Are you looking at buying a caravan? Where do you start and how do you finance it? We never looked at buying our caravan as an expense – we looked at it as an INVESTMENT. An investment in our family, our lifestyle and our quality of life. Best decision we ever made. (check out our article on Choosing the Right Family Van here…)
We have been exploring lots of options for our caravanning community and recently asked some experts for their thoughts. Here’s a ripper run down from our mates at Savvy…
There are about 25 caravans per 1,000 people in Australia. As the borders seem to be closed for the foreseeable future, exploring Australia on six or eight wheels will become more popular than ever. If you and the family have been waiting for a great time to get into caravanning – this will be it! Interest rates are at record lows, there’s intense competition for deals, and some states are giving out vouchers to explore rural and regional areas. Here’s our tips and guide to buying your caravan.
Buying used vs new caravans
The first thought a lot of people have is to go out and buy a second-hand caravan. They have one big and obvious advantage over new caravans – they’re a lot cheaper.
Because they aren’t as dear, taking a used caravan off road and giving it a bit of rough treatment may not phase you. You may think you won’t sell the caravan again for what’s likely to be a pittance.
Caravans aren’t cars. They don’t have odometers, they don’t have scheduled service logs, and some caravans or camper trailers under 750kg weight don’t require roadworthy certificates. Unless you ask the right questions or your second-hand dealer has done their homework for you, you won’t know if it’s been repaired or been sitting outside for many years, exposed to the elements.
Buying new is buying at a premium – but you get more bang for your buck, too. They’ve had no previous owners (and no odd stains or smells), they have the latest mod-cons, water/gas tanks, solar panels, safety features and also come with a manufacturer’s warranty in case anything goes wrong. That means greater certainty for the holidaymaker (and your broker or lender, more on that later).
Budget vs. needs vs. wants
You have to buy the right caravan or it has to be roomy enough for Mum, Dad and the kids. Buying a campervan might be a cost-saver, but your kids will probably find it uncomfortable. Saving a few bucks won’t save you from kids shuffling and tossing about every night! You should also think about spending more on RVs or campers with kitchenettes, toilets and other mod-cons. When going with kids, think about kid friendly set-up and pack-up, so everyone can pitch in.
A bigger caravan will require more fuel to tow but will be more self-sufficient, meaning you can park almost anywhere. If you are staying in well-appointed caravan parks most of the time, you may not need so many creature comforts as the park will provide many of them as part of your lot fees.
Of course, you need to balance all that against your budget. Your budget will determine what range of caravan or trailer you ultimately buy. Make sure you have a shortlist of caravans with your needs and wants so you aren’t tempted to splurge. You can also do a bit of creative haggling if you get your finance sorted early.
Financing your caravan – don’t rely on the “bank of bricks and mortar”
Some people with mortgages or complete home ownership consider using an equity release to pay for their caravan. Yes, it’s easier; but it’s a lot costlier. Adding three or four years to a 25-year mortgage could cost tens of thousands in interest. Adding $30,000 to an outstanding balance of $500,000 at 3.5%p.a will mean an additional $15,056 interest over the lifetime of the loan. A five-year loan for $30,000 at 7%p.a. will only cost $6,242 in interest – less than half!
Getting a separate caravan loan is your most economical way to obtain caravan finance. Getting pre-approval is even better, as Leisure finance expert and Savvy Managing Director Bill Tsouvalas explains.
“A pre-approval is your best friend in negotiations. It gives you a price ceiling you have to stay under unless you want to dip into your own savings. If a dealer can’t go under your price ceiling, you must walk away. Dealers want to make sales more than letting a lead slip past. Use that to your advantage! You could end up with a fantastic deal.”
You can’t really “road test” caravans before you’ve bought them – you’ll only really get to know a caravan once you’ve spent a night or two in one. If you can borrow one before you buy, look into it! Once you’ve bought a new caravan, getting rid of it can be painful in more ways than one. A dealer should be registered with the Caravan Industry Australia National Retail Dealership Accreditation Program. This means they are vetted and committed to the CIA’s policies.
When it comes to finance, you should always choose a lender or broker that has a credit licence at the bare minimum. “This means your broker or lender follows all the responsible lending rules,” Tsouvalas says. “If they can’t give you their credit licence walk away. You should also look at independent and verified reviews online from Word of Mouth, Feefo, or Trustpilot. It can save you a lot of headaches.”
THANK YOU so much Savvy – food for thought! If you are looking at caravan finance, give the experts a call…
Got more questions? Ask your Facebook Group – Aussie Big Lappers – over 20,000 caravanning & camping enthusiasts…