Holiday Loans: All You Need To Know

The cost of holidays can quickly add up, but holiday loans can help. With a holiday loan, you can receive financial assistance to cover the many costs of your upcoming trips and travels, such as flights, accommodation, food, and purchases during your holiday. They’re essentially personal loans that are used explicitly for holiday costs.

There are various types of holiday loans, including secured holiday loans and short-term holiday loans. You might have some questions about these types of loans. For example, you may wonder about the definition of holiday loans in the UK or know if it’s possible to get holiday finance for bad credit. This guide will cover all you need to know.

What Are Holiday Loans?

It’s easy to be confused about certain loan types, especially with so many different terms out there, such as “emergency holiday loans” and “guaranteed holiday loans”. We should begin with a definition of holiday loans so you know exactly what they are.

A holiday loan is nothing more than a personal loan that you borrow to pay for a holiday. You can use it for various expenses associated with the holiday, such as the flights or the hotels. It’s the same basic idea as taking out a personal loan to pay for a new car or cover some renovation costs at your home.

Features of the Best Holiday Loans

Holiday finance exist all around the world, from holiday loans in Australia to holiday loans in Ireland. Depending on who you’re borrowing from, they can have slightly different terms, rates, and features, but most of them tend to have the same basic elements, as listed below.

Holiday Loans Interest Rates

The interest rate is always one of the most significant factors to think about when you’re taking out a loan, including a personal holiday loan for your upcoming trip to India or Barbados, for example. In general, interest rates on holiday loans are just like interest rates for other personal loans, ranging from around 3% up to 13%. Rates can vary from lender to lender, so it’s worth comparing holiday finance loans to find the best option for you.

Unsecured or Secured Holiday Loans?

You may also be wondering whether holiday loans in 2021 are secured or unsecured. Well, these types of loans are typically unsecured. This means that you won’t need to provide any security or collateral when taking out quick holiday loans, even holiday loans with no credit check. So you won’t run the risk of losing your car or your home if you can’t meet the repayments.


Compare Holiday Finance: Pros and Cons

When it comes to holiday finance loans, there are both advantages and disadvantages to take into account, and it’s wise to be aware of all the factors before making your decision to take out this type of loan.

  • Pros

    • Fixed Payments: With a holiday loan, you’ll usually have a fixed rate, which means that you’ll have clearly set amounts of money to pay back each month. You won’t have to worry about any sudden changes in your repayments’ size, which can be a big benefit, as it makes it a lot easier to keep track of your debt and manage your budget effectively
    • Customisable Terms: Holiday loans, like other types of loans, usually come with flexible terms, giving you the option of whether you want to pay your holiday loan back as quickly as possible or if you want to take your time and spread out the payments over a more extended period of time so that you pay back smaller amounts each month.
    • Enjoy Your Holiday: Another big benefit of opting for a holiday loan is quite simply to enjoy your holiday as much as possible. These loans give you the chance to get away from it all and have a great trip without having to worry as much about saving up beforehand and balancing your budget each day, as you get plenty of time to pay back what you owe.

  • Cons

    • Risks: There are always risks when it comes to taking out loans, including holiday loans. If you aren’t able to pay back the money you owe, you could incur fees, reductions to your credit score, which could harm your financial future, and even legal action in the long term. This can be especially worrying for people taking out holiday loans with poor credit scores.
    • Greater Costs: Taking out a holiday loan will result in you paying more for a holiday in the long term because you’ll have all of the added interest to pay off with each repayment. If you simply saved up and spent your own money on holiday, you wouldn’t have to spend as much in total.

Note: When planning a holiday and considering taking out a loan, make sure you include the small things in your estimated budget. They can really add up! Even when you book an all-in hotel stay for your family, there are lots of costs that are actually not included, as illustrated in the infographic below:



Holiday Loans for Poor Credit

One of the most common questions people have about holiday loans is whether or not it’s possible to get holiday loans with bad credit. The simple answer is yes. There are many lenders out there who will be willing to offer you a holiday loan even if you have a bad credit score.

However, there are some risks to consider when it comes to poor credit holiday loans. For example, you may have to spend more time comparing providers to find one who offers the best rates and terms for you, and you might have to pay a much higher rate of interest on your loan as well.


FAQ’s

What is a holiday loan?

A holiday loan is a type of personal loan that is used for covering some or all of the costs of a holiday.

Can you get holiday loans with bad credit?

Yes, it’s possible to get holiday loans when you have a poor credit score, but you’ll usually have to pay more interest.

How do holiday finance loans work?

Holiday finance is simply a kind of personal loan, so they work just like personal loans. You apply, get the money transferred to your account if you are approved, and then use it to pay for your holiday.

Do banks give loans for holidays?

Yes, there are many banks, as well as private lenders, that offer holiday loans.


Summary

Holiday loans can be very useful if you are able to easily make the repayments. However, if you are not able to make the repayments, it’s not advised to take a holiday loan. Instead there are plenty of options where you can go on cheap holidays, or by booking in advance you can also make use of some good offers online. MoneySavingExpert has a guide which can help you save on your travelling costs which you might find useful.


Holiday Loans Amounts

So how much money can you borrow with a holiday loan from a direct lender? Well, the usual range for holiday loans online in the UK is between £1,000 and £25,000. So you can acquire relatively small holiday loans if you’re planning a short trip or don’t need too much help with the costs, or you can request larger bank holiday loans to cover the costs of a more expensive holiday.


Representative example of Cashfloat loans
Total amount of credit: £900
Duration of the agreement: 7 months
Repayment total: £1,565.99
Interest is Fixed at rate of 198.72% per year | Representative 529.09% APR
£187.92
Installment 1
£250.56
Installments 2 – 6
£125.27
Installment 7