If you’re thinking about taking out a loan to buy your first RV, but have some questions about how finance works, you’re not alone. Claire Smith caught up with the team at MTF Finance to seek out answers to some common questions around financing an RV.
If you’ve decided this is the year you’ll take the leap and seek out finance for your first motorhome or caravan, congratulations! You’ll be joining a like-minded community of travellers who love experiencing the freedom and adventure that only RV travel offers.
By now you’ll have spent lots of time researching the various makes and models of RVs, maybe rented a few to see what you like, and thought long and hard about which layout is best suited to you and your family. And that’s important – your RV is a big investment after all. But before you sign on the dotted line for a loan, it’s important to do your financial research and ensure you have a good understanding of how your loan will work. To help get you started, we’ve answered a few key questions.
What should I know about a finance company before I consider taking out a loan?
First and foremost, it’s important to work with a finance company you can trust and who will give you a high level of service and support throughout the period of your loan.
While all lenders have their own set of terms and conditions; each is required to follow the Lender Responsibility Principles set out by the Commerce Commission. A responsible lender will always keep you fully informed, provide full disclosure about your loan costs, and only offer finance when they are confident you can afford the repayments. You should have a complete understanding of your loan before signing the paperwork and feel confident and comfortable asking questions.
Often, trouble comes by us not knowing what we don’t know, and getting into the nitty-gritty of a finance contract can sometimes make things harder, not easier. That’s why MTF Finance recently introduced a new Plain English credit contract that uses everyday language free from jargon and confusing terms. “We think it’s important that you can easily read and understand what you’re signing,” says Clarke. “It’s something that our customers and our staff have wanted for a long time, so we’re very happy to now have it in place.”
Will the recent changes to the Credit Contracts and Consumer Finance Act (CCCFA) affect my ability to get a loan for my RV?
The new law, which came into effect on December 1 2021, emphasises the onus on lenders to ensure their loans are suitable and affordable, protects customers from taking on too much debt, and protects customers from any hardship the loan could cause.
Essentially, the two main questions lenders need to answer when considering an application are: can you afford the loan, and is the loan ‘fit for purpose’ – ie, does it suit your specific needs.
MTF Finance Hornby franchise owner Clarke Ferguson explains.
“The new law means that all lenders need to take a more rigorous approach to lending; however, responsible lenders like MTF Finance always ensure we will only provide loans after confirming the borrower can afford and manage that loan. So in that respect, nothing has changed for us.
“We understand that these changes can leave borrowers feeling a bit anxious. The good news is, because MTF Finance is a local and responsible lender, you can talk directly with us and we’ll make
the process as simple and straightforward as possible – the important thing is, you’ll be talking directly to a local lending specialist who can help you get the right loan with minimum delay.”
What documents do I need to apply for a loan?
To consider your loan application, most lenders require:
- A current New Zealand drivers licence
- A recent bank statement less than 60 days old, in your name, showing transactions for 90 days
- A bank statement, utility or rates bill, New Zealand Government documentation or insurance confirmation showing your name and physical address.
“As long as your loan application is subjected to responsible lending criteria and checks, if you apply in person and bring these documents with you, we can usually give you an answer within an hour,” says Clarke.
Do I need to have a deposit?
This will vary from lender to lender, but it is wise to have as much available for a deposit as possible, says Clarke. “MTF Finance can arrange a no deposit loan, depending on individual affordability and suitability. But of course, a deposit will lower the repayments and term of the loan, which is always a good idea.”
What is the usual length of a loan for a motorhome or caravan?
The average loan period for a vehicle is around 48-60 months.
Can I pay my loan off early?
Most lenders will charge an ‘early repayment’ fee if you pay your loan off early.
“Everyone’s needs are different; MTF Finance will help you work out what your costs might be and whether it would save you money to pay off the loan early, or if you’d be better off seeing out the remainder of the loan,” says Clarke.
Can I add extra to the loan for things like accessories?
Clarke explains that the finance of an RV generally covers the cost of the vehicle and any standard inclusions only – in other words, the amount it will be insured for. “This is usually secured against the vehicle,” he says.
“But if you need to add in accessories on top, we can may arrange a separate unsecured portion of finance to cover those extras.”
What happens if I get made redundant or get ill and am unable to work and make my loan repayments?
Most lenders offer some type of repayment insurance, and this is important to consider. It means that if something unpredicted happens like redundancy or illness, your loan payments are taken care of. “MTF Finance’s Payment Waiver Protection gives that extra peace of mind for buyers. For example, if you’re made redundant, you could be covered for up to 180 days.” says Clarke. “We’ve had a few customers who lost jobs or couldn’t work during Covid, but because they had Payment Waiver Protection, they didn’t have that extra stress of having to worry about their loan payment – it really is worth having.”
Where to next?
Whether it’s your very first caravan or motorhome, or an exciting new upgrade with all the bells and whistles, MTF Finance is a tried and trusted business that’s used to providing loans for RVs, so they’ll have the answers to your questions. To apply for a loan, head to mtf.co.nz. The website includes a handy loan calculator so you can work out what your repayments are likely to be. MTF Finance is New Zealand-owned and operated, and they will meet with you to help sort your loan in person. If you’ve got all your information ready to go, MTF Finance can approve your loan within an hour – imagine getting your loan and your vehicle on the same day!
Any offer of finance is subject to terms, conditions, lending criteria, responsible lending inquiries and checks. See mtf.co.nz/terms for details.
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