For those of us in the United States, we might not be familiar with the phrase “caravan” loan. It might sound like money lent out to pay for a type of cart, but in reality, it is simply a type of personal loan. It is called this in many parts of Europe and Oceania (specifically Australia and New Zealand).
So, that is why I think it is good for us to familiarize ourselves with it, even if it is not a common turn of phrase in our country. Expanding our horizons allows us to consider borrowing money from places we may not have before. Did you know that more and more people have been looking internationally to borrow money?
Well, it is true. Here is an article that discusses it, if you are curious. Just keep in mind that some are indeed offered specifically to finance buying a caravan – not the types that we might picture drawn by camels, but instead something akin to an RV. It is a good idea to brush up on some international slang before applying, as you can probably see already.
So – What is a Caravan, anyway?
As I briefly touched upon above, it is a type of motor vehicle used for travel or vacations. Most of them these days cost a pretty penny: between twenty thousand and fifty thousand US dollars (obviously, this might vary depending on the features you look for). That being said, they are becoming a lot more popular in recent years, perhaps due to the itch to travel but be in comfort and relative isolation.
What are some of the features that are drawing people to splurge on them? Well, as you can probably imagine, there are plenty of them. For example, LED lights or bathrooms on the vehicle. There are even full-on washing machines, showers, charging ports, and solar power installations in some of them. No wonder they have become such a hit, right?
Financing One: Personal Loans
The most common option for financing the purchase of a caravan are personal loans. A personal loan is a type of unsecured loan where the lender does not require any sort of collateral to secure the loan. In return for the money lent, borrowers pay interest monthly over a set period of time.
Usually, all of this is outlined in a sort of contract or agreement before the funds are disbursed. You can see some examples on this page, billigeforbrukslån.no/carvanlån/, though there are of course other websites you could check out as well. Now, there are some other things you may want to remember as well.
Before taking out a personal loan, make sure that you know exactly how much you need to borrow. Additionally, consider how long you plan to repay the loan, and what kind of interest rate you will be charged. Of course, you should consider whether you can afford to pay back the loan, and if you will be able to meet your other financial obligations with the monthly payments expected.
Be cognizant of the fact that most repayment plans span from two years to seven years, but some go on for even longer. You need to ask yourself if that is something you are comfortable with. If the answer is no, then borrowing money to buy a caravan might not be the answer. However, if the answer is yes, there are some other aspects you may want to bear in mind too.
Is it Worth it?
As I have briefly discussed in the above passages, there is a lot that goes into taking out a loan, whether it is for a caravan or for anything else. It is a large financial decision that should never be made lightly. Be sure to consult with your partner (when applicable) or any family members that might be sharing the financial burden before you do it, too.
It is a fact that personal loans have become increasingly popular among consumers who want to borrow money without having to put their home at risk. However, before signing any agreement, it is important to understand what you are getting yourself into. That applies to most contracts in life, so why should it not apply here, right?
Something that I want to point out early is that this question is not exactly an objective one. Rather, it is subjective, and will largely depend on what your finances look like. If you find yourself in a good place with a high credit score, then the answer will likely be yes. However, if the opposite is true, you may not want to be so keen on borrowing more money.
However, these are not absolutes. Depending on your circumstances, it could easily change. So, while I would love to provide you with a more definitive answer, I will have to end this section with an “it depends.”
The Different Types of Personal / Caravan Loans
Now that you have thought long and hard about whether it is worth it for you (or not, of course, I mostly jest), let me go over some of the different options you might find. You may find yourself surprised at how many of them there are!
First there are secured loans. Secured loans are the most common type of personal loan, though many consumers do not favor them. They are backed by something of value – usually your car, house, or some other asset. If you default on the loan, the lender can repossess the item securing the loan. For a caravan, it might not be the best idea to stake your house on it.
Next there are unsecured loans. Unsecured loans are considered “riskier” than secured loans. This is because they do not rely on collateral. The result is that lenders may charge higher interest rates on them, which is not ideal, but a side effect of them that many borrowers are willing to accept.
Finally, there are installment loans. Installment loans are like the other types of loans, except you only pay off the principal balance each month. Your payments are spread out over a longer period, which means you will not have to pay as much interest.
Armed with this information, hopefully you can move forward with the knowledge that you need to borrow effectively. If you are looking to purchase a caravan, be sure that you look at multiple vendors to find a price and number of features that suits you. The same should go for the loan that you take out to finance it.