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Can I Get A Personal Loan For A Holiday?
●September 20, 2021●4 minute read
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Aching for a getaway but strapped for cash? Whether you’re wanting to escape the hustle and bustle of city life for the weekend, or enjoy a luxurious anniversary trip, there’s always a good excuse for a holiday.
However, travel-related expenses can add up super quickly and, if you’re not careful, have you in over your head in bills. It might come as a relief to know that racking up your credit card bills isn’t your only option for a mid-week getaway.
Many lenders offer personal loans to cover various travel-related costs, which can offer applicants financial assistance and a stress-free holiday.
Can I get a personal loan for a holiday?
Yes! Many lenders offer personal loans for holidays, and some even have travel-specific loans to make the process super simple. In fact, taking out a personal loan for travel purposes is something lenders see all the time. Whether you’re struggling to find the cash to cover these expenses, or you’re not wanting to say goodbye to your savings, a holiday loan could be a great option.
What can I use a holiday loan for?
Like regular personal loans, most lenders are pretty flexible with what you can use your holiday loan for. Some common travel expenses include:
- Flight costs;
- Travel insurance;
- Other types of bookings e.g. car hire.
Once accounting for these travel expenses, you may find you have leftover cash. This means you have the option of spending what’s left on everyday expenses while travelling, including shopping, food, and entertainment. It’s important to note however that you should try to avoid borrowing more money than necessary, as this will increase your repayments.
Common fees associated with holiday loans
Holiday loans can be a great option for those wanting to take a trip without being left financially struggling. The last thing you want is to be worrying about how to pay for your taxi ride or the extra baggage costs at the airport. But as handy as they are, it’s important to keep in mind the costs associated with personal loans.
Like any type of personal loan, there are the regular costs and fees associated with borrowing. These can include:
- Application and establishment fees;
- Documentation fees;
- Ongoing fees;
- Prepayment fees;
- Late fees and charges.
Another fee associated with loans are interest charges. Depending on the loan amount and the lender, holiday loans can be secured or unsecured. By taking out an unsecured loan, you’re posing a greater risk to the lender – which can result in higher interest rates. This is an important consideration to have, as higher interest rates can mean your repayments are increased.
As holiday loans typically don’t require an asset to secure the loan, it can result in higher interest rates than secured personal loans. It can be beneficial to shop around when considering a holiday loan, as digital lenders typically have more competitive interest rates and loan terms than traditional lenders.
If you’re wondering how much your repayments would be for a holiday loan, use our loan calculator.
What is involved with applying for a holiday loan?
The application process for a holiday loan is similar to that for a standard personal loan. Digital lenders have made the process speedy and easy to navigate, making things as convenient as possible for applicants.
For most lenders, you will need to provide documentation stating where you plan on travelling to (domestically or internationally), and for how long you intend to stay. In addition, an employment check will be conducted to ensure you have taken annual leave and are expected to return. From this, you will also need to provide:
- Personal information (your name, contact information, residential address, etc.);
- Permanent residency status to ensure you are not on a visa and, therefore, returning back home overseas;
- Proof of income (such as bank statements, tax returns, or payslips);
- Minimum of 100 points of ID (birth certificate, driver license, passport);
- Proof of assets, expenses, and liabilities;
- Residency status.
Other borrowing options for holidays
If you’re unsure whether a personal loan is the right choice for you, consider some of the other borrowing options available.
Credit cards can be convenient for covering various travel expenses during your trip. Certain credit cards offer travel benefits for customers, like frequent flyer points and lounge access at airports. However, credit card interest rates are notorious for being higher than many personal loan rates. To consider which option suits you best, read our article comparing credit cards and personal loans here.
Buy now, pay later services
Buy now, pay later companies such as Afterpay now offer their services for travel expenses like flights and accommodation. This can be a handy way of deferring payment while saving on high interest rates. However, avoiding these rates is only possible when repayments are made on time. It’s important to note that your repayments are likely to be due at some point during your holiday, which might cause financial stress. And, if you fail to make your repayments on time, you will be hit with late fees and charges. Read more on comparing buy now, pay later services and personal loans here.
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Written by Katie Francis
Katie Francis is a Content Writer at Jacaranda Finance. She is currently studying a Bachelor of Business (Marketing)/Media & Communications at the Queensland University of Technology.