For many Australians, retirement is the opportunity to finally take the caravan or motorhome trip they have been planning for years. But before setting off on the Big Lap, there is a major practical question to answer: how will you pay for the caravan?
Grey nomad finance can provide another option for retirees who do not want to pay the entire purchase price upfront. Whether finance is appropriate, however, depends on your circumstances, retirement income, the caravan or motorhome you are buying and the lender’s requirements.
Some buyers pay cash. Others use a deposit and finance the balance. Some may consider accessing superannuation or other investments. There is no single funding strategy that is right for every retiree, and decisions involving superannuation, investments or the Age Pension should be considered separately from the credit assistance provided by a finance broker.
Can Retirees Get Caravan Finance?
Potentially, yes. Being retired does not automatically prevent someone from obtaining caravan finance.
A lender still needs to determine whether the proposed loan meets its lending criteria and whether the borrower can afford the repayments. The information required may therefore look different from an application made by someone receiving a regular employment salary.
Depending on the lender and the applicant’s circumstances, relevant income or financial information may include:
- superannuation pension or retirement income-stream information;
- Age Pension or other eligible government payment information;
- investment or rental income;
- part-time or casual employment income;
- savings and other financial assets;
- existing debts and ongoing commitments; and
- regular living expenses.
Different lenders can have different policies for retirement income, borrower age, loan term and the type or age of caravan being financed. This is one reason a specialist caravan finance broker can be useful when assessing relevant lender options.
Should You Pay Cash or Finance a Caravan in Retirement?
There is no universal answer. Paying cash and using finance have different advantages and costs, and the appropriate choice depends on your own financial position.
| Consideration | Paying cash | Using finance |
|---|---|---|
| Loan repayments | No ongoing loan repayment | Regular repayments need to fit your budget |
| Interest and loan costs | No loan interest | Interest and applicable fees increase the overall purchase cost |
| Cash available after purchase | A large purchase may substantially reduce available cash | Can reduce the amount required upfront, depending on deposit and loan structure |
| Approval | No finance approval required | Subject to lender assessment and approval |
| Financial planning | May involve decisions about savings, investments or super | Requires consideration of repayments alongside retirement expenses |
Finance should not be presented as a way to guarantee that investments or superannuation will outperform the cost of borrowing. Investment returns are uncertain, while loan interest and repayments are contractual costs.
If the decision involves withdrawing or retaining money in superannuation, changing investments or considering the effect on retirement income, appropriate financial advice may be valuable. NLF’s role is to provide credit assistance relating to finance rather than personal financial advice about superannuation or investment strategy.
Can You Use Superannuation to Buy a Caravan?
Australians who are legally able to access their super may be able to take eligible benefits as a lump sum, an income stream or a combination, depending on their circumstances and the rules applying to their super.
That does not mean withdrawing super to buy a caravan is automatically the right choice. A large withdrawal can change the amount remaining to support future retirement spending, while using finance creates interest costs and ongoing repayment commitments.
The Australian Government’s Moneysmart guidance on accessing super in retirement explains the different ways eligible Australians can receive their super and some of the issues to consider.
What About the Age Pension and Centrelink?
This is an area where it is important not to rely on general rules or assume that financing a caravan will improve an Age Pension position.
Services Australia uses income and assets tests when determining Age Pension eligibility and payment rates. The treatment of superannuation, income streams, financial assets and other assets can depend on the person’s circumstances.
A caravan or motorhome can also form part of a person’s assessable assets. Borrowing money to purchase one should therefore not be treated as a Centrelink strategy without obtaining advice relevant to your individual position.
For current rules, refer to Services Australia information about asset types and the Age Pension income and assets tests. If your proposed purchase could affect your pension or retirement strategy, consider obtaining appropriate financial advice before making the decision.
How Much Deposit Does a Grey Nomad Need?
There is no standard deposit that every retiree must contribute to a caravan loan.
The amount required can depend on the lender, purchase price, caravan or motorhome, its age, the applicant’s financial position and the overall transaction.
A larger deposit can reduce the amount borrowed and therefore the repayments and interest payable, but using a large portion of your available cash may leave less money available for travel and unexpected expenses.
Before deciding on a deposit, it can be useful to look beyond the purchase price and consider what cash you may need once you are actually travelling.
Budgeting for the Big Lap Beyond the Caravan
The caravan is only one part of the cost of extended touring around Australia.
A realistic Big Lap budget may also need to allow for:
- fuel;
- caravan parks and camping fees;
- insurance;
- registration;
- servicing and repairs;
- tyres and maintenance;
- food and everyday living expenses;
- internet and communications;
- medical and health-related costs;
- vehicle repairs;
- activities and sightseeing; and
- an emergency or contingency reserve.
If you are financing the caravan, the repayment needs to fit alongside those expenses rather than being considered in isolation.
Caravan Finance or Motorhome Finance for Retirees?
The right touring setup is different for everyone. Some grey nomads choose a caravan and tow vehicle, while others prefer a motorhome or campervan.
Finance requirements can differ because the asset, purchase price, age and lender policies may be different. NLF assists with both caravan finance and motorhome finance, subject to lender criteria and approval.
Before deciding between them, consider the total setup rather than only the purchase price of the recreational vehicle. A caravan may require an appropriate tow vehicle, while a motorhome combines the vehicle and accommodation into one asset.
Does Your Age Affect Caravan Finance?
Age can be relevant to a lender’s assessment, but it is not the only consideration.
Lenders may consider factors including the proposed loan term, verified income, expenses, liabilities, assets and the borrower’s ability to meet repayments over the proposed term. Policies differ between lenders.
Rather than assuming retirement means you cannot obtain finance, the useful first step is to establish which lenders and loan structures may be relevant to your actual circumstances.
Should You Get Pre-Approval Before Shopping for Your Big Lap Caravan?
Pre-approval can be particularly useful for grey nomads who have not yet chosen their caravan or motorhome.
It may give you a clearer understanding of your potential finance position before you start negotiating with dealerships, private sellers or manufacturers. It can also help prevent you from travelling a long distance to inspect a caravan that sits well outside the finance range being considered.
Pre-approval is not final approval. The lender may still need to assess the particular caravan, transaction and supporting information. Our caravan finance pre-approval guide explains the process in more detail.
What If the Right Caravan Is Interstate?
Many grey nomads search well beyond their local area for the right touring setup, particularly when looking for a specific caravan layout, used model or motorhome.
The caravan, buyer, seller and finance broker do not necessarily need to be in the same state. Depending on the lender and transaction, finance may be arranged for purchases from interstate dealerships or private sellers.
Our Australia-wide caravan finance guide covers interstate dealers, private sales, PPSR searches, regional customers and settlement in more detail.
How Does Grey Nomad Finance Work?
Although every application is different, the finance process will generally involve several stages:
- Discuss your plans. Explain what you are looking to buy, the approximate amount required and whether you have already found the caravan or motorhome.
- Complete an application. Provide the financial and personal information required for the finance assessment.
- Provide supporting documents. The lender may require evidence relating to retirement income, other income, assets, liabilities and the proposed purchase.
- Consider relevant lender options. Your broker can assess relevant options available from their lender panel based on the application and proposed purchase.
- Submit the application. The selected lender conducts its own credit assessment and may request further information.
- Confirm the caravan or motorhome. Asset and transaction details are provided where required.
- Complete loan documentation. If approved, the lender issues the required finance documents.
- Settlement. Once lender conditions are satisfied, settlement can be coordinated with the dealership or private seller according to the lender’s requirements.
For a broader explanation of the lending journey, see our guide to how caravan loans work in Australia.
Why Use a Specialist Broker for Grey Nomad Finance?
Retirement applications can be different from standard PAYG applications because the source and structure of income may be different.
National Leisure Finance specialises in leisure finance and has access to a panel of more than 40 lenders. Our brokers assist with new and used caravans, motorhomes, dealership purchases, private sales and eligible factory orders using a technology-supported application process.
The broker’s role is to help assess relevant credit options and coordinate the finance process. Where the decision also involves superannuation, investments, Centrelink entitlements or broader retirement planning, those issues should be considered separately with an appropriately qualified adviser.
NLF operates under Australian Credit Licence 522858.
Grey Nomad Finance FAQs
Can a pensioner get caravan finance?
Potentially. Lenders can consider applicants receiving retirement-related income, but approval depends on the lender’s criteria, the applicant’s financial circumstances, the proposed loan and the caravan or motorhome.
Do I need to be working to get caravan finance?
Not necessarily. Employment income is not the only type of income that may be considered. What a lender accepts and what evidence it requires depends on its individual credit policy.
Should I use my super to buy a caravan?
That is a retirement-planning decision rather than simply a finance question. Paying cash avoids loan interest, while withdrawing a large amount may reduce the retirement capital you retain. Consider your overall circumstances and seek appropriate financial advice where necessary.
Does financing a caravan reduce my Age Pension assets?
Do not assume that borrowing to purchase a caravan will improve your Age Pension position. Services Australia applies income and assets rules based on individual circumstances. Obtain current information or appropriate advice before making decisions intended to affect Centrelink entitlements.
Can I finance a motorhome in retirement?
Potentially, yes. Motorhome finance is subject to lender assessment in the same way as other credit applications, with lender policy, income, expenses, the asset and proposed loan structure all potentially relevant.
How much deposit do retirees need for caravan finance?
There is no universal deposit requirement. It can vary according to the lender, borrower, asset, purchase price and transaction. A broker can explain the requirements of relevant lender options.
Can I get finance before choosing my caravan?
Pre-approval may be available before you select the final caravan, subject to your circumstances and lender criteria. Final approval will generally still require assessment of the eventual caravan and transaction.
Can NLF help if I am already travelling around Australia?
NLF assists customers Australia-wide using phone and online communication. Your current location does not by itself determine whether finance can be arranged, although lender eligibility and transaction requirements still apply.
Plan the Finance Before You Start the Big Lap
Your caravan or motorhome may become home for months at a time, so the finance deserves the same planning as the trip itself.
Before deciding how much cash to contribute or how much to borrow, consider the purchase price, ongoing repayments, travel budget and the cash you want available for unexpected costs on the road.
National Leisure Finance can help you understand relevant caravan and motorhome finance options from our panel of more than 40 lenders. Start with our caravan finance page, estimate repayments using the caravan finance calculator, or apply online when you are ready to discuss your plans.
You can also call National Leisure Finance on 1800 653 346.