We all want to go on a nice summer break, but when you can’t afford it, it’s time to look into holiday loans. That might just be your ideal solution so that you can go on your summer adventure and not worry about finances. But as well as advantages, every financing option also has disadvantages. Is this kind of loan right for you, or are you better off searching for alternatives? Keep reading to find out.
What Are Holiday Loans?
There are several things you can do to raise the necessary amount, but the quickest and easiest way to go on vacation when you can ill afford it is to get holiday credit. It's an unsecured loan that you are offered with the purpose of travelling to a location of your choice. The amount borrowed, as well as the repayment period, are determined based on your financial history.
How Do Holiday Loans Work?
Just like any other type of financing, you need to apply. These days, applications are almost entirely made online, so you can just take a few minutes and fill out a form, regardless of your location. Based on the information provided, you will be rejected or accepted. If it's the latter, you may be asked to provide further documentation in order to finalise the application process.
What you need to know is that your credit score will massively impact your chances of getting a loan, as well as the amount, and interest rate. If you have a good score, you don't need to worry much about being accepted, but if your financial history isn't stellar, then you can expect to pay a fair amount of interest, and for the amount you can borrow to be limited.
Once everything is in place, and you've agreed on an amount, instalment sum, and repayment period, you will get the money. Then, you will regularly repay in fixed sums until you've paid back the whole amount, including interest.
How Can I Use Holiday Loans?
No one can tell you how to use travel loans, so there is a fair amount of flexibility you enjoy. You can go home for Christmas or on a winter vacation, go on an extended adventure for your gap year, travel the world, or go on your dream summer vacation. Most often, these loans are used for sunny beachside vacations to get away from the wet and cold English summer weather.
What Is The Biggest Challenge With Holiday Loans?
Because this type of loan is so reliant on credit score, a bad one can severely limit your chances. Lots of people have poor ratings, and that can make it difficult to get accepted for a loan of any kind. But there are things you can do to improve your rating if you're looking to get a better deal. Alternatively, you may want to look into getting holiday loans with no credit check.
Are There Any Good Alternatives To Holiday Loans?
If your credit is not in great shape, or the idea of a loan for a holiday doesn’t strike your fancy, you might be asking yourself “What are the alternatives to holiday loans?”. There are certainly other options to choose from that will fit your needs better
A fairly common option is to put your vacation on your credit card. But while it seems easy and straight-forward, there are advantages and disadvantages to this choice. If you have a 0% interest card, this might be a convenient solution. However, you have to repay what you borrowed within the grace period. Otherwise, you pay a higher interest rate. In addition, some travel companies will charge you extra for making card payments.
If you’re fortunate enough to have an asset you can use to secure your loan, you can put it up as collateral for a secured loan. While this allows you to borrow more money than with an unsecured loan, and the interest rate is lower, you have to be mindful of the fact that you risk losing your asset if you fail to repay the loan.
If your score is not excellent, but your friend’s is, then you might consider asking them to co-sign the loan with you and act as your guarantor. That means that if you can’t repay the loan, they have to do it for you, as they are legally liable. The advantage of this is that it’s quick and easy. The downside, however, is that it can be hard to find willing participants.
A good old personal loan will do in a pinch, but it’s not much different in terms of rates and repayment terms. It’s based on your financial history, just like holiday finance, and it is generally offered in the same conditions. A loan for travel, however, is tailored to your needs for travel, so it might be worth going for it, instead.
How Can I Get The Best Holiday Loan For Summer 2018?
There are numerous loans on offer, so how can you make sure that you get the best one available for your vacation next summer? Here are some things you can do to ensure that you score the best deal.
Improve your credit score
If you want the best deal, then you need the best credit. Pay off your debt, keep on top of your bill payments, and limit those credit cards! You’ll be grateful later, when you can enjoy a lower interest rate on your loan.
Browse lenders and offers
Finding the best source of money for holidays takes time and effort, so be prepared to browse every lending company in town and every offer available online. Do not settle for the first option offered to you. Compare and contrast offers for the most convenient one.
Check the lender
Unfortunately, lending money is a lucrative scam, so make sure the deal you are being offered is not too good to be true. Check that your lender is properly registered with the Financial Conduct Authority (FCA).
In conclusion, it is possible to find the best loan for a holiday available; you just have to be thoroughly informed about holiday loans and put in the time and effort to search for one according to your financial circumstances and affordability.