Many people ask themselves this question when they consider buying a caravan. Though it may seem like a daunting process, getting a caravan loan is actually pretty straightforward. Here are three of the most popular types of caravan finance.
Secured caravan loan
Secured loans are some of the most popular finance options used by caravan buyers. This type of loan sometimes requires that you put down an agreed percentage of your loan as a deposit, which is held as security against the rest of the loan amount. If you default on your payments, the lender may take ownership of and sell your caravan so they can recoup their loan.
One of the main benefits of secured caravan loans is that because you’re giving your lender an increased amount of security, you’re normally able to access a lower interest rate. This type of loan product is normally best suited to newer caravans.
Unsecured caravan loan
An unsecured caravan loan is a type of finance where you don’t have to use your caravan or any other asset as security. This makes it a popular choice for most people buying used caravans because most lenders won’t allow you to put down a deposit on an older model caravan that has been used by several previous owners.
Unsecured loans normally come with a higher interest rate than secured loans, but because you’re not putting down any form of security the lender may be less likely to withdraw your finance agreement.
Personal caravan loan
This type of finance agreement is much like a personal loan from a bank or building society, where you use the money to buy a caravan, or anything else you wish to.
This is a popular choice if you’re buying a used caravan and want to pay it off with a low interest rate over several years without having to put down any security. It differs from a traditional unsecured caravan loan, because there are no restrictions on how you must spend the loaned money. You might choose to loan more money than the caravan costs, and use some of that money to pay other related costs like registration and insurance.
No matter which finance product you go with, the important thing is that you do your research to find the best loan situation for you. Make sure you understand all the terms of your caravan finance agreement before committing to a purchase.
Some people find it beneficial to hire a professional caravan loan consultant to help them find the best finance product for their needs. These professionals can often negotiate more favourable terms on your behalf, saving you hundreds or even thousands of dollars in interest over the life of your loan.
Otherwise, you can use an online car loan comparison website to find the best loan options available to you. Check out Driva for caravan finance options and easily compare personalised interest rates for you from multiple lenders.