How to Finance A Caravan & Other RVs
Ever wondered how to finance a caravan?
Whether it’s a caravan you’re looking for, or a motorhome, campervan or other RV, the process is more simple than you might think!
This article will explain how to buy a caravan on finance, as well as touching on pre-approved RV finance, secured vs unsecured caravan financing, and more.
Here’s how to kick things off.
Find a Lender
When it comes to knowing how to finance a caravan, the first thing you’ll need to do is find a place that will provide you with the finance.
Banks:
Often when people are wondering how to finance a caravan or other RV, they’ll think of their bank as a place to get a loan.
While you can get financing for a caravan through a bank, it’s a common belief that banks are the only way to get a loan, but that’s not the case.
Finance companies and lenders are also a way you can get finance to buy an RV.
The lender:
There’s certain lenders you can apply with directly. They’ll work with you in getting you a loan for your RV.
Although this is a good way to get finance, it often involves manual research to find the perfect lender for your caravan, as well as what interest rates they may offer and credit scores they will approve.
Finance Companies:
A finance company, such as Exceed Finance, are great alternatives. They’re often in contact with multiple lenders across New Zealand.
This means when you apply with them, they have the ability to match you with a lender that offers the best opportunity for your application to be approved, with the best rates and terms available to you.
It’s a great way to reduce the amount of time you spend searching around for the best interest rates and loan terms, making multiple applications to various lenders and potentially not finding a finance deal that works best for your situation.
TIP: When you’re looking at where to get your finance from, remember that not all interest rates are created equal.
They vary from lender to lender and depend on factors like your credit score, loan amount, and repayment term.
The Initial RV Application
Now you know the first step of how to finance a caravan, the next step is applying for it!
The Application Form:
Most finance companies will have the ability for you to apply for finance online.
The application form on the company’s website is where you’ll start. It covers the basics: who you are, what you earn, and other information that’s needed to start your application off.
Be Prepared to provide more information:
Even though the application form for your RV will ask for basic information, be ready to provide more details later on. Companies often need a deeper dive into your finances to move forward.
This is done to ensure you’re able to make the payments for the amount you are looking to borrow, as well as placing you with a lender that will provide the best finance available to you.
Additional information you may be asked for:
- Driver’s License: Initially you may only be asked to provide basic details. Have clear photos (front and back) ready as this may be asked for later.
- Proof of Income: Compile recent payslips or bank statements for proof of stable income. These can often be provided electronically, so don’t feel like you need to rush around gathering the paperwork.
- RV Details: If you’ve already chosen a caravan, prepare the relevant information about the vehicle. The details needed will differ depending on if you’re buying from a dealer or private seller.
TIP: To ensure your application gets processed, and potentially approved, as quickly as possible it’s a great idea to send through any information
requested as soon as you can. Often the speed of your approval process is impacted by how quickly you can provide the additional information.
After Submission
Once you have submitted your application for your RV finance, a finance broker will begin working on your application behind the scenes. It’s a great idea to double check any confirmation emails or other contact you may get following your application submission, as they may contain some of the requests for additional information in them.
Expect a Call:
Once you submit your caravan application, someone from the company will typically contact you to discuss your application and request any additional information they need.
Gather Further Details Requested:
This could include more in-depth financial information, proof of identity or specifics about the caravan you’re looking to buy.
Wait for approval
The Process Continues:
Even after you’ve applied, there’s work being done behind the scenes. Your finance broker will be in touch with the lender, ironing out the details of your application.
Conditional Approval:
Sometimes you might be conditionally approved as the lender finalises the loan terms. During this phase, be ready to supply any additional details or documents that are requested.
The lender will be assessing everything that has been provided to them, and may want more information based on their assessment. This could be details about the caravan itself, the seller or dealership, or just to confirm some additional things with you.
Finalising the Deal
Review and Accept:
If your application is approved, you’ll receive a loan agreement. Check the terms carefully before accepting, and don’t be afraid to talk with your finance broker about any questions you may have.
Streamlining your Caravan Finance Approval
The RV Approval Timeline:
The timeline from application submission to approval for your caravan varies. Initial reviews may lead to conditional approvals, where additional verifications are needed.
Speeding up the Process:
The speed of your finance approval for your RV largely depends on how quickly and accurately you respond to requests for additional information.
While the finance broker will handle specifics with the seller or dealership, your promptness in providing personal documentation can significantly impact the overall timeline.
By preparing your documents and responding quickly to any additional requests, you can streamline your caravan finance application and ensure a quicker path to hitting the road in your new caravan.
Knowing your RV Financing Options
Navigating through the various financing options for your caravan purchase is crucial to making a choice that aligns with your financial situation and goals.
Whether you opt for a secured or unsecured loan, or explore the advantages of getting pre-approved, understanding these options is a great way to know how to finance a caravan that will best suit your situation.
Choosing your Caravan Loan: Secured vs Unsecured
Secured Caravan Loans: Benefits and Considerations
Secured loans require collateral, which serves as security for the lender. This type of loan often comes with lower interest rates compared to unsecured loans, as it poses less risk to the lender.
Unsecured RV Financing: Flexibility and Risks
Unsecured loans don’t require collateral, offering more flexibility in terms of what you can finance. They’re an option for buyers who don’t want to risk their collateral. The trade-off is usually higher interest rates due to the increased risk to lenders, as well as a lower available borrowing amount.
The advantages of Pre-Approved RV Loans
What Does Pre-approval Mean for Your Motorhome Loan?
Pre-approval is a preliminary green light from a lender, indicating how much they’re willing to lend you before you make your purchase. It’s based on an assessment of your financial situation and creditworthiness.
This process can give you a budget of how much you have to spend when shopping and puts you in a stronger negotiating position with sellers.
How to Obtain a Pre-approved Caravan Finance in NZ
The process involves submitting a similar range of documents as required for a loan application, including proof of income, employment status, and other financial details. The lender will conduct a credit check and assess your financial health.
If successful, you’ll receive a pre-approval offer, which is typically valid for a specific period.
Determining the Term of Your RV Loan
Choosing the right terms for your caravan or motorhome financing is critical not only in terms of the duration of the loan but also in how and when you make your repayments. Understanding the nuances can help you manage your RV finance more effectively and tailor your loan to fit your lifestyle.
Short-term vs Long-term Financing: What’s Best for Your Caravan?
Deciding between short-term and long-term financing depends on your financial comfort zone. Short-term loans mean higher repayments but less interest over time, while long-term loans stretch out the payments, making each one lower but accumulating more interest.
How Loan Terms Affect Your Repayments on Motorhome Loans
The term length influences your monthly repayment amount significantly. A longer term spreads out the cost, lowering each payment but increasing the total interest paid. A shorter term means higher monthly payments but reduces the overall interest cost, saving you money.
Flexibility in Repayment Schedules
Choosing Your RV Repayment Frequency: Weekly, Fortnightly, or Monthly
Many lenders offer the flexibility of making repayments weekly, fortnightly, or monthly, allowing you to align your caravan loan repayments with your income schedule.
This is a great way to sync up your repayments on your caravan finance with when you get paid or when your other bills and payments go out.
Quick Insights:
Credit Scores: A Snapshot
Your credit score influences your caravan loan in terms of approval and the interest rate you receive. A higher score can lead to better terms, but don’t be discouraged if yours isn’t perfect. Many lenders are willing to work with a range of credit scores, so having a lower score doesn’t automatically exclude you from caravan financing options. It may, however, affect the interest rate of your loan.
What are the different RVs?
This article was written with all RVs in mind, however we have another article explaining the difference between caravans and motorhomes that you may be interested in reading.
Planning with Our Finance Calculator
To get a clear picture of what your caravan financing might look like, use our online finance calculator. It’s a straightforward tool that estimates your borrowing power and repayment scenarios based on different interest rates. Remember, these are just estimates to guide your planning.
Explore your financing options by using our finance calculator here.
Get your RV Loan through Exceed Finance
Now that you know the process of how to finance a caravan, let Exceed Finance do the the rest.
We have access to multiple finance lenders across New Zealand. This means we are able to place your application with a place that best suits your individual financing goals.
All you need to do is send through your application online, and we will provide you with a loan personally tailored to suit your needs.
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