Caravans, recreational vehicles, and campers all have one thing in common – they offer the adventurous an opportunity to explore in style. This is why they are top of the list of dream acquisition for many households. However, the cost of these vehicles makes using a financial product to acquire it necessary. A caravan loan is one of such financial products.
Many lenders provide caravan loans with some even specialising in the industry alone. They offer both secured and unsecured loans with terms that vary from one lender to another and depends on the peculiar terms of each loan. Some lenders also offer caravan loans for both used and new caravans so your options a consumer are unlimited.
In order to protect consumers, Lenders are bound to certain standards and must follow the rules and regulations as provided by ASIC. For instance, they must not enter an unsuitable contract with you. An example of an unsuitable contract is one that does not meet your objectives and requirements or a contract that would be impossible for you to repay without going through any hardship.
Lenders are also obligated by law to reasonable inquire into financial position, objectives and requirements. And to also do everything reasonable to verify your financial position.
However, as a consumer seeking to borrow, you also need to do all due diligence to ensure that you get the caravan loan that you want. Some of the things you should consider are:
- The interest rate: this can be fixed or variable and have a huge impact on the amount you will repay monthly. The interest can be influenced by factors such as the length of the loan. When choosing a loan, you must ensure the interest rate is a favourable one when compared with what is obtainable in the market.
- Repayment period: It is important to ensure that you pay attention to this. A longer repayment term might seem like a convenience for you at first. But once you calculate the interest you will have to pay for the whole period; it may not be the best choice. When it comes to repayment terms, the idea is to keep it as short as you can afford to pay.
- Your monthly instalment: This is the amount youth have to pay each month for the duration of the loan—a culmination of interest rate, loan amount, and the repayment period. Calculate the cost and see if it’s comfortable for you to make the payment.
- Prepayment options: there are times when you come into money and want to repay your loan even before it is due. Thus, before entering into the loan contract, ensure that the lender has a prepayment option that does not require an additional charge for paying off the loan prematurely.
When it comes to entering into a loan contract, it is essential for you to ask the lender as many questions as you can so you will fully understand the extent of the terms. Most times, consumers in their eagerness to get the loan and buy the caravan forget to ask salient questions about fuzzy issues, and end up with loan terms that have hidden charges they failed to notice.