are free services available online to check your credit score.
You can keep your credit score in good shape by ensuring you always make repayments on credit cards and loans on time. You may also look at reducing the limits on any credit cards you have open to improve your creditworthiness.
There are dozens of lenders you could apply to for caravan finance in Australia. Each will have their own lending criteria.
Depending on your circumstances, some of these lenders may approve your application, while you may not meet the criteria for a loan with other lenders.
Trying to navigate the sea of lenders available on your own can be extremely challenging. It’s hard to know which lenders are suited to your personal circumstances and where you can get the best rate.
A finance broker like Credit One will have access to an extensive panel of lenders. They will understand the lending policies of each lender and be able to match you with a lender that gives you the best chances of approval and a good interest rate.
A good broker will also save you a lot of time by comparing the options available for you. This means you can get your loan approved faster and get into your new caravan sooner!
Before you go to a broker or lender to apply for caravan finance, consider how much you can really afford to borrow.
If you can’t afford it, lenders probably won’t approve it.
Take a look at the prices for caravans you’d like to buy. Then work out how much you would be borrowing. This will be the purchase price, minus any deposit you pay upfront.
Once you’ve got an idea of how much you’d need to borrow, you can use a finance calculator to work out what your repayments would be. Caravan finance repayments are generally made weekly, fortnightly or monthly.
Repayments are calculated based on the amount borrowed, interest rate and length of the loan.
The finance calculator will give you an estimate of your repayments. You can then see if those repayments would fit in with your existing financial commitments.
Of course, a calculator will only give you an estimate. It’s best to then speak to a broker who will be able to give you a more accurate repayment figure based on your circumstances.