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For some, the holiday season is the most wonderful time of the year. But it can be stressful if you don't have enough cash to pay for meals, gifts and other holiday-related purchases.

A potential solution is taking out a holiday loan, which is essentially a personal loan used for holiday spending. You can receive funds quickly, and this type of loan often has lower borrowing costs than credit cards. However, a major downside is that taking on additional debt can put a strain on your budget.

That said, taking out a holiday loan can make sense in a few scenarios. Below, we'll look at several loan options to help you decide if it's the right move for you. Plus, we'll discuss some alternative ways you can cover holiday spending.

What Is a Holiday Loan?

A holiday loan is a type of personal loan used to cover holiday-related purchases. Several financial institutions, like banks, credit unions and online lenders offer these loans.

Like other personal loans, a holiday loan usually has a fixed interest rate and is unsecured. In other words, you’re not required to pledge collateral—something of value, like a bank account or a car title, that a lender can seize if you don’t repay the loan. 

Loan funds are usually deposited into your bank account, and you repay the loan in fixed monthly payments, plus interest.

Best Holiday Loans

Several lenders offer personal loans that can be used to cover holiday expenses. Here's a breakdown of some of the best holiday loans.

Loan results will vary based on creditworthiness, loan purpose, loan amount, and other factors.

Best for Low Rates


  • Loan Amounts$5,000 – $100,000
  • Loan Terms24 – 144 months
  • APR Range7.49% – 25.49% (with autopay)
  • Minimum
    Credit Score
    660 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

LightStream is a solid online lender offering no fees, high loan maximums and low-rate personal loans for several purposes.


LightStream offers personal loans for several purposes, including debt consolidation, medical expenses, home improvement, weddings, car purchases and more, making this worth considering for those seeking flexibility. The lender offers relatively low rates compared to competitors, including autopay discounts. Its personal loans also have no origination fees or late fees, which can help keep borrowing costs low. However, borrowers will likely need to have good-to-excellent credit in order to be approved for a LightStream personal loan. Overall, it’s a good lender to add to your shortlist if you’re looking for flexible funding, no fees and a low APR. Lightstream may also disburse loans as soon as the same day you’re approved, making this lender a worthy choice if you need fast funding.


  • Low minimum APR
  • No origination fees, no late fees
  • High loan maximum of $100,000
  • Autopay discount
  • Joint applications allowed


  • Rates and terms vary by loan purpose
  • No soft pull prequalification
  • Must have good-to-excellent credit
  • No physical branches

Best for Good Credit

SoFi Personal Loans

  • Loan Amounts$5,000 – $100,000
  • Loan Terms24 – 84 months
  • APR Range8.99% – 29.49%
  • Minimum
    Credit Score
    680 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

SoFi's personal loan offering comes with no fees required and a high loan maximum that may be a good fit for those seeking large loans.


SoFi offers a competitive personal loan product that boasts no origination fees, no late fees, and a high maximum loan amount of $100,000. SoFi is one of only a handful of lenders offering loans as large as $100,000. If you need a substantial loan to cover a considerable expense, like a home renovation, SoFi’s high maximum can be a strong option. One standout feature of SoFi is that it offers unemployment protection, which might allow you to pause payments if you lose your job. Same-day funding is also available for qualified borrowers


  • No origination fees, no prepayment penalties and no late fees
  • Loans up to $100,000
  • Unemployment protection available
  • Autopay rate discounts
  • Co-borrower allowed
  • Same-day funding available


  • No physical branches
  • High minimum loan amount
  • Good credit likely required

Best for Bad Credit


  • Loan Amounts$1,000 – $50,000
  • Loan Terms24 – 84 months
  • APR Range8.49% - 35.99%
  • Minimum
    Credit Score
    560 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

Borrowers with less-than-stellar credit profiles may find Upgrade personal loans accessible, and its quick funding and flexible payment due dates convenient.


Upgrade offers personal loans that are accessible to those with not-so-ideal credit scores. The low loan minimum of $1,000 also makes it an easy choice for those with small financing needs. However, borrowers in certain states will be subject to higher minimum loan amounts. With this lender, you can expect to pay an origination fee. Borrowers can view their rate before applying without impacting their credit score. Overall, Upgrade is worth considering if you’re looking for a lender that is willing to work with lower credit scores and offers loans with competitive rates and flexible terms.


  • Accessible to borrowers with bad credit
  • Flexible loan terms
  • Joint applications allowed
  • Secured loan options
  • Direct payment to creditors


  • Has origination fees
  • No physical branches
  • Higher APRs than some competitors

Best for Fast Funding


  • Loan Amounts$2,000 – $50,000
  • Loan Terms24 – 60 months
  • APR Range8.99% – 35.99%
  • Minimum
    Credit Score
    600 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

Prosper is an online lending platform offering fast funding for personal loans and the option to apply with a co-borrower if your credit isn't stellar.


Prosper is an online peer-to-peer (P2P) lending platform offering personal loans and HELOCs. Because it’s P2P, Prosper works slightly differently than other non-P2P lenders. Borrowers sign up and are assigned a Prosper Rating based on their creditworthiness, and investors can choose whether or not to fund them after viewing their loan listing. Borrowers can expect to pay an origination fee depending on their Prosper Rating. Funding can be available as soon as the next business day after approval of the loan, making it a solid option in emergencies. Fortunately, if your credit isn’t stellar, Prosper offers the option to apply with a co-borrower, which could improve your chances of getting a better rate.


  • Can change your loan payment date
  • Option to apply with co-borrower
  • Next-day funding available after approval


  • No physical branches
  • Has origination fees
  • Not available in all states

Best for No Fees

Discover Personal Loans

  • Loan Amounts$2,500 - $40,000
  • Loan Terms36 - 84 months
  • APR Range7.99% - 24.99%
  • Minimum
    Credit Score
    660 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

Discover offers personal loans up to $40,000 and no origination fees or prepayment penalties.


Best known for its credit cards, Discover also offers a range of banking and lending products, including personal loans. Its maximum loan amount is just $40,000, which is relatively low compared to certain competitors. A notable perk of Discover personal loans is that borrowers benefit from no origination fees or prepayment penalties, and an APR range that’s comparable to what other lenders offer. 

Discover also provides a credit score range of 660 to 850 on its personal loan page, suggesting its willingness to work with prospective borrowers with fair credit. Many lenders require good or excellent credit, so this accessibility sets Discover apart. Just be aware that if your credit isn’t great, your loan’s interest rate will likely be higher. 


  • Competitive APRs
  • May be available to fair-credit borrowers
  • No origination fees


  • Low maximum loan amount
  • No co-borrowers permitted

Uses for a Holiday Loan 

cheers at holiday table

As with most personal loans, you can use a holiday loan for almost any purpose. People can use them to cover many holiday-related expenses, including:

  • Christmas gifts
  • Black Friday shopping
  • Meals and catering
  • Flights
  • Hotel rooms
  • Holiday decorations 
  • Christmas trees
  • Entertainment 
  • Holiday parties

Whether you need some extra cash to cover Christmas gifts while you wait for your end-of-year bonus or need to pay for a last-minute holiday vacation, personal loans can be a reliable funding source if you can afford the payments.

Pros and Cons of Holiday Loans


  • You can receive funds as soon as the next business day after approval 
  • Often comes with lower rates than credit cards
  • Fixed monthly payments can be easy to budget for
  • Can be used to cover nearly any expense


  • Interest charges can greatly increase the cost of your holiday purchases
  • You'll likely have trouble scoring a competitive interest rate if you have bad credit
  • Increased debt load can put a strain on your budget 

What to Consider When Choosing a Holiday Loan

If you think a holiday loan is right for you, consider these factors before submitting a loan application.

Interest Rate

It's always a good idea to look at a lender’s advertised interest rates—it gives you an idea of how much a lender charges consumers to borrow money. Of course, the higher the rate you receive, the more you'll spend on interest over the life of the loan.

A lender will determine your exact interest rate when you apply based on your credit history. But you can get estimated rates from lenders that allow you to prequalify for a personal loan without impacting your credit score.


Personal loan fees can make borrowing more expensive. Some common fees include origination fees, prepayment fees, late fees and returned check fees. If possible, look for a lender that doesn't charge any fees so you can save money.

Annual Percentage Rate

Looking at a loan's annual percentage rate (APR) can help you better assess how much your total borrowing costs might be since it takes into account interest charges, plus fees.

Repayment Terms 

A loan's repayment term tells you how long you have to repay the loan. The shorter the loan term, the higher your monthly payments will be. You can lower your monthly payments by choosing a longer loan term, but you'll pay more in interest over the life of the loan. Choose a loan term that is affordable to you, based on your monthly budget.

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How Much Do Holiday Loans Cost?

How much you’ll pay for a holiday loan depends heavily on your interest rate, repayment term, loan amount, and personal loan fees.

For example, say you borrowed a $3,000, 24-month holiday loan at 10%. In that case, your estimated fixed-monthly payment would be $138, and you'd pay $322 in interest over the life of the loan. 

How to Apply for a Holiday Loan

carving a turkey

The exact personal loan application process varies by lender, but here are the general steps:

  • Determine how much you need to borrow. Write down your holiday expenses, and then add them to see how much you need to borrow to cover your holiday purchases.
  • Review your credit. Before applying, check your credit reports for errors that can harm your score. You can check your credit score for free from Equifax, Experian, and TransUnion by visiting Check your credit score to ensure you meet a lender’s minimum credit requirements.
  • Shop around. To get the best deal for your unique situation, compare rates and terms from multiple personal loan companies. You can prequalify with many lenders online so you can see your estimated rates without hurting your credit score.
  • Submit a loan application. After you find the right lender for you, submit a loan application. You’ll likely need to provide the following information: your Social Security number, birth date, recent paystubs and tax returns.
  • Repay your loan. Repay the loan as agreed to avoid potential late fees and major damage to your credit. Enroll in autopay if available to ensure you pay your bill on time.

Alternative Ways to Cover Holiday Spending 

It’s important to note that taking out a holiday loan isn’t the only way to pay for holiday expenses. Here are a few alternatives to consider.

  • Holiday savings account. Creating a holiday budget and depositing a certain percentage of your income into a high-yield savings account throughout the year can help you avoid needing to borrow money for holiday expenses.
  • 0% intro APR credit card. If you have good credit and want to avoid paying interest, taking out a 0% APR credit card instead of a loan could be a better fit. These cards typically have interest-free periods that last 12 months or longer. You don't pay any interest when you pay off the balance in full before the promotional rate expires.
  • Holiday assistance programs. If you're struggling financially, you may qualify for assistance in the form of free gifts or meals. The Salvation Army has Christmas assistance programs designed to help kids ages 12 or younger and seniors ages 65 and older. You can dial 211 to find holiday assistance programs in your area.
  • Gifts of service. Instead of purchasing a gift for a family member or friend, consider performing an act of kindness for them instead. For instance, you could volunteer to wash a person's car or rake their lawn.

Should I Take Out a Loan to Cover Holiday Spending?

Whether using a holiday loan is a good idea depends on your unique financial situation. It could make sense if you can comfortably afford to repay the loan. But if doing so would stretch your budget too thin, it's probably best to consider alternative options.

A holiday loan could also make sense if you want to consolidate high-interest credit card debt. You could save hundreds of dollars in interest if you qualify for a lower rate.


  • Numerous financial institutions offer personal loans that can be used for holiday spending, including banks, credit unions, and online lenders.

  • The amount you can borrow depends on your chosen lender and your unique financial circumstances. Some lenders allow you to borrow up to $100,000, but few borrowers will qualify for such a high amount. The better your credit, the better your loan terms will be.

  • Yes, qualifying for a holiday loan with bad credit is possible. There are lenders that offer loans for bad credit borrowers. But keep in mind that if you're approved, a lender will likely charge you fees and a higher interest rate, or ask you to bring on a co-signer or co-borrower.

    To boost your chances of qualifying for a more competitive rate, consider taking steps to improve your credit score before applying. For example, it's possible to boost your score by paying down any outstanding debt and paying all your bills on time.


Jerry Brown

Jerry Brown is a personal finance writer and owner of the Peerless Money Mentor blog. He's written for major publications, such as Forbes Advisor, Fox Business, Business Insider, and Rocket Mortgage. Financial products he enjoys covering include credit cards, personal loans, and mortgages.

Awards & Distinctions

Jerry was nominated for the 2020 Plutus Award for Best Social Media for personal finance, where he was also a presenter.