Holiday Loans: Because Everyone Needs A Vacation
There is nothing better than taking a long anticipated trip. Especially if you are not able to find time for yourself. However, traveling is expensive. As a result, many people are choosing to stay home. If they do travel, they are not going far. Many people cannot afford to travel these days. That can really be a drain. There are so many benefits to traveling. Vacations are a good break from the stress of every day life. Everyone should be able to enjoy taking some time off from work. It is not all bad. There is some good news to share.
There are ways to cut down some vacation costs. There are many deals available and with technology, we can find them easily. You can finance your trip with holiday loans. Continue reading for more information about vacation funding.
What are Holiday Loans?
You may hear loans referred to as a holiday loan, a travel loan, or vacation loans. No matter what you call them, they are all the same type of loan. They are all personal loans. A personal loan is when a lender, such as a bank or credit union, gives you money that you agree to pay back over time. The terms of the loan are set and will not change. You have one payment each month until the loan is paid back. There is interest on the money you borrow.
There is no limit to what you can use holiday loans to purchase. When you think of travel expenses, you think of the obvious ones, plane tickets and lodging. There are so many other costs that people tend to forget, but add up quickly. You can use holiday loans to pay for all those things you have forgotten. You thought about the plane tickets to get you to your destination. Did you think about transportation while you are there? That can be a hefty cost, if you have to rent a car. If you do not need a rental car, you may have to pay for public transportation, like the bus or train.
Think about: Eating
Do not forget about eating. In most cases, you need to eat three meals, and snacks per day. Food and drinks can get expensive, too, while you are traveling. The cost of food is always more expensive while traveling, especially if you are going to a really touristy place. There may be some ways to cut down on travel food expenses. You may be able to find small hole in the wall kind of place that costs less than some more well known places.
Think about: Excursions
There are excursions in which you may want to participate. Do not forget about all the things you want to do while traveling. This may include tickets for shows, events, or museums. This could also include participating in the night life. You can use holiday loans to pay for any one or all of these things while you are traveling. Sometimes, it is nice to have some extra cash with you, just in case. You never know what can happen, especially if you are far away from home.
Can I Get A Vacation Loan with Bad Credit?
Yes, you can get vacation loans with bad credit. It may not be easy, but it is possible. The better your credit is, the easier it will be for an approval. Lenders prefer to give money to those who are not considered high risk. Lenders consider you high risk when you have bad or poor credit. However, there are ways to get the money you want. You may be able to find a loan through an online lender.
Look for information
When it comes to getting a loan, the more information you have, the better. You should understand the definition of bad credit. A credit rating of 650 or lower is considered bad credit. A number under 560 is considered poor credit. You can still obtain holiday loans with bad or poor credit, but you will find higher interest rates. There are less lenders willing to lend money to those in these credit categories. You should shop around for the best lender for you. Understanding what impacts your credit is also important. When you understand it, you can make improvements and repair your credit.
Making late payments impact your credit negatively. Having too much debt also decreases your credit score. You should know your debt to income ratio and decrease debt as much as you can. When you have more debt than income, it is harder for you to get a loan.
Choose the best one for you
Once you decide that you want to apply for holiday loans, find the best one for you. Shopping for a loan before you decide can help you get the best interest rate. Credit unions are often more willing to loan money to those with bad credit. They have less strict requirements for approving loans. That may be beneficial to you. You do not have to already belong to the credit union, but it might be helpful. If you have an established relationship with the credit union, they may be willing to loan you money. That is true for any lender. A relationship with a lender allows them to see your banking history and may give you a leg up.
Consider online loan
You can apply online for a loan. Online loans tend to have a faster response time. You can get approvals in about one day. The money is deposited directly in your bank account. This allows the lender to debit directly from your bank account when you make your payments. There are other types of loans. There is the possibility of a short term loan option. This gives you cash fast, but they have short repayment schedules. You may have to pay back the loan all at one time. The key is making sure you can pay it back.
There is nothing worse than taking out a loan and putting yourself in a worse financial position. You do not want to come home from a dream vacation and face a ton of debt. When thinking about a loan, borrow only the amount of money you need. Make a budget of how much money you need. This is not the time to blow the budget. You must stick to it. Make sure to include dining and entertainment expenses.
Should I Get a Travel Loan?
There are varying opinions on whether or not holiday loans are a good idea. Taking out a loan for travel is not always a bad idea. The real question is can you afford to pay back the loan? It is never a good idea to take out a loan that you already know you cannot afford. If you are getting a lump sum of money or expect a large payout, then a travel loan might be right for you.
Lenders do not like it when you do not pay them. They will get their money. It may be through collections. It may mean garnishing your wages, but they will do it. In addition, defaulting on a loan, and even making some late payments, hurts your credit score. Just one late payment can cause your credit score to go down.
Always be sure that you can pay back the loan. You do not want to get yourself into a deeper cycle of debt. One of the benefits of holiday loans is that you borrow a set amount. You can determine how much you want to spend and borrow that amount. You will not have revolving credit like you do with credit cards. You have set monthly payments for a predetermined amount of time. The amount you pay per month does not change like it does with credit cards.
What if I want to finance only one specific piece of my trip?
There are also ways to finance specific pieces of your trip. You can finance the cost of the airfare. There are some sites and apps that let you finance your airline ticket. Some sites allow you to finance airline tickets at the point of sale. Some do not check your credit, but charge fees. These sites may give you anywhere from 3 to 12 months to pay for the tickets. The fee could be as much as 20 percent of the cost of the ticket. Keep in mind the fees when if you choose this route.
If you decide to finance any part, or all of your trip, you should use a vacation calculator first. These calculators allow you to see how much you pay with interest charges and fees. It can also show you the exact annual percentage rate that the lender adds to the amount you borrow. A calculator helps you determine just how much you can afford. You enter all of your bills and expenses, including all your income to see how much you can afford to pay back. This is a great way to see a full picture of how much you will pay. It gives you great insight into whether or not you can afford a loan.
What Are My Alternatives to Travel Finance?
Before choosing holiday loans, there are some other thoughts to consider. You should make sure you know all of your options before accruing more debt. There may be ways for you to save money on your trip, which may allow you to avoid a travel loan. If nothing else, you would be able to take out a loan for less money. When considering a loan for your travel plans, think about some way to save money first.
One of the most obvious solutions is save the money first. I know that is much easier said than done. If you use a travel estimator to figure out how much the trip will cost, you can create a budget. You can see areas where you might be able to cut out things to save money. Once you know how much the trip will cost, you can set up a travel account. You save the money in that account and do not touch it for any other reason.
Save before your trip
To save money now, you can eat out less and cut down on some expensive habits. You can stop buying coffee out and make it at home. You can cut down purchases. Only purchase items that you absolutely need. It will surprise you how much money these simple tips will save.
You can decrease your electric bill. There are simple ways you can decrease your power bill costs. Turn off the lights when you leave a room. You can open the windows instead of defaulting to air conditioning. Or you could adjust your thermostat by two degrees. You will not feel the temperature change much, but it will be a huge cost savings. If possible, you could get a part time job, or find some other way to make some money in the short term.
Save on the trip itself
When it comes to planning your trip, you may be able to find ways to save on the cost of your trip. Deals on vacations change as often as every week, so it is important to check for deals often. Hotels and resorts have lower rates during certain times of the year. If you do not have a settime to travel, you can choose to travel during off peak times. Find someone with whom you can travel. If you have a travel companion, you can split most of the costs with another person.
You also have the option to use credit cards to pay for your travel. If you already have a credit card that you can use, you will not have worry about applying for a loan, or credit card. If you have bad credit, you will not have to take the chance of being denied. There are some other items to consider when using a credit card. You are limited by the amount you have on your credit card. Some credit cards have a high interest rate. The amount you have to pay back each month depends on how much money you have spent on your credit card. It changes every month. If you do not pay off the entire amount each month, you face interest charges.
If you only pay the minimum payment each month, the interest charges could be more than the minimum payment. This puts you in a terrible position as you may not be able to dig yourself out of the credit hole. Think carefully before you decide to use your credit cards for your travel plans.
Only you can make the decision if a travel loan is right for you. There are several things to take into consideration before taking out a personal loan to travel. First, you should consider if you can afford to pay back a loan. You can use calculators to determine how much you can afford to pay back each month. If you cannot pay back the money, you should not take out a loan. Late payments, or missing payments will lower your credit score. In addition, it could cause you to default on the loan. This hurts your credit. The lender may send your loan to collections. The last thing you want is to have collections calls every day.
Not sure yet?
If you are not sure if a travel loan is right for you because you cannot repay, you can save the money. In reality, taking on more debt is typically not the best choice. Unless you know that you are going to have the money in a lump sum to pay back the loan. If that is not the case, other options may be better for you. Knowing how much your trip is going to cost allows you to save the money. Once you know, you can create a budget that allows you to save the right amount of money. Opening up an account that is dedicated to your trip may help you save the money. Put the money in the account and do not touch it until you pay for your trip. Pretend that you do not have access to it at all.
You can also look for less expensive ways to travel. You can look for deals and savings but traveling at off peak times and being flexible with your travel dates. If you are smart about deciding how to pay for your travel, then you will not regret it. Traveling offers so many benefits, you should not limit yourself because you do not think that you can afford a trip.
Julia Peoples is a long-time business manager focused on providing decision making assistance to the public. She works with people at key points of their lives who are making important retirement and financial decisions. She has had many articles published that educate the public on sound financial decision making.
Julia writes for those who are working towards financial freedom or a better understanding of how finances work. She has shared her financial insights with individuals on a one on one basis for years.