cars, utes

Toby Simmons Oct 21, 2020

Next to your home, a caravan will be one of the most expensive assets you’ll own. Which is why it’s important to have a good, long think about the way in which you’re going to pay for it. To make things a little clearer for you, we delve into some of the most-utilised payment methods and the pros and cons of each, hopefully giving you a better perspective on things before you make any costly mistakes!

 

Option 1: Cash

 

They do say that ‘cash is king’. But is it the best way for you to pay for your new home on wheels? Let’s see.

 

Pros:

  • Upfront payment in full means no ongoing monthly repayments
  • There’s no need for any credit checks to be completed

 

Cons:

  • If it fully depletes your savings, you’re left with no emergency/rainy day funds
  • May cause overall potential cash flow issues down the track
  • Having to budget/save if you don’t have the cash on hand which will delay purchase (maybe significantly)
  • The kidney you sold on the blackmarket to pay for it will surely be needed in a few years, right?

 

Option 2: Redrawing on your mortgage

 

If you’re paying off a mortgage on a property, you do have the option to redraw on it. Is it the right option, though?

 

Pros:

  • It’s quite easy to secure (talk to your bank/lender)
  • There are no additional outgoings each month; you just continue to pay your mortgage as you were previously

 

Cons:

  • You may end up paying fees and even an increased interest rate if you access the redraw facility
  • You’re extending the time it takes you to pay off your home (your main asset) and you might end up paying a lot more in interest than you would with a low-rate financing deal
  • It’s completely at the discretion of your lender whether you’re able to access your redraw

 

Option 3: Using your super

 

Accessing or ‘drawing down on’ your super is yet another option when it comes to paying for your new caravan.

 

Pros:

  • Instant access to some (or all) of the cash you need

 

Cons:

  • Drastic reduction of funds meant to support you later
  • As the money in your super is being invested and yields returns, you’ll see substantially less returns due to decreased capital being invested (you will lose money)

 

Option 4: Financing

 

Finally, let’s explore the pros and cons of obtaining caravan financing.

 

Pros:

  • One consistent monthly repayment amount makes budgeting a breeze
  • Keep your savings in your account for better cash flow and to be covered for a rainy day/emergency
  • Freedom to refinance/renegotiate at the end of the financing term
  • Incredibly low interest rates (specifically when you use a broker)
  • Getting pre-approval gives you negotiating power

 

Cons:

  • You have a monthly repayment

 

Verdict

 

It really all comes down to your personal circumstances, so please consider your needs and what option works for you specifically. Having said that, redrawing on a mortgage or using super might be just a little too iffy for our liking. Financing is a very solid choice and a clear winner here - find out how much your monthly repayments could be right now using our online finance quote tool!

 

Finance your new caravan with the best in the business

 

While we don’t like to toot our own horn (too much, anyway!), we know you’ll be more than impressed with what we can do for you. Over the 20-plus years we’ve been operating in the finance industry, we’ve accumulated a huge network of lenders which means we have access to a multitude of finance product options at our fingertips.

So if you’re after the leading caravan financing company who will work tirelessly to find the lowest interest rate for you with the terms you want, give the friendly team at Stratton Finance a call now on 1300 787 288. If you’d prefer, you can use our online enquiry form to send us a message and we’ll get back to you quickly.

Note: this has been written as a guide only and it might be worth consulting with your accountant.

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