Vacation Loan Financing: Fly now, Pay Later
What is A Vacation Loan?
A vacation loan is a personal loan. Some lenders may advertise a loan as a vacation loan instead of a personal loan, but it is still a personal loan. Vacation loan financing can be used for a vacation, or travel expenses. Many individuals are no longer taking trips because they are finding them to be too expensive. Vacation loans have a set repayment term, as well as set monthly payments. When shopping for a travel loan, you should pay attention to interest rates. Different lenders have varying interest rates. Personal loans typically do not come with many fees, except an origination fee.
Average Cost of a Vacation
Vacations are a great way to relax and take a break from every day life. It is also a great way to see the world. Unfortunately, many people cannot go on vacation because of the cost. Many are not able to afford the cost of vacation. That is what makes vacation loan financing appealing to many people. The average cost of domestic vacation is $1,140 including airfare, hotel, foods, and other activities. For an average family of four, the price tag goes up to $4,560.
That is just an estimate because with more people, the cost more than doubles for each person. The typical cost breakdown for a weekly vacation for a family of four is about $910 for food, $1260 for hotel, or other lodging, flight can be around $600 and roughly $700 for additional activities.
You can find the average cost of a family of four to visit some popular cities through research on Loanry. Paris is one of the more expensive cities coming in around $8.682 and Rome costs $6,431. London comes in third and costs the same family of four around $5,324. The price is lower by vacationing in the US. Myrtle Beach, South Carolina costs $3,616. A trip to Branson, Missouri will cost $3,383. If you take a trip in the US, it will cost 50 to 70 percent less than going overseas.
Instead of skipping a vacation, individuals can try to make economical choices when it comes to vacation plans. You could find a package deal, such as a resort on an island and the travel and hotel are combined, or a travel plan that comes with a meal plan. You also have the option of vacation loan financing.
How to Get a Vacation Loan
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Since a vacation loan is the same as a personal loan, you can apply for a vacation loan with any lender. When considering a vacation loan, you should consider the type of vacation you want. It should be a big trip; one that is worthy of a loan. If you wanted to take a European holiday or a trip to Australia, that might be ideal for vacation loan financing.
There are some vacation financing pros and cons to consider when thinking about a vacation loan. A vacation loan could be a line of credit. This allows you to take only the money you need. You only have to pay back the money you use. You do not need collateral for personal loans. The downside is you are accruing more debt. This may not be the best way for you to pay for a vacation. You must consider if you are able to pay back the loan. Be aware that some lenders may give you a loan that you are not able to pay back.
You should always shop around when looking for a travel loan online. Make sure you find the best interest rate and terms with which you are comfortable. Once you have done that, you have to fill out the application and provide the necessary documents.
How Can You Use a Vacation Loan
More people are using vacation loan financing to pay for their vacations. For some, it is the perfect way to pay for a vacation that they cannot pay for all at once. There are new companies popping up, such as UpLift, that allows people to pay for flights in 12 payments. There are other companies whose only purpose is to provide travel finance options.
You can use vacation loan financing for numerous travel expenses, such as your flight, or any other transportation costs you have. It is a sound idea to plan your transportation early. You can use your loan on drinks and food. When traveling, you pay for everything you need to eat and drink. You won’t have food at home in your refrigerator that you can eat. Depending on your travel destination, the food and drinks are more expensive than you pay at home.
You may use vacation loan financing for your hotel, or where ever you choose to stay. Depending on what you have planned, this could get expensive. You can’t forget about entertainment on your vacation. Most likely, you are going somewhere where you want to experience and enjoy the area. This can get costly fast. You may decide to use vacation loan financing for your entertainment.
Should You Take Out a Vacation Loan?
A vacation loan is a personal loan. That means you have monthly payments at a set rate until it is paid back. That means you are taking on additional debt and paying interest on that debt. You are committing to paying back the debt. You risk defaulting on the loan, or missed payment fees if you can’t pay it back.
There are times when vacation loan financing makes sense. The most obvious one is if you have an emergency. If you have to leave and go somewhere because it is dire situation, then you have to do it. If this is a business opportunity and you will make money on the trip, then it might be a good idea. Vacation loan financing makes sense when you get back from the trip, you can pay the entire loan back.
Only you know your current situation and can make the decision. You have to weigh the pros and cons to vacation loan financing. If taking a loan puts you in a worse place financially, then it may not be a good idea.
Apps to that help you “Fly now, Pay Later”
You have weighed the options and you decide that vacation loan financing is a good idea. However, you specifically want to finance your flight. Now what? If you want to finance the flight, there are many apps available that help you fly now and pay later.
Affirm offers installment loans at the point of purchase. When you use Expedia or Cheap Air to book flights, you can choose Affirm as a payment option. They do a soft hit to your credit. When you spend over $100, you receive 3, 6, or 12 months to pay back the money. Affirm does not charge a fee. They do charge interest on your purchase. They do not check your credit.
Airfordable allows you to look for your flight. Just take a screenshot of the flight you want and upload it to Airfordable’s site. Then pay a deposit. You will get your ticket after you make all the payments to Airfordable. You end up paying for your ticket before you can use it. They have plans allowing for up to 3 months to pay. If you default, the ticket is canceled.
You do not get your deposit, but you get all other payments refunded. They have a one time service fee and your flight must be more than $200. The service fee may be 10 to 20 percent of the ticket depending on ticket price, date, and demand.
Bliss is a new site. You book your flight and make monthly payments. You have as much as 12 months to repay. Your interest rate is based on your credit. They do not charge any fees. They do charge interest on the amount of the flight.
Vacation Loan Calculator
A vacation loan, or personal loan calculator helps you get a better understanding of vacation loan financing impacts on you. It gives you avisual so you can see just how much you are paying. The calculator helps figure out monthly payments and the total cost of the loan, afterinterest. It can help you calculate any fees or other costs associated with the loan. It will show you the actual annual percentage rate (APR) that you pay. This gives you a true picture of all the details of the loan.
You can use a calculator to determine how much you can afford to pay back. This helps you determine if the loan puts you in a worse financial position. You enter all your bills and expenses into the calculator, along with all of your income. The calculator determines how much you can afford to pay. It is important to make sure you include all of your bills, so that number can be accurate. It can inform you if vacation loan financing is a good idea for you.
Alternatives Ways to Pay for A Vacation
1. Save Money For Travel
Vacation loan financing may not be the right thing for you. You should focus your energy and your money on saving for a vacation. The first thing to do is estimate your travel costs. This helps you understand how much money you need. This can guide your savings. You can set up a bank account just for vacation savings. Do not touch this money for anything other than the vacation. Once you know how much the trip costs, you can figure out how much money to save with each paycheck. You can set up direct deposit into the account for that amount.
You can cut out extra expenses. Get rid of that gym membership that you are not using. If you only go once or twice a year, you are wasting money. Do not eat out; stay home and eat. Stop an expensive bad habit like drinking or smoking. You should pay off as much debt as you can. Large debts can prevent you from saving extra money.
You can decrease your utility bill by making small changes. Turn off the lights when you leave the room. You can take shorter showers. Bundle up and turn the heat down by a couple degrees. Do not use the air conditioning. Be sure to wash full loads of laundry. These all seem like small things, but the savings can add up quickly.
2. Travel credit cards
Vacation loan financing is not going to work for you, but a travel credit card might. There are so many credit cards available, how do you know which one makes sense for you? In many ways, it is a personal choice. Some credit cards have pretty pictures on them, while others are justplain black. This makes a difference to some. It should not make a difference to you. You should pay attention to interest rates and introductory rates. Those things serve you better than how the front of the card may look.
If you plan to carry a balance, finding a card with 0 percent interest, or a really low interest is best for you. If you play to pay the entire balance every month, they a better rewards program is enticing. There are so many credit cards available, you have the freedom to pick the one that is best for you. When it comes to vacation loan financing, a credit card might suit you best. You only use what you need and you can pay it back on your terms. Keep in mind, that you must pay the minimum balance every month.
You should also pay as much as you absolutely can because it is easy to get stuck in a dangerous credit card cycle. If you only pay the minimum balance every month, interest continues to accrue on the balance. Every month, more interest accrues and increases the amount you owe. If you have a 0 percent interest card, then no interest accrues until the end of the promotional period. You should be sure to pay off the full balance by the end of the promotional period.
How to Plan an Affordable Vacation
You do not have to look to vacation loan financing to pay for your trip. Instead, you could plan a trip that you can afford. First, think about where you want to go and what you want to do. Then, consider the time when you want to go. You should go during off peak times when the prices are cheaper. You should look for sales. Use a website that shows you all the airfare prices.
Smart Money Tips:
You can set up alerts so you know when the prices are going down, or up. Flying on an off day, or taking an early red eye flight can also lower the cost. When flying, you can make stop instead of flying direct. This also decreases the cost.
Vacation loan financing does not have to be your only option. Thinking and planning ahead can help you save money on your purchases. Once begin planning your trip, look for every opportunity to save money. You can pack snacks to take on the place with you instead of buying food at the airport. Plan a daily budget for each day of your trip and stick to it. Plan ahead of time and look for local favorites instead of touristy places. If you plan ahead, you can find free or inexpensive entertainment while vacationing. You also can look for special pricing, or deals. You could find restaurants that have special happy hour pricing and go to an early dinner.
In the end, there are many ways you can pay for your trip. Remember to choose vacation loan financing by finding a personal loan with terms that you are comfortable. You can choose vacation loan financing that uses a credit card. You can even use an app when you purchase your airline tickets and stretch the payment out from 3 to 12 months. The options are numerous.
You can choose to stay away from more debt, by saving for your vacation. You can make simple changes that help you save a lot of money in the long run. Always remember to plan ahead and look for deals and special pricing for your flight, hotel, and activities. If you are smart about your vacation, you can have the vacation you want. And you will not have to go into debt to get it.
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.