There are countless valleys in Australia. Brumby Pass. The Wolgan. Glenworth. You name it. Now, if you feel a slight tingle after hearing those names, you should know: That’s adventure calling.
Yet, you’ll need a camper to get around. And purchasing a new one can be challenging if your credit score isn’t up to par. Well, all you need to do is find an organization that offers caravan finance with bad credit.
Still, it’s not always easy to tell what you need to consider while deciding on such financial help. Rest assured, this article will walk you through all of it. Let’s dive right in:
1. Factor in the loan’s upper limit
Most financial services that lend money to poor credit score holders do so within a specific range. This is especially relevant for vehicle loans. For example, say the upper limit, in this case, is 75,000 AUD.
Now, the cost of a new caravan in Australia can sit between 60,000 to 80,000 AUD. So, if you choose that option, you’re already shooting yourself in the foot. Instead, a better alternative would be to look at used variants.
They’ll need some work, but at least you won’t have to deal with a high interest on top of an exorbitant amount. Besides, the upfront purchasing fee for any vehicle is a depreciating asset. In short, you won’t ever recover what you spent initially if you decide to sell it.
2. Account for the amortization rate and maturity date
Institutions that offer caravan finance with bad credit will typically provide you with a set repayment period. While the details may vary based on your circumstances, this can usually range from 3 to 7 years.
The best part about it all? You probably won’t have to make any special balloon premiums. Still, that doesn’t mean you sign up for an unreasonable sum. Take the example below:
You borrow 45,000 AUD. If it’s an amortized loan, which it probably will be, the initial payments will primarily go towards your interest rate. However, this will change when you near the maturity date, with your instalments lowering the outstanding principal amount.
Simply put, consider the time you’ll spend making monthly payments and the duration you’ll be doing it for.
3. Weigh in the additional service charges
While not directly related to the financial help you seek, the service charges on a caravan can impact your ability to repay a loan.
Usually, you’ll be paying for three things:
- Potential repairs
None of the listed elements will be too high on their own. However, collectively, they can put a serious dent into what you set aside for your instalments. A simple tip is to limit these expenses to 300 to 400 AUD.
That will be easy enough to do, considering that gas and insurance coverage will be the only two things you pay for frequently. Repairs can be avoided if you keep up with maintenance while being careful when you drive around.
Understandably, the mentioned aspects can seem overly analytical when you look at what you actually want to do. After all, you are merely here to figure out the best way to travel on a budget.
Yet, these factors are necessary, if not mandatory, to consider when opting for bad credit loans. So, account for your service charges, repayment period and, finally, the upper limit. Once you do all that, you’ll realize that none of it is as convoluted as you thought.