Dreaming about your perfect getaway can often be ruined by the idea of wondering how you’re going to afford it. It’s a common misconception that the only ways to pay for a holiday are to extend the limit on an existing credit card or to save up for months in advance. However, you may want to consider a travel loan for your next adventure abroad.
A travel or holiday loan is an unsecured personal loan taken out to cover the costs of traveling and the money you may need while you’re away. Depending on your bank or financial institution, your travel loan application can usually be completed online quickly and reasonably effortlessly. These types of loans are generally best suited if you’re looking to borrow $5,000 or more.
Because a travel loan is taken out to finance your holiday, the money can be used for flights or a cruise for example, as well as covering things such as accommodation and spending money. Holiday loans can also be used to cover the following parts of your trip:
A travel loan is the same as an unsecured personal loan, meaning the same terms and conditions apply.
Your repayment amount will depend on how much you borrow and the overall term of the loan. Many loan products, especially variable rate personal loans, allow you to make additional or more regular payments, as long as you’re paying the minimum amount by the due date each month.
It’s worth talking to your lender to find out if there are any fees associated with making extra repayments or paying off your loan early.
Travel loans are issued as lump sum payments, which means the money will be available to you as soon as the loan is funded and you can start booking your flights, as well as paying for upfront accommodation costs and any other activities that you have planned.
If you’ve decided by this point that a travel loan might be something to consider, there are still a couple of things to think about before applying.
Firstly, it’s important to understand your repayments. Once the loan is funded your repayments will begin, which means you’ll likely need to start making payments before you go away, and these will continue while you’re away and once you’re home. You’ll need to make sure that you’re in a financial position to maintain the repayments for the life of the loan.
Another thing to think about is discipline. If you think you’ll find yourself giving into the temptation to go on another holiday before your loan is paid off, you may end up in a seemingly never-ending cycle of travel debt. No matter the size of your loan, you still need to make sure that the repayments are manageable for you.
Considering the great financing options available for travel, there is no reason you shouldn't be able to relax and enjoy your much-needed vacation simply because you don’t have the money yet. A travel loan allows you the flexibility of being able to go on your dream holiday earlier than planned, by simply paying off your travels over a set period of time.
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