With the high cost of international travel, caravanning is becoming a popular choice.
Caravans seem like big expenses, and they can be, but you can get a great caravan or camper trailer without blowing your budget by following a few simple rules and doing some homework beforehand.
Working out your caravan repayments ahead of time can go a long way to keep costs down.
Whether you’re joining the “grey nomad” ranks or going on an extended holiday, you can even turn a profit on your caravan when you’re not using it!
Set your expectations based on 'use' case
When picking the right size and type of caravan, you have to think about where you’re planning to go.
Will you be using powered sites? Cabins?
Are you going off-road for weeks at a time? How many people are going with you?
If you’re using cabins, a smaller caravan may suit you well; but if you’re carrying everything in and out with you from the Back of Bourke, you may need something with a lot more bells and whistles such as an RV.
Make a shortlist based on what your caravan needs to do on your extended journeys.
While investing in a versatile caravan may be a big expense, it is still a cheaper way to enjoy some of the best coastal towns Australia has to offer than relocating to the beach permanently.
Using a caravan loan calculator
To get a handle on how much a caravan loan will cost – and most of us will need to get finance – you should use a caravan loan calculator.
You need to know the interest rate, loan term, and amount you intend to borrow.
Remember to look for comparison rates if possible; if you really want to get a range of options, it’s best you approach a specialist broker.
Remember to include extras
On top of your loan repayments, you need to think about the extras – towbars, cables, furniture, insurance, and extra fuel. Include this in your monthly repayment calculation so you aren’t caught out.
Buying used vs new
Though it seems counter-intuitive, buying new can actually be a better investment.
Bill Tsouvalas, Managing Director of Savvy, says that new caravans are seen as a lower risk by lenders.
“They tend to reward you in the form of lower interest rates. This means your interest bill is lower proportional to buying something second-hand,” Ms Tsouvalas said.
Making a profit – P2P caravan hire
When you aren’t using your caravan, you can hire out your caravan using a Peer-To-Peer (P2P) hire or sharing service (think of it as GoGet for caravans).
You can make tax deductions for hiring out your caravan for private use – as well as a bit of money to go toward your repayments.
Doing your homework and getting the maths right goes a long way to buying a caravan right.
Using a broker, calculating your repayments, and accounting for extras make you well prepared for the costs of caravanning – and the best thing is, you can view it as an investment if you choose to hire it out on the P2P market.
Just remember to consult a financial professional before committing to any loan products.
Thomas Perrotta is the chief finance writer at Savvy.com.au. He frequently shares his knowledge and ideas on finance, mortgage, money and investment online and in the media.
This content has been supplied by Savvy.com.au, an award-winning national Australian finance broker.