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Taking out a personal loan to cover vacation and travel-related purchases can be a great option when you don't have the cash or savings up front to cover your trip. But personal loans come with extra costs, including interest and personal loan fees. And if you're not able to pay on time, it can negatively affect your credit score. We'll break down some of the best vacation loans to consider, when it makes sense to get one, and some alternative ways to finance your next vacation.
What Is a Vacation and Travel Loan?
A vacation loan or travel loan is essentially a personal loan you take out to pay for vacation and travel expenses. You can spend the loan on nearly anything, including airfare, hotels and cruises. The only things you can't use it on are gambling, college tuition and illegal activities.
Most personal loans are unsecured, meaning you don’t have to put up any collateral. But lenders offering unsecured loans also tend to prefer borrowers with good credit, so qualifying for a personal loan if you have bad credit can be challenging.
If you can qualify for low rates and can afford the payments, however, vacation and travel loans can be a useful financing option.
Best Vacation and Travel Loans
- Best for Bad Credit: Upgrade
- Best for Fair Credit: Best Egg
- Best for Low Rates: LightStream
- Best for No Fees: SoFi
- Best for Small Loans: LendingClub
- Best for Fast Funding: Avant
Loan results will vary based on creditworthiness, loan purpose, loan amount, and other factors.
Best for Bad Credit: Upgrade
Upgrade
- Loan Amounts$1,000 – $50,000
- Loan Terms24 – 84 months
- APR Range8.49% - 35.99%
- Minimum
Credit Score560 or aboveA 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.
Overview
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.
Read the reviewPros
- Accessible to borrowers with bad credit
- Flexible loan terms
- Joint applications allowed
- Secured loan options
- Direct payment to creditors
Cons
- Has origination fees
- No physical branches
- Higher APRs than some competitors
Best for Fair Credit: Best Egg
Best Egg
- Loan Amounts$2,000 – $50,000
- Loan Terms36 – 60 months
- APR Range8.99% – 35.99%
- Minimum
Credit Score700 or aboveA 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.
Best Egg provides fast personal loans, including unsecured and secured options.
Overview
You can use Best Egg loans for various purposes, including paying for moving expenses, home improvements, debt consolidation, weddings, adoption and more. Borrowers will pay origination fees and need a minimum annual income of $100,000 to qualify for their lowest rates. Best Egg products are not available for residents in Iowa, Vermont, West Virginia, the District of Columbia or U.S. Territories.
Read the reviewPros
- Loans are funded as soon as the next day
- Loans up to $50,000
- Option for secured loans for homeowners
Cons
- No physical locations
- Has origination fees
- Steep income and credit requirements
- Doesn’t allow co-signers or joint applicants
- Not available in all states
Best for Low Rates: LightStream
LightStream
- Loan Amounts$5,000 – $100,000
- Loan Terms24 – 144 months
- APR Range7.49% – 25.49% (with autopay)
- Minimum
Credit Score660 or aboveA 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.
Overview
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.
Read the reviewPros
- Low minimum APR
- No origination fees, no late fees
- High loan maximum of $100,000
- Autopay discount
- Joint applications allowed
Cons
- Rates and terms vary by loan purpose
- No soft pull prequalification
- Must have good-to-excellent credit
- No physical branches
Best for No Fees: SoFi
SoFi Personal Loans
- Loan Amounts$5,000 – $100,000
- Loan Terms24 – 84 months
- APR Range8.99% – 29.49%
- Minimum
Credit Score680 or aboveA 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.
Overview
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
Read the reviewPros
- 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
Cons
- No physical branches
- High minimum loan amount
- Good credit likely required
Best for Small Loans: LendingClub
LendingClub
- Loan Amounts$1,000 – $40,000
- Loan Terms24 – 60 months
- APR Range9.57% – 35.99%
- Minimum
Credit Score600 or aboveA 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 in the fair credit range who need a small loan can appreciate LendingClub's quick funding and option for direct payments to creditors with debt consolidation loans.
Overview
LendingClub can be a good fit for those looking to consolidate high-interest debt, as they offer the ability to pay your creditors directly from your loan. You can also use LendingClub loans for almost any purpose, from home improvements to medical bills. Eligible borrowers who need some assistance qualifying can apply for a joint loan, and borrowers can expect to receive funding as soon as 24 hours after approval. However, APRs do start at relatively higher rates than some competitors.
Read the reviewPros
- Low minimum loan amount
- Fast funding for personal loans (receive funds as little as 24 hours after approval)
- Joint loans allowed
- Direct payment to creditors
- Check rates without a hard credit inquiry
Cons
- Has origination fees
- No physical branches
- Lower maximum loan amount than some lenders
Best for Fast Funding: Avant
Avant
- Loan Amounts$2,000 – $35,000
- Loan Terms12 – 60 months
- APR Range9.95% – 35.99%
- Minimum
Credit Score580 or aboveA 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.
Avant offers small personal loans that are accessible to borrowers with fair credit, with funding available as soon as the next day.
Overview
Avant is known for its personal loans that can be used for a wide range of purposes and are accessible for those with fair credit. Funding can be completed as soon as the next business day once approved. The minimum APRs tend to be higher than competitors, but the maximum APR is comparable to other online lenders. A unique feature offered by Avant is their flexible payment due date, which allows a 10-day grace period without incurring a late fee.
Pros
- Loan terms up to 60 months
- Low minimum credit score requirement
- Flexible payment due date
- Next day funding available
Cons
- No physical locations
- Origination fee of up to 4.75%
- Relatively low maximum loan amount ($35,000)
- High minimum APR
- No joint applicant or co-signer
What Can You Use a Vacation Loan for
Whether you want to spend quality family time or use those saved-up vacation days, vacation loans can help finance your next trip.
You can use vacation loans for a variety of expenses, including:
- Airfare
- Lodging and hotels
- Cruises
- Meals
- Recreational expenses such as tours, entertainment and outdoor activities
- Vacation packages
- Day-to-day costs
- Honeymoons
- Emergency trips
- Destination weddings
Applying for a loan can be a relatively fast and easy process, making it an attractive choice to quickly get the funds you need. Some loans can be sent straight to your bank account in as little as 24 hours after approval, which comes in handy for last-minute urgent trips.
Related Article
14 Ways You Can Use a Personal Loan
Pros and Cons of a Vacation Loan
A personal loan for vacation and travel comes with a lot of benefits, but it can have drawbacks too. Consider the pros and cons before you decide on the right option for you.
Pros
- Lower interest rates than credit cards
- Fixed rate on monthly payments
- Lump sum funding
- Flexible spending
- Fast approval
Cons
- Have to pay interest
- Decreases credit score if you can't make payments
- May have additional fees
Pros of a Vacation Loan
Lower Interest Rates
Compared to credit cards, a vacation loan typically has lower interest rates. The interest rate will vary depending on the borrower's creditworthiness, so if you have good credit, you'll likely qualify for a low interest rate.
Those with bad credit may struggle to get a low rate or even be approved at all, but there are options available. You could bring on a co-signer or co-borrower with excellent credit or opt for a secured personal loan to be eligible for a competitive rate.
Fixed Rate on Monthly Payments
Most personal loans are offered at a fixed rate, which means you’ll have predictable monthly payments. You don’t have to worry about any fluctuations in the interest rate of your vacation loan, and this predictable repayment scheme could help you plan your budget accordingly.
Lump Sum Funding
Another benefit to personal loans is that borrowers typically receive the loan amount in one lump sum that goes straight into their bank account. This way, you have all the funds up front to spend as you see fit.
Flexible Spending
A personal loan for vacation and travel expenses can be used for almost anything. From booking flights and hotels to dining out, borrowers are free to spend their loan as they wish, as long as it is not for prohibited uses such as gambling or illegal activities.
Fast Approval
Personal loans typically have quick approvals for borrowers with a strong credit history. Some lenders may even transfer the funds within the next business day after approval. For emergencies, some lenders offer same-day funding as well.
Related Article
How to Prequalify for a Personal Loan, and Why It Can Be a Good Idea
Cons of a Vacation Loan
Have to Pay Interest
One downside of any personal loan is that you have to repay not only the principal (the amount you originally borrowed), but you have to pay interest charges each month, too. Before you sign on the dotted line for any loan, be sure you've calculated the overall expense of taking the loan to make sure those interest charges are worth it.
Decreases Credit Score if You Can't Make Payments
If you can pay your monthly loan bill on time and in full each month, you'll probably get a boost to your credit score. But keep in mind that if you miss payments, your credit score will take a hit. Get a sense of what you can afford each month before you take out a loan so the debt won't hurt your credit.
May Have Additional Fees
Some loans have no fees attached to them—you just pay back the amount you borrow, plus interest, and that's that. But some lenders charge extra fees, often called origination fees. These are administrative and processing fees the lender charges to manage your loan. Check the fine print on any loan you're considering to find out if you'll be charged origination fees, as these typically come out of the total amount you're borrowing.
What to Look for in a Vacation Loan
Before applying for a vacation loan, there are a number of important factors to consider.
- Prequalify with multiple lenders: During the prequalification process, you'll receive estimated rates, repayment terms, and loan amounts without it affecting your credit score. This helps you compare rates across lenders and find the best deal for you.
- Loan amount: Calculate your estimated expenses and how much you need to borrow. Some lenders offer small loans while others offer up to $100,000 (but most people won't need that much and don't qualify for it). Know how much you need and pick a lender that can offer you that amount.
- Repayment period: The repayment period refers to the number of months or years you will repay the loan in full, including interest charges. Repayment periods vary by lender, but most lenders offer periods ranging from two to five years.
- Interest rate: The interest rate is essentially what the loan will cost you. The better your credit score, the lower your interest rate. It's a good idea to shop around for lenders that can give you the lowest rate.
- Fees and penalties: Personal loans can come with various fees, such as an origination fee to process the loan, prepayment penalty for paying off the loan early, as well as late fees and other penalties. Read the fine print so you understand the full cost of the loan up front.
Alternatives to Vacation Loans
A vacation loan may not be the right choice for everyone. There are alternative financing options that may be a better fit for your situation.
Save Money for Your Trip
If you have a planned vacation that is still many months away, the most common way to pay for it is through savings. Using your own savings means you won't have to worry about paying interest or other fees that come with a vacation loan.
Start by estimating how much money you need for your next trip. Then, divide the estimated expenses by the number of remaining months before your planned trip.
Say your vacation costs $1,500 and there are eight months left before you travel. In this case, you need to save $187.5 each month to finance your trip. The key is to plan early so you can still get a good deal on your flights while having enough time to build your savings. A high-yield savings account can help you earn money interest.
Recommended High-Yield Savings Accounts
| Bank Account | APY | Features | Learn More |
|---|---|---|---|
|
|
5.25%
UFB Direct breaks balances into five tiers, but, currently, there is only one interest rate. |
No minimum deposit |
Open Account |
|
|
0.50% - 4.60%
Customers earn 4.60% APY on savings balances when they set up recurring monthly direct deposit of their paycheck or benefits provider via ACH deposit. Alternatively, deposit at least $5,000 each month to earn 4.60% APY on your savings balance. Checking balances earn 0.50% APY |
No minimum deposit |
Open Account |
|
|
5.05%
Earn 5.05% APY on balances over $5,000. Balances of less than $5,000 earn 0.25% APY. Annual Percentage Yield is accurate as of July 27, 2023. Interest rates for the Platinum Savings account are variable and subject to change at any time without notice. |
$100 minimum deposit |
Open Account |
|
|
4.65%
Annual Percentage Yield is accurate as of July 27, 2023. Interest rates for the Savings Connect account are variable and subject to change at any time without notice. |
$100 minimum deposit |
Open Account |
Get a 0% Intro APR Credit Card
Some credit cards come with a 0% intro APR promotion, where cardholders can take advantage of no interest on purchases during the offer period. This is essentially an interest-free loan—as long as you pay off the balance within the promotional time frame. Cards with 0% intro APR promotions usually range from 12 to 21 months.
Fly Now, Pay Later
Many airlines now offer Buy Now Pay Later options, including Fly Now Pay Later, when you book your flights. Fly Now Pay Later is a service that allows you to book all of your travel, including hotels, airfare and vacation packages, and pay for the expenses through monthly installments. You'll need to pay interest, but you can essentially spread the cost of your vacation over time.
When Is a Vacation Loan a Good Idea?
While more affordable alternatives could help cover your travel expenses, a vacation loan is a viable option for several scenarios, including these:
- Urgent trips: Unexpected travels can arise, such as attending to a sick family member or going on an emergency trip. A vacation loan can give you quick funds for these trips if you don't have the money up front.
- Once-in-a-lifetime trips: A vacation loan is also convenient for once-in-a-lifetime trips such as your dream vacation or an out-of-state concert of your favorite artist.
- If you qualify for low rates: If you have strong credit and can qualify for a low interest rate, a vacation loan may be a good fit, provided you can afford to make the monthly payments.
The next time you plan your vacation, consider all of your options first. A vacation loan can make sense in some scenarios, such as an urgent trip or once-in-a-lifetime vacation, but make sure you understand the full cost of your loan before making the decision.
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FAQs
-
You can use a vacation loan for pretty much anything, other than illegal activities and college tuition. People often use vacation loans for:
- Airfare
- Lodging
- Cruises
- Meals
- Tours and excursions
- Vacation packages
- Day-to-day costs
- Honeymoons
- Emergency trips
- Destination weddings
-
Saving up for a trip is the main alternative to getting a vacation loan. If you have the time and resources, you can calculate how much you'll need and set up a savings plan to stash away the funds in advance.
Another option is to get a credit card with a 0% APR introductory offer. These cards give you a long period, often 12-21 months to pay off your bill without getting hit with interest charges. This could be a great option if you can pay off the full amount before the intro period ends, otherwise you'll face steep interest costs.
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Here are the basic steps to getting a vacation loan:
- Figure out how much you need to borrow
- Check your credit score so you have an idea of your qualifications
- Shop around with lenders and get prequalified with a few you prefer
- Compare the offers and consider the loan amount, interest and fees
- Read the fine print and be sure you understand all the details
- Choose the lender you like and start the formal application process
Once you're approved, you'll receive your funds, typically within a few days. Then you'll be ready for your trip. Just be sure to keep your payment plan in mind and be ready to pay down the loan when the monthly bills are due.
Slickdeals Money Staff
The Slickdeals Money editorial team is dedicated to helping readers navigate the personal finance space. We’re passionate about educating our readers on the very best financial tools & products on the market today.
