Kiwis love their caravans, and they’re a great way to travel if you want to keep accommodation costs down. But buying a caravan requires a large upfront payment.
A good quality secondhand caravan can cost between $40,000 and $60,000, while a new caravan can cost over $80,000. Unless you have the money saved you will need to look into your financing options.
If you’re considering a personal loan it’s good to know how much the loan will cost you before you apply and to work this out you can use a caravan loan calculator, also known as a personal loan calculator.
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What is a caravan loan calculator?
A caravan loan calculator can help you determine how much a personal loan will cost you and it can also help you adjust the terms of your loan to see if you can save money.
After you compare your loan options you can fill out the relevant fields on the calculator to see how much your repayments will be, how much interest you will pay at different stages of the loan and how much the loan will cost you overall. This enables you to make an informed decision as to whether to apply for a caravan loan.
Read on below to see how to use the calculator to determine your loan costs.
How to use the calculator
Once you have found a loan product you’d like to apply for, simply put in the relevant figures that match the fields on the calculator. Here’s a breakdown of the calculator fields:
- Loan amount. This is the amount you intend to borrow. If you are opting for a secured loan this amount will usually need to be equal to the cost of the caravan.
- Purchase rate. This is the rate that is charged on your loan. Lenders should advertise their interest rate and comparison rate, with the comparison rate giving you a better idea of the total cost of your loan. The rate can also be fixed or variable, so be sure to take this into account.
- Loan terms. This is the amount of time you intend to borrow the loan amount for. As caravan loans are generally for larger amounts than other personal loans, you may require longer to pay it back. Loan terms vary between lenders, but generally you are able to borrow for up to five years for a fixed rate loan and seven years for a variable rate.
- Repayment frequency. Lenders will generally allow you to choose your repayment frequency as it allows you to budget for your repayments. Depending on the repayment frequency you choose—monthly, fortnightly or weekly—you may be able to save money. Adjust the ‘Repayment Frequency’ field on the calculator to see if you can save.
- Repayment type. Principal and interest repayments mean your repayments are going towards paying off the original amount you borrowed as well as the interest you are being charged. Interest-only repayments mean you are only paying off the interest that is accumulating on your loan and your principal loan amount stays the same.
Compare your options
Can you afford a caravan loan?
When you’re inputting the required fields you will be able to get a better idea whether or not you will be able to afford the loan. If you notice that the repayments are too high or you’re not happy with the amount you would be paying in interest, here are a few ways to use the calculator and save money on your loan:
- Change your repayment frequency. As mentioned above, making your repayments more frequently can help reduce the amount of interest you pay at the end of the loan. Adjust the repayment frequency on the calculator to see if you can save money.
- Choose a different loan. Some lenders offer more competitive loan products than others, so by comparing your options you may find a better deal with a different lender. Use the calculator when looking at your options to get a better understanding of the amount you’ll be paying.
- Decrease the loan amount. Although you may have a loan amount in mind, if you will not be able to afford the repayments then you might want to look at reducing the amount you will borrow.
The affordability of a caravan loan can be difficult to determine, but by using a caravan loan calculator you can get a better understanding of the costs you’ll be facing. You can also compare your caravan loan options using the comparison table on this page.