Do you want to go on a stress-buster vacation in the sun but don’t have the money, or you’re waiting to get paid? You can take out an unsecured travel loan with fixed payments so you can hit the road today! Learn more about travel loans in this article, then talk to your loan adviser about your options.
What Is A Travel Loan?
A travel loan is just another name for a personal loan that is unsecured. You can use the loan to pay for airfare, hotel accommodations, car rental, etc. Travel loans are available in various amounts, from a few thousand dollars to up to $100,000. Interest rates in 2023 can range between 8% and 30%, with payment periods between 24 and 84 months. You could need a credit score of 670 or higher to get the best interest rates, but people with lower scores can be approved at higher interest rates.
When Is A Travel Loan A Good Idea?
The major benefit of a travel loan is you can pay for the cost of your trip over time, instead of forking over thousands at once. This can ease the financial stress of your vacation and allow you to just go and have a good time. However, remember that you will pay interest over the life of the loan, so the vacation will cost you more. If you take out a travel loan, make sure that you will have enough income to pay the loan or it could negatively affect your credit score. Also, try to pay off the loan as soon as you can to reduce interest you pay.
A travel loan can be a good move if you have a business trip or emergency travel situation that you cannot pay any other way. Some also may take out a travel loan for a wedding anniversary trip of a lifetime, such as a round-the-world cruise. Others get a fast-funding travel loan when they have a family emergency and need to travel quickly. Instead of jeopardizing their daily financial lives, getting a travel loan can ease the stress of the emergency so you can get where you need without worry about short-term costs.
Benefits of a Travel Loan
Some advantages of a travel loan are:
- Payments are fixed: A personal loan has a fixed rate and lets you make the same payment over a few years. Many people like not having to pay the full cost of the vacation up front. But the loan has to be paid back with interest.
- Lower rate than credit cards: If you have good credit, you could get a lower interest rate with a personal loan than a credit card. You may pay 18% or more for a credit card balance, but a personal loan may be had with good credit for 10% or 12%.
- Can fund emergency travel: Have you ever had a travel emergency but didn’t have the money to pay for it upfront? For example, your relative could be ill on the other side of the country and you need to fly there immediately. A fast-funding travel loan could be a huge help.
- More flexibility: Having a travel loan means you can get tickets and accommodations at any time, which can make it easier to find the lowest prices. But for this to make sense, the discounts need to be greater than what you are paying in interest on the loan.
However, remember that you will pay interest on the loan, so the trip will cost you more than if you paid cash. For example, a $10,000 travel loan with a 12% rate and 36-month term will cost you almost $2,000 in interest. Is this worth it? It depends on your finances and goals, but you will definitely save a lot of interest if you pay off the loan faster than three years.
How to Find a Travel Loan
Finding a travel or vacation loan isn’t hard and there are many places you can look online for this type of personal loan. As you look at various travel loan opportunities, keep these factors in mind:
- APR matters more than interest rate: The APR is the interest rate plus any fees the lender charges. Looking at APR gives you a better understanding of what the various lenders charge for your travel loan.
- Look for the lowest fees: Some lenders may charge a prepayment penalty or a loan origination fee, not all do, so look around.
- Positive online reviews: Would you buy a new TV or car without reading reviews? You should read online reviews about the travel loan provider to see what others experienced.
- Perks: Some lenders may have special benefits, such as funding the loan the same day, or return windows that let you return the money with no penalties.
Summary
Do you want to go on the trip of a lifetime for an anniversary or after a big promotion? Then you might want to consider the benefits of a travel loan. If you have good credit, you may be able to get a travel loan at a much lower rate than a credit card. Why pay for that trip all up front in cash when you can use a travel loan to pay for most of it over time? Talk to your loan provider today about a travel loan. They’ll run your credit and show you what your loan options are.
