The Do’s and Don’ts of Taking Out a Caravan Loan

You’ve got your eye on the dream caravan, but the next step is to figure out how you’re going to finance it. There’s no better way to ensure that you’re getting the right caravan loan than by learning what not to do. Here are some essential tips when it comes to taking out a loan.

Do: Shop around

It’s very important that you look at your choices. Make sure you’re getting the best deal for your caravan loan by comparing rates and conditions across a few lenders. If you have friends or family who have used car finance companies before, ask them to recommend places they’ve worked with in the past.

Don’t: Let convenience make your decision

As tempting as it is to use the finance company that’s closest to you, or has the branch near your house, ask yourself whether you’re really getting a good deal. If you can get a better interest rate and payment plan from another lender, then why should you go with someone else? It’s also important to make sure you read the fine print and understand your repayment plan before you sign on the dotted line.

Do: Be honest

When you’re applying for a loan, it’s crucial to be truthful about your income and your spending habits. If you overestimate how much money you earn or underestimate the amount of credit card debt that you have, there’s a higher chance that you won’t get approved. Being honest is also important because it’ll give you a realistic idea of how much you’ll be paying back every week.

Don’t: Assume your credit history is enough

Most car finance companies will want to do a full credit check on you before they approve the loan. They’ll need to see how much debt you have, as well as where and when you’ve paid it off in the past. If your credit score isn’t high enough, this could be a problem. Even if you’ve got a good credit score, this might not be enough on its own. The finance company could still reject your application and for reasons that aren’t related to debt or your credit history.

Some people assume they aren’t approved for a loan because they don’t have the best credit history. But this isn’t always the case. If you’ve got an income and are able to show where it’s come from, then you may be approved for a loan. Speak with your bank or credit union first. They can help you find the best caravan loans on the market, and there might even be some special rates available to loyal customers.

Do: Have an emergency fund

It’s important to make sure that you keep some money aside for emergencies. Some unforeseen expenses may come up after getting your caravan loan approved, like unexpected car repairs or medical bills. It’s best to leave some room for this in your budget so that you don’t have to take on additional debt.

Don’t: Borrow against your caravan

If you have a bad month and can’t afford the repayments on your loan, don’t be tempted to use your new caravan as collateral. If you can’t continue making payments then it’s likely that you won’t get your caravan back either, which will leave you in a difficult situation. Click here

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