A Complete Guide To Camper Trailer Finance and Caravan Finance

Financing a camper trailer or caravan? Here are your finance options, explained. 

With domestic tourism set to reopen in the coming months, many are turning to camper trailers and caravans as a way for their family to get back out and about, while still maintaining social distancing measures. 

What you might not be aware of, is that there are different types of leisure finance options out there, and what might look like a good deal from the outset, can set you back long term. I have seen many different applications over the course of my time which produce entirely different results to one another, depending on how they are set up. 

Let’s dive in. 

Factors To Consider

Leisure finance or as we know it, Caravan Finance and Camper Trailer finance, can vary from lender to lender. Rates can vary based on your profile and the age of the asset, and/or your current residential status. Most lenders have a tiering system that ranks your profile and purchase into a category, and each category reflects a different interest rate. 

The lender also categorises the age of the asset with their rating system. If you purchase NEW or Used and this can also be determined based on how old the asset is. i.e –from NEW 2020 Model to 1-5yrs old will rate different to 5-9 years old and so forth. 

What this means is that purchasing a used asset may come at a higher interest rate, when compared to a new asset. When you add it all up, you might be better off purchasing the new asset at the lower interest rate, even at a higher purchase price. 

Broker vs Your Bank

The most important decision to make, in most leisure finance cases, is whether to loan through your existing bank, or with a broker. Most mainstream banks will recommend a personal loan for leisure finance, which attracts a higher interest rate, starting at 12.99% p.a. 

It always pays to do some homework. Some lenders will not lend on a non structured item – for example a camper trailer (being a pop top/pullout system) so because of this they tend to finance the asset under a Personal loan which attracts the higher rates. 

We’re different, because when we gauge your borrowing tier and estimate your rate, it won’t reflect a credit enquiry on your credit file, which in some instances can be damaging. 

As a broker we also have access to wholesale rates at a much cheaper cost which we are able to pass onto our customers. 

Homeloan Re-Draw

A 5 or 7 year loan term on a camper trailer/caravan has often come up against redrawing on your home loan. I have seen some of my clients do this given the substantially cheaper interest rates on home loans. 

However, if you do not intend on paying that portion of the loan off within 5-7 years, it will cost you more in the long term because you end up paying interest on a much higher loan amount i.e $450,000.00 and over an extended loan term of up to 30 yrs. 

For example; a camper trailer loan for $50,000.00 with the average available rate at the time of writing of 7.99%.

Using the loan calculator if you paid the loan back over a 5 year period your monthly repayments would be $1009 and you would pay $10,579 in interest.

By comparison, let’s see how much it would cost you to finance the camper trailer into your existing home loan, or redraw from your home loan. 

Using the average variable home loan rate at the time of writing of 3.70%, if you have 20 years remaining on your $500,000 home loan, your monthly repayments would increase by $295 to accommodate the $50k redraw and you would pay $20,941 in interest.

The home loan turned out to be the more expensive option here, even though the home loan interest rate was substantially lower than the camper trailer finance rate.

The problem with purchasing something on your home loan facility is that you wouldn’t be forced to pay it off sensibly, as you would be with a camper trailer loan, and the extra debt could sit around for 20 years.

Who Are We?

Hi, I’m Nadia. Caravan & Camper Trailer finance is an area I specialise in and I have worked with some of the largest Australian made brands nationwide! 

I love to always be open and transparent with my clients, because long term relationships are what I thrive on, not set and forget. So if you have any further questions about Leisure Finance, please reach out!