We all have our own personal travel goals, both short-term and long-term.
Unfortunately, not everyone has the funds for it. After all, traveling is so hard to save for. We all saw it in the Disney movie, Up. All they ever wanted was to go to Paradise Falls, and they did their best to save for the journey. However, there’s always an emergency that comes up, forcing them to use it.
If only there was a way for them to get the money they needed instead of relying on their savings…
What Is a Travel Loan?
That’s what a travel or holiday loan is. It’s a type of unsecured personal loan that financial institutions provide specifically for travel or celebration.
We understand, however, how most people are wary of borrowing money for travel. After all, it’s categorized under “bad debt”. Good debt is borrowing money as an investment or in order to start a business. You know that there’s an opportunity to grow the money you get and that eventually, your investment will be more than enough to pay for the loan itself and even let you earn on top of it, such as when you’re taking out a car loan with the intention of using it to start a ride-sharing business.
Bad debt, on the other hand, is borrowing money that will not grow in value, such as when you’re swiping your credit card for groceries. But travel and groceries are two very different things.
Who can put a price on the memories you’ll be experiencing? Who’s to say that it’s not going to be worth it? That it won’t be an investment that will increase in value through time?
Travel Loans and Credit Scores
If you do decide on applying for a travel loan, payday loans for any credit score really, that you can apply for online. Your chances of getting approved do improve the better score you have but that doesn’t mean having a bad credit disqualifies you from getting a personal loan approved.
Credit history is just one piece of the puzzle, but online lenders also need the final pieces to make a decision, such as:
- Proof of steady income. Lenders need to be sure that you can pay the loan back.
- Amount of the loan. Applying for a lower amount can enlarge your odds for approval; however, you don’t want to go too small and end up with expenses uncovered. It is crucial that you calculate the cost of your trip well.
- A guarantor with good credit. If you miss paying for the loan but there is someone with excellent credit that “guarantees” to have your back, chances of getting the loan approved will quite increase.
How to Compare and Choose the Best Option
There are also travel credit cards that you can apply for that allow you to earn travel-related points, free miles, or cashback rewards; however, we recommend that you look for a low-interest credit card due to its low-interest rates.
Apart from the different loan options that we have mentioned above, here are the other things that you should consider before applying for any type of travel loan:
You should draft a budget, in order to get an idea of how much money you will need to borrow and gauge whether you can actually pay it back later on.
The main reason for taking this trip in the first place is because you know that it’s going to help increase your life quality and not the opposite. Hence, it’s better to have a repayment strategy in place before you even apply for your loan and hop on that train.
Where are you going? What do you plan to do when you arrive? What are your absolute priorities? When are you going? These are all important, not only to help you determine the amount that you need, but also to plan when you’re going to apply for the loan itself. You don’t want to apply too soon in fear of spending the money beforehand. You also don’t want to wait until the last minute, which might end up affecting your plans.
Finally, here’s a question that we usually get from our readers: is getting a travel loan worth it? The answer is both yes and no. If this trip really means a lot to you, just like what Paradise Falls meant to Carl and Ellie from Up, or your dream is to travel to Paris, and you have a solid repayment plan, then yes, it’s going to be really worth it. However, if you’re just going on a trip to have more interesting pictures on social media, or because you’re being pressured to do so whether directly or indirectly, and you know that you’ll probably be spending the next five years of your life paying for it, then no it’s not. In the end, it’s up to you to decide.
Have a safe trip!