Holiday loans are a popular choice for a lot of people, but if you’re still not convinced that they are for you, and you are thinking about just throwing in the towel, don’t!
Why not stick around, and found out what some of the best alternatives are to holiday loans?
I know this might seem like an obvious one but taking the necessary steps to becoming more financially responsible and saving up means you can avoid having to take out a loan in general. Although it may involve you having to make some sacrifices, it is the most practical and efficient way to go on holiday.
So, start saving up now, and avoid putting yourself or your assets at risk.
If your piggy bank isn’t getting any heavier, secured loans could be a great alternative for you.
This type of financing is secured against one of your assets, such as your home. Since the lender is protected, they offer low interest rates.
Because the loan is protected by such a high value asset, you are able to borrow larger sums of money. As well as this, they are more affordable because you are usually given a longer repayment period!
The biggest drawback, however, is that you are putting your asset at risk. If you fail to repay the loan, they are within their rights to repossess it if they feel necessary.
Payday loans are quick loans that tend to be popular amongst those who need some extra cash to keep their head above water until their next pay day.
However, they have now progressed into loans that you can spread over several months.
Whilst this may seem like the perfect option, you have to take into consideration that the interest rate will be relatively high. Because there is lack of security with this type of loan, the lender has to ensure that they are protected by keeping their interest rates high.
Payday loans are great if you are looking for a quick fix. For example, if you need a little extra cash to fix that flat tyre or leaky shower in a hurry, they would be the perfect option. However, because they were not designed to be repaid over several months, you may end up paying a considerably high interest fee.
Personal loans are fairly similar to holiday loans, in terms of the rates they offer and the repayment terms. They are also largely based on your credit rating, likewise to holiday loans.
Because personal loans are dependent on your financial history, you can expect to receive less money and a higher interest fee if you have poor credit.
In terms of holiday finance options, they are not as popular as holiday loans. This is because personal loans are not designed to meet your holiday financing needs, whereas holiday finance is tailored for that very purpose.
Despite of this, they do have some advantages…
Because you are not required to secure the loan with an asset, they are accessible to most people and are usually easier to get your hands on, compared to other loans.
Guarantor loans are a type of unsecured loan that enables a second party to co-sign the loan agreement. In signing the agreement, the guarantor consents to assuming all financial responsibility if the borrower is unable to repay the loan.
The main reason people apply for guarantor loans is because they are easily available for those with a bad credit rating. They are also relatively quick if you are able to find a guarantor who is in a favourable financial position, willing to accept responsibility.
Sounds too good to be true?
Well, the main issue with guarantor loans is that it can be quite difficult finding a guarantor. Bearing in mind that this is an extremely vulnerable position to put someone in.
Better get started on practising those persuasive pitching skills!
Credit cards are a practical and convenient way to go on holiday, as all your expenses can be kept in one place. They are similar to holiday loans as they are both different forms of borrowing credit, which you are expected to repay, with interest.
Credit cards are great if you are able to get your hands on a good 0% interest credit card. Even though this feature allows the 0% interest for an initial period of only a few months to a year, it could very well be your most affordable option if you manage to pay the money back within that time period.
However, just as loans have their advantages, they don’t come without their drawbacks…
As mentioned previously, holiday loans and credit cards both charge interest. While the interest rate is a worry for both financing approaches, credit cards do tend to charge a higher APR than holiday finance.
Now that you have digested all of this new information, you have no need to eenie menie minie mo all of your options!
Simply choose the holiday finance option that stuck out most to you and apply now to move one step closer to booking your dream holiday!