Many people in the UK use personal loans each year to help pay towards their holidays. While loans are typically used for financial emergencies or times when you need extra funding to ensure all of your payments and bills are attended to.
Loans, including payday loans and instalment loans online, may, in some cases, also be used for holidays or weddings. However, they should only be considered in times of true financial emergency, and using a loan for a luxury purchase like a holiday is often best avoided.
A holiday loan is a loan which may be used to pay for a holiday. Approximately over 20 million Brits each year pack their bags and enjoy a well rested holiday abroad, with Spain being one of the most popular destinations.
Funding a holiday can be expensive, from buying new clothes, toiletries, sun essentials like suncream, towels and more. Not to mention the cost of booking the transport to and from the airport and the flight fares themselves. Holidays can be very expensive, which is why some people opt for loans to fund them.
However, there are ways to make your holiday more affordable.
You can cut back on the cost of a holiday by finding cashback schemes through supermarkets and online stores, as well as using vouchers from airlines. Yet, these aren’t always available when you’re ready to book your next trip away. That’s why personal loans are an option to consider when you need extra funding towards your holiday.
With a personal loan, you may be able to borrow as little as £100 , or you may opt for a larger amount depending on your eligibility.
Some of the major costs associated with holidays include plane fares, with many airlines nowadays requiring you to pay for your bags and seats.
Depending on where you’re going, you may also be required to pay for visas or entry documents, like an ESTA when entering the USA.
A holiday loan may also help fund the wardrobe you will need for the climate. Alongside clothing, you have to consider holiday expenses when abroad, including entertainment and food.
Therefore, a personal loan could help fund your holiday. As personal loans are categorised as unsecured loans, this means you will not be required to put your home or car as collateral if you cannot repay. However, bear in mind that failing to repay the loan or incurring late payments will lead to potential penalties and damage to your credit score.
Ultimately, personal loans should only be used for short-time financial emergencies and when you have exhausted all other resources. Typically, personal loans should not be used for ongoing expenses, large sum costs, or frivolous spending like a holiday.
The key to remember is that personal loans should not be considered for a holiday unless there is a particularly pressing need.
For example, borrowing money to cover the entire cost of a holiday is generally not advisable. It is better that you save up the money you need for a holiday. Then, if required, you could top off your fund with another source, such as from friends and family or a small loan.
There are some potential advantages of using a loan to pay for a holiday. For instance:
Ease of Online Application: Applying for a personal loan online is a straightforward process and is accessible 24/7. This convenience can save you valuable time, allowing you to focus on planning your holiday.
Clear Repayment Terms: Personal loans offer clear repayment terms, providing a transparent understanding of your obligations. This knowledge can help you manage your budget effectively throughout your loan repayment period.
Favorable Interest Rates with Good Credit: With a good credit score, you may secure a personal loan that comes with comparatively lower interest rates. This could lead to considerable savings over the term of your loan.
Top Up Your Holiday Fund: A personal loan can be an excellent way to increase your holiday fund. It can help bridge the gap between your savings and the full cost of your dream holiday, allowing you to travel without financial strain.
On the other hand, there are some potential drawbacks to consider when wanting to use a personal loan to pay for a holiday. These include:
High-Interest Rates: Personal loans can come with high-interest rates that significantly increase the overall cost of your holiday.
Limited Accessibility for Bad Credit: If you have a bad credit history, many companies might not consider your application for a personal loan. This could limit your options for funding your holiday.
Non-Essential Expenditure: Borrowing money for non-essential expenses like holidays could put unnecessary strain on your financial health.
Obligation to Repay on Time: Repaying the loan on time is crucial, as late or missed payments could lead to additional debt or damage your credit score.
Impact on Credit Score: Applying for a loan could temporarily affect your credit score. It's essential to keep this in mind, particularly if you plan to apply for more credit in the near future.