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What caravan finance options are there in Australia?
There are two main caravan finance options in Australia: a secured caravan loan and unsecured caravan finance. If you want to keep your costs as low as possible it’s important to know the difference.
It’s important to pay attention to whether the caravan finance you’re considering is secured or unsecured. The term ‘caravan loan’ does not always mean a secured loan. Here’s an example from a major Australian bank.
Secured caravan loan
The loan will be secured by the caravan you buy, meaning it could be reclaimed by the lender if you can’t repay the loan. But this extra security for the lender generally means this is a cheaper form of caravan finance, with higher loan amounts available.
Unsecured caravan loan
An unsecured caravan loan is really just a standard personal loan aimed at caravan buyers. Your caravan won’t act as security (collateral), meaning there is more risk for the lender. This kind of finance is usually more expensive than a secured caravan loan.
It’s important to pay attention to whether the caravan finance you’re considering is secured or unsecured. The term ‘caravan loan’ does not always mean a secured loan. Here’s an example from a major Australian bank.
How do caravan loans work?
Here are some of the main features of caravan loans in Australia:
- Loan amounts between $5,000 and $100,000, with no deposit required
- Can be used to finance the purchase of a new or used caravan
- Typically come with a fixed interest rate but there are variable rate options
- Loan terms from 1-7 years
- Flexible repayment options (weekly, fortnightly, or monthly)
- Approval can often be straightforward and quick
- Can finance a range of vehicle/trailer types including camper trailers, RVs, motorhomes or converted buses
- Secured caravan loans are often available for older caravans, as they do not depreciate in value as fast as cars
Cheapest caravan finance rates in Australia
The lowest rate caravan loan interest rates in Australia start from around 6.00% - 7.00% p.a. for borrowers with the highest credit score and otherwise strong applications.
But rates can vary significantly for different borrowers, even on exactly the same caravan finance from the same lender.
The average interest rate on caravan loans on Money’s database is 14.17% as at February 2024.
The actual rate you get on a caravan loan will depend on factors including:
- Your credit score
- Your broader financial situation (e.g. income and other debt)
- The age of the caravan you’re buying
- Whether you contribute a deposit (usually not mandatory but may mean you get a lower rate)
- Whether you own your own home (a bricks and mortar one).
On the average new caravan loan ($69,673 according to Money data), the difference between paying 8% and 10% interest is $4,058 in extra interest over a five-year loan term.
How do I find the best caravan finance option?
Caravans are not cheap and have been in high demand since the pandemic. You certainly don’t want to add to the cost unnecessarily by overpaying on the finance.
There are five main factors that will save borrowers money and hassle when shopping for the best caravan loan deal.
1
Interest rate
Look for the lowest rate you’re eligible for. Importantly, this won't always be the same as the lowest rate advertised by a lender.
2
Loan term
This is how long you’re borrowing the money for. A longer term means cheaper repayments but you’ll pay more overall interest.
3
Fees
Upfront fees can be significant (over $1,000 in some cases) and some lenders charge ongoing fees too (annual or monthly).
4
Extra repayments possible?
Being allowed to pay off more than the minimum amount each month without penalty will help you save on interest.
5
Borrowing amount
Does the lender offer loan amounts to match the caravan you ’re buying?
How to minimise fees on your caravan finance
Shaun McGowan, Loans Expert
You almost certainly won’t get anything extra for your money from a lender that charges higher fees on their caravan finance. Watch out for loans with an attractive interest rate but a high comparison rate – the difference is fees. A loan with no fees for early repayment can also be a big money saver if you want to get ahead of your repayments and pay off the loan early.
Shaun McGowan, Loans Expert
Am I eligible for a caravan loan?
You can generally apply for a caravan loan in Australia if you are:
- over the age of 18; and
- an Australian citizen or permanent resident; and
- employed or have a steady source of income to cover the loan repayments
If you meet the basic eligibility for a caravan loan, you will then need to compare lenders and assess their individual approval criteria. For example, some will only finance caravans up to a certain age.
How to apply for a caravan loan
1. Compare as many lenders as possible
Remember, the headline rate you see advertised by lenders may not be the rate you end up paying. You need to compare personalised caravan finance rates. Just make sure you use a comparison tool that won’t impact your credit score.
2. Prepare for your application
To save yourself time down the track, gather together your most recent payslips (or tax documentation if you’re self-employed) plus bank statements and statements for any other loans and credit cards you have.
3. Apply for pre-approval with your chosen lender
You can do this before you have found a caravan to buy. With pre-approval, instead of releasing the loan funds at that time, the lender conditionally approves you for a set amount. This gives you a budget to find the right caravan. Of course, if you have already found a caravan you want, your application will be for full approval.
4. Go caravan shopping
The fun part. If the lender grants pre-approval on your caravan finance, you’ll have a fixed maximum budget to play with. The lender will also let you know what restrictions (if any) there are on the kind of van you can purchase.
5. Give the lender details about the caravan
As a last step, the lender will complete a final assessment of your application based on the vehicle being used as security. You’ll need to provide registration details and details about the seller. If you’re approved, the lender will fund the loan (usually by transferring the funds directly to the caravan seller). For a secured caravan loan, you’ll also need to provide proof that the caravan is insured.
Tips on managing costs
Caravan owner case study
Brett Stockley from Randwick in NSW bought a family caravan (pictured) in 2021. He told Money that managing costs was always front of mind.
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