Credit score and caravan loan interest rates
Researching caravan loans and want to know what interest rate you’ll get with your credit score? There are lots of factors that can influence your caravan loan interest rate, and one of the most important to lenders (and often overlooked by those applying!) is your credit score.
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How your credit score and caravan loan interest rates work
Your caravan loan interest rate is calculated based on your credit score, which is a summary of your financial history and lenders look at it as a reflection of your ability to make repayments as a trustworthy borrower.
The higher your credit score is, the lower your level of risk is as a result and the better your chance at gaining approval and a great interest rate.
Lower credit scores don’t necessarily mean you won’t be approved or will only be approved for caravan loans with high interest rates, it just means that you’ll be required to provide more supporting information if you want to access a better deal from a lender, you may also have to work with a lender who specialises in bad credit personal loans.
In short, a higher credit rating just makes it easier to get lower caravan loan interest rates - so there’s very little reason not to consider understanding and improving your credit score before applying.
What caravan loan interest rate will your credit score get you?
If you are only taking your credit score in to account when applying for a caravan loan:
- Excellent credit scores provide access to the lowest rates on offer.
- Average credit scores may result in a caravan loan interest rate up to 5 per cent higher.
- Low credit scores almost always result in very high interest rates.
It’s also important to understand that interest rates aren’t the only indicator of a good deal on caravan finance, and that caravan loan interest rates are determined by several factors, not just your credit score:
- Your personal credit history
- The amount you wish to borrow
- The length of the loan period
- The value of any collateral - if any - used on the loan
Important: No matter what your credit rating, you’ll find much better rates when you apply for a secured caravan loan vs an unsecured personal loan, as the value of the collateral (the caravan) greatly decreases the risk to the lender.
If you’re more interested in saving money than just getting a good deal, it’s important to consider the length (term) of your loan. The sooner you repay your loan amount, the greater the amount of total interest you will save.
How to get a better credit score and better caravan loan interest rates
If you’re wanting to get a better caravan loan interest rate by improving your credit score, you have two main options to consider.
- First, you can hold off on making your caravan loan application while you take steps to improve your credit score, pay off any defaults or outstanding debts, correct any errors on your credit report, and wait for any negative events to be cleared from your report over time.
- The second option is to apply for the caravan loan at the higher interest rate, and then refinance your caravan loan further down the line once you’ve made consistent repayments and improved your credit score to a higher rating level.
Only you will be able to decide which option is more suitable for your situation.
How can you check your score?
You can check your credit score for free and without any impact on your credit score with Money Matchmaker®.
You'll need to create an account with these details:
- Full legal name
- Driver Licence number
- Residential address
- Date of birth
Your score won't be negatively affected and we protect your data with encryptions.
Written by
Loans Expert
Shaun McGowan
Reviewed by
Editor
Sean Callery
