Travel Loans for Bad Credit: Stay Grounded
Most of us love to travel. Whether it is a quick weekend away somewhere close, or an extended vacation to an exotic location, we all want to get away. The cost of travel makes that much harder to do. Often, we find that we take less vacations over a longer time period. People would take two and three vacations per year. Now, it might be one vacation every two years. Even more interesting is that travel within the US has decreased, while travel abroad has increased. People are looking for ways to be able to take more vacations per year.
What Is A Travel or Vacation Loan?
A travel loan and a vacation loan are the same thing. They are both personal loans. A personal loan is when a lender, like a bank, agrees to lend you money. You pay that money back in monthly payments for the length of the loan. The typical length of a loan is three to five years. These loans do have interest charges. That interest is wrapped into your monthly payment. The payment you agree to make is the same one you make for the length of the loan. The amount of money a lender agrees to let you borrow is based on your credit score. The amount of interest you pay is based on that, too. Personal loans are considered unsecured loans. You do not provide collateral to get a personal loan. The lender takes more risk when approving someone for an unsecured loan.
Once a lender agrees to let you borrow the money, you can use it on anything you want. You can use vacation loans for anything associated with your vacation. You can use it on transportation, like plane tickets, but also car rentals and other transportation. You can use a personal loan to travel for hotels and other places to stay. You can use it for food and drinks and entertainment. Once you have the money, it is yours to use how you would like. A lot of money is spent on travel. The average person spends close to $1,200 on a vacation. The price goes up to over $4,500 for a family of four.
What Is Considered Bad Credit?
You want to travel, but you do not have the money for it right now. You are considering a loan, but you think you might have bad credit. There are travel loans for bad credit. First, you should understand a little bit about your credit score. A credit score can range from 0 to 850.Anything 700 or above is considered pretty good to excellent. Anything below 650 is considered bad credit and below 560 is just terrible. Lenders see scores of 650 or lower as high risk and may be less willing to lend money. However, do not let this discourage you. You have options, but you have to shop for them.
You should understand what impacts your credit. Most of the time, a low credit score results from late or missed payments. You should look at your credit report and know what is on there. Sometimes, there are errors on the reports. If there is an error, you should correct it. That may increase your credit score. Having a low credit score impacts many things. You may not be able to get a loan, a car, or an apartment. It really impacts your life in a negative way. All that being said, it is still possible to get travel loans for bad credit.
Can I Get A Vacation Loan With Bad Credit?
People are spending more money than ever on vacation. They are even going into to debt to pay for them. Keep that in mind when considering your next vacation. Decide if you are doing it just to keep up with social media. That being said, if you are considering a vacation loan, there are something you can consider. Even when you have less than stellar credit, you may still want travel loans for bad credit. It can feel like a hopeless situation when you have bad credit. However, it is not. Things are a little more difficult, for sure.
It is possible to get travel loans for bad credit. You just have to shop around for the best deal. Credit unions have less stringent standards when it comes to lending money to those with bad credit. You should consider online loans. They are easier to obtain. The applications are easy to fill out. You often get an answer in less than 24 hours. When applying for a travel loan online, be careful. There are companies out there looking for people to scam. They have some understanding that people who are looking for loans online are in a bad financial place. There are some companies that prey on that. Be sure when applying online that it is a reputable lender.
Another thing to consider when applying for a loan online is the interest rate. Online lenders often increase the interest rate to incredibly high amounts. This makes it harder for you to make monthly payments. The monthly payments might be too high for you. It may also increase the length of repayments. These are all things you should consider when thinking about travel loans for bad credit.
Just Because I Can Get A Loan Does That Mean I Should?
Now you know you can get one with bad credit, but should you take out a personal loan to travel? Any time you are planning to borrow money, you should make sure it is the right thing for you. You should remember that a loan means you are adding more debt. You also run the risk of not being able to pay back the loan.
Why would it make sense?
Travel loans for bad credit makes sense for you when you are faced with an emergency that requires you to travel. If you know that you have consistent income when you return from travel, a loan may be a good idea. The most important things to remember when you are considering a travel loan is that you should not put yourself in a worse position. If you know that you cannot pay back the loan, you should not apply for one. Doing so puts you in a worse financial place and that is not something you want. If you are not sure if a loan is the answer for you, you should consider other options first. A bad credit travel loan does not have to be your only option. The worse feeling is when you feel like you have no options. You have options. You just need to find them.
What are the advantages?
There may be some advantages to obtaining a travel loan. You may be able to find a good deal on a loan that offers better interest than your credit card. With a loan, you know your payment amount. It is the same every month. It does not change based on how much you have spent. Using your credit card can tie up your credit limit until you are able to pay it off. This leaves you with no available credit for an emergency. Unless your credit card has zero percent interest, obtaining a loan is the better way to go. This is true as long as you can afford to pay back the loan.
Do I Have Other Options Besides A Loan?
Travel loans for bad credit do not have to be your only option. There are many other options available to you. You just have to know what is available. There is a type of travel finance available that is not a loan. One option is for plane tickets. There are companies willing to pay for your ticket immediately. You pay them back. These are called fly now, pay later companies.
These apps are usually at the point of service. That means when you purchase an airline ticket online and you put it in your cart, these apps take over. There are about three different companies that help you purchase airline tickets. Affirm teams up with Expedia and Cheap Air. You choose Affirm as your payment option. There is a soft hit to your credit. You must spend over $100. You can pay back the cost of the ticket between 3 to 12 months. There is not a fee. They do charge interest on the cost of the ticket.
Airfordable accepts a screenshot of a flight you want to take. You upload that picture to their website. You have to put down a deposit. You have to make all payments to Airfordable before you get your plane ticket. With this company, you pay for the entire ticket cost before you get the ticket. You have to pay for your ticket within three months. If you do not pay for it, the ticket is canceled. In the event of a canceled ticket, you woo not get your deposit back. You get all other payments back. There is a one time service fee that is as much as 10 to 20 percent of the cost of your ticket. Your ticket must cost more than $200.
Another site offering a similar plan is called Bliss. You book your flight through them and make payments to them monthly. They give you up to a year to pay for your ticket. They do not charge fees. They charge interest on the amount of your ticket.
Are There Ways To Save On Travel, So I Don’t Need A Loan?
Maybe you are thinking that travel loans for bad credit are not the best option for you. There are ways to cut the cost of your next trip. The most obvious way to save money when planning a trip is to look for travel deal and discounts. The internet allows us to have access to so many things. If you take some time and search for deals, you can find cheaper ways to travel.
Keep your dates flexible and consider traveling at night. If you are flexible that keeps your options wide open, so you can travel when you find the best deals. Being rigid with your dates doe not allow you to take advantage of off season pricing. Traveling at night, overnight, or really early in the morning is typically less expensive because no one wants to travel at that time.
Considering finding a friend with whom you can travel. It is always cheaper if you can find someone to pay some of the costs. A travel buddy may not be able to help cut all the cost, but certainly lodging and car rental could be split. Doing things that could decrease the cost may be safer with a friend. You may be able to stay in an area that’s cheaper but may not be safe by yourself. You may be willing to use ride share programs with a friend, but not by yourself.
How Can I Budget For My Vacation?
Budgeting for a trip is always a good idea. Putting yourself on a budget in general is also a good idea. When considering a trip, you should use a travel cost estimator. To use this estimator, you estimate all of your travel costs, including airfare, hotel, additional transportation, food, entertainment, and souvenirs. It helps to have the costs as close to accurate as you can get them. You should add in a little extra for unforeseen costs. Once you have that figure, you have a fairly good idea of how much your vacation will cost.
From this point, you can begin saving for it, or you can begin to cut costs. You can create a travel budget to help you save the money. This helps you get a good look at your income versus expenses. You can usually find some areas where you can cut expenses to save money. It is also a good idea to open a bank account just for travel savings. You can save money in the account and only use out for travel. This is a great way to control spending on travel. You can only spend money on vacation when you have it in the account.
Cut some expenses
This is also a good time to cut out some expenses. Do you have a gym membership that you are not using? Cancel it. Magazine subscriptions that you do not read? Cancel them. That is a fast way to put money back in your wallet. Cut back on how often you eat out. Not only will this save you money, but it is better for your health. This is also a good time to cut an expensive habit, such as smoking. If you smoke, you spend thousands of dollars a year on cigarettes. Think of the amazing vacation you could have with that money.
There are travel loans for bad credit available to you. However, you are the only one that can decide if that is the path for you. It honestly starts with the same question. Are you able to pay back the loan? Can you afford to make monthly payments for three to five years?
You can use a loan calculator to determine how much extra money you have per month to pay towards a loan. This calculator looks at your income and expenses to figure out how much is left over each month. If you cannot afford to pay back the loan, do not apply for it. Doing so will cause you to have late or missed payments. This can cause you to default on the loan. All of these things will negatively impact your credit.
There is nothing worse than coming home from an amazing vacation to debt you cannot afford. That debt could make your vacation not worth the price you have to pay. It is time to take a hard look at your expenses and determine if you can afford to pay back the loan. It may be a difficult thing for you to admit, but it is better to do so before you get the loan. Do not put yourself in a worse financial position than you are currently. Before you apply for a loan, put yourself on a budget and save the money.
Cut some of your expenses to have more flexibility with your money. Consider getting a part time job to bring in some additional income. You could do this until you are in a better place financially. You should try all of this things before you apply for a loan. Taking on more debt should be your last resort.
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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.