The finance cost of buying a caravan is one of the biggest expenses you’ll face. Getting a competitive interest rate can help to reduce that burden.
Caravan loans are typically arranged by car dealerships, which advertise the best deals at any given time. Here’s a guide on how to get the cheapest caravan finance.
Even if you have a car dealership in mind, make sure to get at a few other lenders. This will give you an idea of the ‘going rate’ and help you decide how much wiggle room there is on interest rates. Or, even better, you can use a car loan comparison website to compare multiple caravan finance options all in one place.
You can also check with non-specialist finance providers such as banks and building societies, even if you don’t have a good credit rating.
Put down a deposit
If possible, use enough of your own savings to make a significant deposit on the purchase price. That will help to get a better interest rate from dealerships and lenders alike. It may even be that the dealer offers a preferential deal because you’ve helped finance the vehicle in this way.
Check your credit history
The better your credit rating, the more likely you are to get a competitive interest rate on your caravan loan. Car dealerships and lenders can run a check on whether you’ve missed car finance or other debts repayments in the past few years. If this is looking good, it will give you more clout when negotiating.
Make sure you check your credit history to ensure that there are no mistakes or errors on your credit history, which will impact your credit score. If there are any mistakes, you can contact the credit provider to get these fixed before applying for any loans.
Don’t borrow an excessive amount
Car dealerships and lenders will want to make sure they get their money back, so make sure you only borrow the amount you can afford. If your loan is for a significant portion of the price of your caravan, you could run into trouble if something goes wrong with the vehicle.
Understand what a ‘good’ interest rate is
If a dealer or lender isn’t offering a competitive interest rate, consider looking elsewhere. As a guide, anything over 10% will make the loan unaffordable in the long term.
As with any major purchase or loan, do your research and check out various caravan finance options before locking in on one specific product. Doing this will give you the best chance of getting a competitive interest rate on your caravan loan.
It’s also important to understand that the interest rate isn’t the only thing that will impact how much you pay each month. Each lender charges a range of different fees, including admin, entry and monthly fees, so you’ll need to factor these into your decision when choosing between loan options. For this reason, it’s a good idea to pay more attention to comparison rates than APRs, as comparison rates include most of the fees you’ll be charged (and APRs do not!).
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