Guest Post - Finance Broker, Rapid Finance, answers some common questions when it comes to financing the purchase of your new car or caravan.
What do you need to consider for your loan?
If you're planning to upgrade your caravan or the vehicle that's going to tow it for your next trip, then you may be considering taking out a loan. Getting a good price for the car or caravan you buy isn't the only way you can save money either. Getting a loan that suits your needs and has favourable terms can save you a lot over the loan term.
A loan that's right for your situation can help you get all the gear you need for your next big adventure.
What type of loan should is right for you?
The two most common options will be a secured or unsecured loan. Each of these have different advantages and disadvantages, so the one you choose should depend on your preferences and circumstances.
A secured loan will use the product that you purchase (caravan/car etc.) as security for the loan. This makes the loan less risky for the lender, meaning that you will probably get a lower interest rate than you would with an unsecured loan.
An unsecured loan is usually a personal loan. One of the biggest advantages of this kind of loan is that you aren't required to use the whole amount on one item like you are with a secured car loan. For example, you could get a personal loan to buy a new caravan with enough money left over to buy all the other gear you need for your trip.
However, unsecured loans are more risky for lenders so you might have to pay a higher interest rate or get approved for a lower amount than you would for a secured loan.
What type of interest rate should you expect?
Again, you have the choice between two options here: fixed or variable interest rates.
The difference between them is that the interest that you pay can change with a variable rate loan while it will stay the same for a fixed rate loan.
Always knowing what your repayment amount will make it much easier to budget for a fixed rate loan. This can be really helpful if you're planning an extended trip like the Big Lap where budgeting is very important.
On the other hand, it is possible that a variable loan will be cheaper if official interests rates go down, but it could be more expensive if they go up too.
What if you have bad credit?
Bad credit doesn't have to stop you from getting approved for a loan for a new car or caravan. There are a number of things you can do that can make it more likely that your loan application will be approved.
Some of these include:
- Making sure that none of your bank accounts get overdrawn.
- Paying more than the minimum repayment on your credit cards and reducing your debt.
- Setting aside at least a little bit of each pay check into a savings account.
How can a finance broker help?
A finance broker will approach lenders on your behalf and advocate for the strength of your application. If your credit history isn't perfect but your current financial situation is strong, then a finance broker could be just what you need to get approved for a loan.
If you need loan advice or help getting approved for finance, the friendly team at Rapid Finance can guide you through the whole process.