Holiday loans

Compare loans suitable for using for a holiday [1]

  • Choose a shorter term to lower the cost of your loan overall
  • It may be more difficult to find a holiday loan if you have bad credit

The excitement of going on holiday and getting away from it all is a feeling like no other.

If you don’t have time to save up, you might be looking at other options to fund your vacation.

A holiday loan could help you to hop aboard a plane sooner rather than later and spread the cost over a number of months.

What is a holiday loan?

A holiday loan is a personal loan that you’ve taken out to cover the cost of your trip.

You’ll receive a lump sum which you pay back to the lender in monthly instalments for a set period until the total amount you’ve borrowed, plus interest, has been repaid.

Family on holiday having barbeque on beach

How do they work?

You should have a few things to hand before you apply for a loan. We need to know some details about you, your income, and any other debt you’re currently repaying.

Then, you can start to look at your options.

  1. Compare rates from a range of different providers to find the right deal for you. You can use our smart search tool to see which loans you’re more likely to be accepted for, without affecting your credit report

  2. Look at all the important information, like the interest rate, annual percentage rate (APR) and any fees or charges

  3. Choose the best option for you and click ‘Apply’

  4. The money will be sent directly into your bank account within a few days once you’ve been accepted

  5. You’ll make monthly repayments over the term of the loan until the debt is repaid. It’s important to keep on top of these, so you’re not charged any fees

Advantages of a holiday loan

As with any type of loan, there are pros and cons that you’ll need to weigh up. Consider these advantages before you choose to take out a loan, as well as the following disadvantages:

You could pay a fixed interest rate for repayments

With fixed monthly repayments, you’ll know how much you’re paying each month, so you can budget easily.

No extra fees for withdrawing money

Unlike a credit card which will usually charge for taking cash out in the UK or abroad, the loan lump sum is deposited into your bank account, so you can withdraw and exchange money without any extra fees before you travel.

Could work out cheaper than using a credit card

If you have a credit card with a high interest rate, taking out a loan could actually be a cheaper option. You can compare the cost of a loan versus a credit card by looking at the APR.

Disadvantages of a holiday loan

There are some disadvantages to a holiday loan which you’ll have to bear in mind.

You’ll be building up debt

Putting yourself in debt for a holiday could result in financial difficulty further down the line if you’re unable to make your repayments. Missing repayments and failing to repay your debt can negatively impact your credit score, making it harder to borrow in the future.

You’ll end up paying more overall

You’ll be charged interest on the amount you borrow, which means that you’ll end up paying more overall than if you saved up or used a 0% purchase credit card. The interest rate you’re charged will depend on how much of a risk you pose of not repaying the money. If you have a lower credit score or income, you may be charged a higher interest rate to offset the perceived risk.

You could struggle to find a good rate with a low credit score

A poor credit score will make it more difficult to find a good holiday loan deal. There are loans available for people with bad credit, so it’s worth doing a soft search to see the options before applying.

Am I eligible for a holiday loan?

To be eligible, you’ll usually need to be over 18 and living in the UK.

Every provider will have their own eligibility criteria, so you’ll need to check if you meet them before you apply.

For instance, banks may require you to already have an account with them before you can take out a loan.

You’ll also be required to pass an affordability check, which will assess your income and any existing debts to see whether you’re likely to be able to cover the monthly repayments.

Taking out a loan of any size is an important financial decision and you must consider your personal circumstances carefully before committing to a loan. Saving up before travelling and paying off the loan amount fully before your trip might be the right option for you.

How to get a holiday loan

When you use our smart search tool, you’ll be able to see the loans that you have a higher probability of being accepted for before applying. This helps to protect your credit score from being impacted by rejected applications.

From your results, you’ll be able to click through to the provider’s website and apply. Your provider will take into account your credit score and ability to pay the money back to evaluate whether they consider you a good candidate.

It can take a few days for providers to review your application and for the money to land in your account so it’s worth applying in advance, rather than booking your holiday last minute.

Alternatives to a holiday loan

A holiday loan isn’t your only option. Instead, you could:

1. Save up for your trip

The old-fashioned route but it could be worthwhile to stop you getting into any debt. Try drawing up a budget to see where you could be cutting back on your monthly expenditures.

2. Use a credit card

If you can get accepted for a 0% purchase credit card, it could be a good option for booking a holiday. You can spread the cost over the 0% interest introductory period, essentially allowing you to borrow for free.

Just make sure that you repay the full amount by the end of the 0% period, or you’ll be switched to the lender’s expensive standard interest rate. You also need to make at least your minimum monthly repayments to keep your 0% interest offer.

3. Share the cost with friends or family

If you’re booking a group holiday, you could find great deals on villas that house multiple people. Splitting the cost of the accommodation could help you to keep the costs down, while bringing everyone together for a well-needed catch up.

4. Look at your holiday provider’s offers

Some travel companies will offer payment plans for more expensive holidays, so it’s worth chatting to them to see if there are any deals you can take advantage of. Make a note of the interest rate they’ll charge you and see whether you’ll end up paying out more than you would with a loan.

Frequently asked questions

It depends on whether you’re confident you can comfortably make the monthly repayments. Think about whether you’d still be able to keep up with the rigid repayment schedule if your household outgoings suddenly increased or you lost your job.

It depends on how much you want to borrow, the loan term and the interest rate. The longer your loan term, the more you’ll end up paying back overall.

When you compare loans with us, you’ll be able to easily see the APR, letting you know the cost of the loan over a year as a percentage of the amount you’re looking to borrow.

It’s possible, but you’ll have fewer options to choose from.

Personal loans aren’t secured, so the lender has no security if you default. This means that they often require the borrower to have a good credit score which demonstrates that they’re able to repay debt responsibly.

If you do find a loan that accepts lower credit scores, it will usually lead to higher interest rates. However, there are lenders who specialise in poor credit which may be able to help.

You’ll need to know your addresses for the past three years, as well as your bank account and employment details. You might need to provide proof of your employment, such as a paycheck.

The lender will also want to know about any existing debts as part of the affordability check.

A holiday loan will provide you with the money to cover the cost of your trip.

On the other hand, a loan holiday is something you can request from your provider if you’re struggling to make repayments. They may allow you to miss a couple of monthly payments, as long as you meet certain terms, like not taking payment holidays in consecutive months.

Be warned that you’ll still be expected to pay interest on the months where you haven’t made payments, making it more expensive overall.

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