If you have enough money to buy a caravan outright, you might not think there's any reason to consider taking out a caravan loan to cover the cost. In fact, there are several benefits that come with taking out financing, and here are just four.
1. Avoid Dipping Into Your Emergency Fund
The most obvious and probably the most important reason to finance instead of buy outright is keeping your emergency fund intact. Unless you have millions in the bank, the cash needed to buy a caravan outright is probably going to consume a large slice of your savings. That means you won't have as much of a cushion if you ever do run into money problems in the future.
2. Invest Instead of Spend
Okay, maybe you have enough money to buy a caravan outright and still have an emergency fund. Even so, it still makes more sense to finance. A caravan is only going to depreciate in value, just like a car; in any case, it's never going to be worth more when you sell it than when you buy it. Instead of putting a large chunk of money into a caravan, you might as well invest it. Even putting it in the bank is going to provide interest and keep the value steady.
3. Go for a Better Model Than You Could Afford Outright
The difference between a top-of-the-range caravan and a bargain model is huge. If you want anything from more space to superior amenities, it is going to cost more money. You'll also want to keep in mind that cheaper caravans are generally more likely to run into problems in the future, since they aren't made using the highest-quality parts. Caravan loans spread the cost out over time, so taking one out instead of buying outright often means people can afford a better model.
4. Help Keep Your Credit Rating High
It's crazy to think that borrowing money instead of spending what you've diligently saved is what's going to build your credit, but that's how it works. Lenders want to see that you can continue to take out loans and repay them. If you think you might want to make purchases on credit in the future or if you simply want to repair a low credit rating, it makes sense to take out financing on your caravan and pay on time each month.
Contact a company that offers caravan loans to learn more.