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Alternatives to Holiday Loans in 2018

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Alternatives to Holiday Loans in 2018
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42.50% APR Representative

Holiday loans can be an excellent solution if you’re itching to go on holiday, but don’t have the money, but what if they don’t work for everyone? Is it possible to travel on little to no money? The answer is yes, and there are several alternatives to consider, if you’re still interested in holiday finance for your travels. You just need to expand your horizons a bit, read up on alternative choices, and see which option is the best to cover your future travel adventure.

Secured Loans As An Alternative To Holiday Loans

How do they work?

Secured loans are, like you may guess from the name, loans that are secured. That is done with the help of an asset of significant value, like a house. The asset needs to have a value equal or higher than the loan you need to get, in order to qualify as collateral. Secured loans can be taken out on big purchases, like houses or cars, or they can be taken out for other purposes and secured with an asset you already own.

What are the advantages?

As far as benefits go, a secured loan will have a lower interest rate, because it doesn't pose as much of a risk to the lender as an unsecured one does. Plus, you can get more money, and it usually comes with a longer repayment term. That means it can be more affordable and manageable. In addition, it also helps improve your credit score, as long as you make the payments on time.

Any drawbacks?

The biggest disadvantage is the fact that you risk losing your asset if you cannot repay the loan, which might not be worth it, especially for a holiday. But it is also limiting in terms of range of borrowers, because in order to get a loan, you need to own a valuable asset.

Personal Loans As An Alternative To Holiday Loans

How do they work?

Personal loans are unsecured loans that are pretty straight-forward. They are very similar to holiday loans, as you apply in the same way and they are largely based on your credit score. A good score can get you a nice amount of money with a manageable interest rate, while a bad one can severely limit you. Like most other loans, it is repaid in fixed instalments.

What are the advantages?

An advantage with personal loans is that anyone can get one, even if they do not have collateral. Whether you do not own assets, or you do not want to risk losing them, you can get a loan without them. What is more, if you have a poor credit rating, you can get bad credit loans, much like travel loans for bad credit.

Any drawbacks?

This is entirely reliant on you maintaining an excellent rating, and depending on your credit, you will be offered less money with this option. You also need to be aware of the fact the amount of interest you need to pay is going to be high, because this is an unsecured loan.

Guarantor Loans As An Alternative To Holiday Loans

How do they work?

A guarantor loan is an unsecured loan where a second person co-signs with the borrower in order to offer the lender security. Should the borrower become unable to repay and defaults on the loan, the guarantor then becomes liable for assuming financial responsibility. In simple terms, the guarantor needs to pay for the loan if the borrower cannot.

What are the advantages?

The main benefit is that you can get a loan even if your score isn’t great. It can be a reasonably quick and easy solution, as long as you have someone who is in a good position, financially, and who is willing to co-sign with you. The amounts offered are also higher than say, a payday loan. Citizen Advice has the available statistics for multiple lenders and how much they offer.

Any drawbacks?

Of course, the drawback is that it can be tricky to find someone who is willing to act as your guarantor. Even if you’ve never had issues before, you never know what can happen, and this is a big financial responsibility to assume for someone else. In addition, entangling finances with family or friends can make this more complicated.

Credit Cards As An Alternative To Holiday Loans

How do they work?

A fairly popular option is to just put the charge of your vacation on your credit card. It's like any other expense you make on a card, and it goes on your usual balance than you can then pay off as you normally would.

What are the advantages?

The biggest advantage here is the convenience this option offers. It's quick and easy, and you can just put everything on your card and then pay it all off in the same place, as opposed to having several loans, etc. In addition, a 0% interest card can make this an affordable option, as well.

Any drawbacks?

You have to be mindful of the fact that some retailers, hotels, airlines, etc. charge extra when you pay by credit card, so it might end up costing you more. In addition, if you don’t manage to pay the balance off before the 0% grace period expires, you may very well pay a higher interest rate than you would on a holiday loan, for example.

As you can see, there are numerous alternatives to pick from, so even if holiday loans are not for you, there are still travel loans options for you out there. “How can I get the best holiday loan for summer 2018?”, you may be asking yourself. Just browse the options presented here and compare and contrast advantages and disadvantages. While not every offer will be suitable for your needs, you are bound to find something appropriate that will cover your financing needs.

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