Join the club: experience a new way to holiday
With international borders likely to be closed until July next year, many Australians have had to adjust their holiday plans. It looks as though seeing more of Australia – rather than jetting off to Paris, London or New York – could be our only option for the next little while at least. Now, more and more Australians are grabbing this opportunity with both hands.
Why we want to holiday in Australia
Border closures aside, an increasing number of Australians seem more comfortable holidaying within the relative safety of our island home while there is a global pandemic going on. It’s a trend that could last even after COVID-19 is gone, as more Australians realise they actually don’t need to go to the expense of jumping on a plane to holiday somewhere great – there’s plenty to see and do within driving distance of your front door.
The bushfires of last summer have also contributed to a renewed sense of enthusiasm for hitting the road and exploring the countryside. The pandemic has brought about a wonderful sense of loyalty and camaraderie from many city siders who are keen to support their fellow Australians in regional and rural areas, who have had the double whammy of bushfires and the COVID-19 pandemic.
A different kind of holiday
We are also seeing a shift in the way people are holidaying. Camping, caravanning, boat trips and road trips have had a surge in popularity since travel restrictions were rewound throughout May and June. New and second-hand caravans, camper trailers and boats are in high demand right now. People are choosing to take accommodation into their own hands, rather than relying on hotels or other forms of ‘public’ accommodation, which can be expensive and potentially increase your risk of catching COVID-19. Some caravan dealerships reported doubling their sales over the winter months.1
Caravans, motorhomes and camper trailers have a number of advantages as a travel option. There’s a lot less set up and packing required compared to traditional camping, particularly if you want to visit multiple locations. If a tent is just a bit too rugged for you, these options offer built-in storage and cooking facilities, with caravans and motorhomes offering the added bonus of running water, a private bathroom and an immediate drive away option if the rain sets in!
Boats too have been increasingly popular in recent months, with the second-hand boat sales market experiencing increased competition and high sales turnover.2 Boating is possibly the ultimate social distancing experience and offers a real break away from the stress of crowds, masks, hand-washing and social distancing restrictions.3
All these holiday options give travellers a relatively cheap nightly rate (once they’ve purchased the vehicle), and are generally comfortable and versatile. They offer the flexibility to get away from crowds and cities, and are an easy accommodation option for those who want to explore rural areas or coastal towns where hotels may be unavailable, full or otherwise unappealing.
Borrowing to purchase your vehicle
As a result of these trends, we have seen a huge surge in enquiries for financing caravans, motorhomes, camper trailers and boats. Recently, these vehicles have been making up around 11% of our asset finance loans, up from around 4% previously.
If you’re keen to join the club and are looking to purchase one of these vehicles, there are a number of loan options. You may be able to redraw from your home loan if you have been making additional repayments. Or if you have built up some equity in your home, you may be able to get a top-up on your home loan. If you don’t have a home loan, you may be able to take out a personal loan.
Why asset finance may be the right option
Often, however, the best way to finance this kind of purchase is through an asset finance loan. You can take out an asset finance loan for a new or second-hand vehicle and these loans are usually for a period of between two and five years. You may be required to put down a 20% deposit and most lenders have a minimum loan amount of $5,000.
Asset finance loans have a number of advantages over your other options:
- Lower interest rate: The asset is secured against the loan so your interest rate is typically lower than a personal loan or credit card, although it tends to be slightly higher than for a home loan.
- Cheaper over the long term: Using asset finance gives you a separate loan with a fixed rate and a shorter specified timeframe to pay off your asset. You would typically reduce the interest you pay on your loan by up to five or six times by using asset finance instead of your home loan.
- Maintain borrowing capacity: Redrawing on your home loan to purchase a depreciating asset also means you are reducing the equity in your home, and therefore your borrowing capacity.
- Budgeting: Having a separate loan to your home loan can make budgeting much simpler.
- Easier: Depending on the loan amount and your situation, you may not need to show your financial information to have a loan approved.
If you decide to give caravanning, camping or boating a go, a Mortgage Choice broker can help you access the most appropriate loan option for you, depending on your financial circumstances. It could be a great way to get away from it all and bring back a sense of fun, independence and freedom to your holidays.
SOURCES: 1https://www.abc.net.au/news/2020-06-28/border-closures-see-caravan-sales-surge-across-australia/12400134, 2https://boatsales.com.au/editorial/details/why-your-post-covid-19-recovery-plan-needs-a-boat-in-it-124272, 3https://www.boatsales.com.au/editorial/details/australias-boating-industry-shows-signs-of-post-covid-recovery-124973
