Looking to finance your dream holiday? With a variety of holiday loans available, you can get the funds you need to cover your trip's costs, whether it's for accommodation, entertainment, or flights.
How to compare holiday loans
When it comes to comparing holiday loans, there are several factors to consider.
- Interest rates. The interest rate determines how much you'll pay in addition to the loan amount over the life of the loan. Look for the lowest rate possible to save money.
- Loan term. The loan term determines how long you'll have to repay the loan. A shorter loan term means higher monthly payments but less interest paid overall whereas a lower rate over a longer term means lower monthly payments but paying more interest in total.
- Fees. Some lenders charge fees, such as establishment and early repayment fees, which can add to the cost of your holiday loan.
- Collateral requirements. Holiday loans can be secured or unsecured. Secured loans require collateral, while unsecured loans do not. Consider your options and choose the loan type that suits your needs. In general secured loans have lower interest rates.
Pros and cons
- Go on your dream holiday. Holiday loans can cover the costs associated with your trip, allowing you to travel without worrying about finances (so long as you can afford the repayments).
- Flexibility. Some lenders offer competitive interest rates and flexible repayment terms for their holiday loans.
- Interest. How much the loan will cost depends on how much you want to borrow, from where, and what your credit score is like.
- Penalties impact your credit score. Late payments can incur fees and negatively impact your credit score, making it more difficult to get credit in future.
- Build up of debt. Taking out a loan can lead to long-term debt if not managed properly.
What you need to apply for a holiday loan
Eligibility requirements for holiday loans vary depending on the lender and the type of loan you're applying for. These are some of the common requirements you may need to meet.
- Age. You must be over 18 years old to apply for a loan or any sort, including loans for a holiday.
- Income. You'll need to have a steady income to show that you can afford to repay the loan.
- Credit score. Lenders check your credit score to determine your eligibility for a loan. A higher credit score may increase your chances of being approved and make you eligible for lower rates.
- Employment. You'll need to provide information about your employment status, including your job title, employer, and length of employment.
In addition to meeting these eligibility requirements, you'll also need to provide documentation and proof.
- Identification. Typically government-issued ID, such as a driver's licence or passport.
- Proof of income. Payslips or tax returns as evidence you can repay the loan.
- Bank statements. To verify deposits and expenses.
- Proof of address. For example, a recently-issued utility bill showing your current address.
Can I get a holiday loan with bad credit?
Yes. There are lenders that consider holiday loan applications from people with bad credit, although interest rates are higher.
Can I use a holiday loan for anything other than travel expenses?
Yes. A holiday loan is just another name for a personal loan. Unsecured personal loans can be used for various purposes, not just travel.