You've seen it: the caravan of your dreams. It's being sold by a reputable dealer and it's at an amazing price, but you just don't have the money in your wallet to buy it outright. Financing the caravan with a loan is one option, but there are several things you would need to consider before signing the contract.
What does you budget look like at the moment? Don't go with your gut on this one; really sit down and look at your income and expenses. If you have a credit card, you may find that you're hiding a problem by shifting expenses onto it. Are there any expenses you could reduce or any memberships you're happy to cancel? Make sure that your monthly budget has enough room to comfortably add the monthly loan repayment before you commit to anything. What about the additional expenses that owning a caravan would bring? There's no point in owning a caravan if you can't afford to take it anywhere.
Alternatively, could you increase your income? Find out how much per month the caravan would cost in loan payments and other costs. Consider whether you could increase your income by that amount. Could you take extra hours at work, or even start a side business in your spare time?
Consider your future as well. Are you confident that you will still be financial comfortable throughout the duration of the loan? Are you secure in your job, or is there a likelihood of your income dropping in the next couple of years? If your income is seasonal, do you make enough month when you are working to cover the periods when you aren't? If you are a freelancer, then you will need to review how stable and secure your business is. Do you have many clients, or do you only rely on one for a bulk of your earnings? Consider what would happen if that changed.
Is it actually a good price? Sure, the sticker price on the caravan is a steal, but if you are taking a loan, have you considered the effect of interest and any fees? By the time you reach the end of the finance agreement, you may have paid more than you would have if you had saved and waited.
Once you have considered all of these things, you will have a much clearer idea of whether a caravan loan is a worthwhile choice for you and your family.Share