What Is A Holiday Loan?
Holiday loans, as the name would suggest, are essentially unsecured loans that you can receive for travel and holidays. Although it may not be the most popular choice, it can be used for a variety of different situations, so you should not overlook this option if you are planning an expensive trip that is difficult to cover.
Who Can Get A Holiday Loan?
As long as you meet the following requirements, you can benefit from this kind of financing:
- Have a good credit rating
- Be over 18 years of age
- Have a UK bank account
However, if your credit rating isn’t as good as it could be, there are other avenues that you can pursue, as we will discuss a little later.
How Do Holiday Loans Work?
This type of holiday finance works just like any other unsecured loan – you do not need to have collateral in order to get it.
However, the amount you can receive, as well as the interest rate, is dependent on your credit rating. The amounts and lending periods vary, but they usually sit at around £100 to £5,000 with a possible repayment term of 1 – 60 months.
Applying is simple and straight-forward. Simply follow the step by step instructions below:
1. Apply Online
You can apply for holiday loans online by just filling in a form with all the relevant details.
2. Wait For Approval
Your application will then be reviewed. The lender will let you know very quickly whether or not you have been accepted, based on your credit score.
Caution: Make sure you check that the lender you are thinking of using is reputable before you apply. You can check this by visiting FCA’s (Financial Conduct Authority) website here. Search their register for your preferred lender to see if they are authorised.
3. Agree On An Amount
Depending on how good your rating is, you can get a bigger or smaller sum of money, with an interest rate that is more or less advantageous. Naturally, the better your score is, the more money you can apply to borrow and the less you have to pay in interest.
The lender will also advise you on any additional documents which you may need to provide to verify the information in your application.
After you agree on an amount, you will receive the money and pay it back in flexible monthly instalments over a period that is agreed upfront with the lender. You are required to repay the entire amount borrowed, including interest.
What Can You Use Holiday Finance For?
This type of finance can be used for any kind of travel you like, regardless of season. It is completely up to you how you decide to use travel loans, so there is a fair amount of flexibility you can enjoy.
Think about it…
You could finally have the opportunity to go home for Christmas, go on an extended adventure or gap year, take the plunge and travel the world, or go on your dream summer vacation!
Christmas Holiday Loans
Driving home for Christmas may be the name of the song, but it’s unpleasant to do in real life, especially if your home is hours away.
Plane tickets are expensive at this time of year, so a holiday loan could be the ideal solution. You can get where you need to be quicker, easier, and more affordably.
Why Choose Us: We specialise in finding exclusive, low-interest rates on quick, same day, unsecured holiday loans for UK residents. Our aim is to get you the best holiday loan at the lowest rate.
Summer Holiday Loans
What better time to go away than during the summer?
Nobody wants to be the one stuck back at home in the miserable UK weather while all their friends are sipping cocktails on the beach in various tropical locations.
A holiday loan can change that and help finance the summer getaway you need in order to relax and recharge your batteries.
Gap Year Loans
After more than a decade of school, a gap year sounds like heaven, right?
However, it also sounds expensive, and if you haven’t saved up, it can be tricky to make the most of it. Taking out a gap year loan to travel is a great solution to your problem; you can fund your gap year adventures and pay your holiday loan back in affordable instalments.
Did You Know: According to the Office for National Statistics, UK residents made 70.8 million overseas visits in 2016, 8% more than the previous year. These trips cost them a whopping £43.8 billion, a whole 12% more than in the previous year. With numbers like that, it’s no wonder we need some help in the finance department when it comes to travelling.
Pros And Cons Of Holiday Loans
It all sounds great so far, but are you still unsure about whether to opt for a holiday loan?
Holiday loans might just be your ideal solution. But as well as advantages, every financing option also has it’s drawbacks.
So let’s look at things objectively, to help you decide if a holiday loan is the best option for you:
What Are The Benefits Of Holiday Loans?
Probably the most obvious advantage of a holiday loan is that it eliminates the need to tirelessly save. We all need a holiday from time to time, but without financial backing, our options are limited.
This is where holiday finance comes in. Holiday loans make travel possible in a relatively low-effort way. All you have to do is apply online, and you might be able to score the money for your dream winter getaway or a much-need summer adventure with your best mates.
You Can Repay The Loan In Affordable Instalments
This holiday financing option enables you to repay the loan back in instalments, that are affordable to you and in amounts that are pre-determined. Depending on the amount you borrow, yourself and the lender will agree on fixed instalments, as well as a repayment period.
What does this mean for you?
This way you know exactly what to expect every month and what you need to fit into your budget, making it less stressful and easier to repay.
The Loan Offers Flexibility
Holiday loans can be used for any kind of travel you want. In other words, the lender cannot dictate or limit you to a set package, destination, season, etc.
Use your loan to take a dreamy Christmas trip to ski in the Swiss Alps, run away to Paris for a romantic spring weekend with your significant other, or take the summer holiday you’ve always wanted in the Caribbean.
Nothing is off-limits, as long as you get the trip you want!
It Is Unsecured
The fact that the holiday loan is unsecured means that you do not need to put an asset up as collateral. Therefore, you won’t have to risk losing something of high value to you, such as your home.
You Can Choose The Time-frame And Instalment Size
The flexibility of holiday loans is also a massive draw for customers. You can choose how much you want to borrow, for how long, and how much you can afford to repay every month.
For example, you may prefer lower instalments. In this case, your loan will be longer, and the amount of interest will be higher. You may even be interested in minimising interest costs and getting rid of the loan quicker. If so, you can choose larger repayments. It is completely up to you!
Why Choose Us: We are a broker, not a lender. In simpler terms, this means that we can search up to 80 different lenders to find you the best deal for your holiday loan.
What Are The Drawbacks Of Holiday Loans?
You Need A Good Credit Score
because approval for this type of loan is predominantly reliant on your credit score, holiday loans for bad credit are quite limited. It completely depends on whether or not you pass the lending company’s criteria.
Why is a good credit score so important, you ask?
If you have a poor credit rating, then you pose a higher risk for the lending company. As a result, the amount you are able to borrow will be limited, and your interest rate will be high. In simpler terms, you may end up repaying much more than you originally borrowed, making this a very expensive holiday option.
Expert Advice: There are things you can do to improve your overall credit rating if you’re looking to get a better deal. These include: paying your bills on time, reducing credit cards, and paying off outstanding debt. If you would like to find out your credit score, click here.
You Will Incur A High Interest With Bad Credit
As previously mentioned, it is important to note that bad credit is going to attract a high interest rate, which makes the holiday loan more expensive.
It is also important to remember that this is an unsecured loan, which means that you do not have to put an asset up as collateral in order to receive holiday finance.
This means that you are not providing any kind of tangible security for the lending company, which results in a higher interest rate. The interest rate makes up for the lack of security and will allow the lender to recoup some of their losses, should you default on the loan.
Top Tip: Keep in mind the fact that different lenders will offer different terms for their holiday loans, so it’s good to browse and keep your options open to ensure you find the best deal.
It is clear that holiday loans could be a popular choice for a lot of people, with so many benefits to enjoy. So, if you’re looking to book your next holiday, and the advantages outweigh the disadvantages, then go ahead and apply today!
Why Choose Us: Our online applications are safe and secure. We use 256 bit encryption so your details remain 100% confidential, and we’ll never pass on your details to third parties without your permission.
How To Get The Best Holiday Loan
There are numerous loans on offer, so how can you make sure that you get the best one available for your holiday next summer?
Well, there are a few things you should prioritise when applying for holiday finance.
If you are searching for ways to score the very best deals, then be sure to follow our top tips:
1. Improve Your Credit Score
As mentioned, your credit score is the most important aspect of your application. It is the factor that decides the following:
- Whether or not you are accepted
- How much money you can apply to borrow
- How high your interest rate will be
Holiday loans for bad credit are limited. So if your rating is less than stellar, there are things you can do to pull your credit up and help it along:
Pay Off Previous Debts
The first step is to pay off all previous loans or debt you may have incurred. Overdue debt pulls your credit score down, but you can improve it if you pay it off.
Pay Off Your Credit Card Balance
The same goes for the balance on your card – making the minimum repayments doesn’t help. Instead, pay off the whole thing, every single time.
Pay Your Bills On Time
Paying your bills on time can do wonders for your rating. Just make sure to stay on top of all payments, and you will see your credit score go up.
Top Tip: You can set up direct debits to make sure you don’t miss payments and increase your credit score at the same time!
2. Browse Lenders And Offers
Finding the best holiday loans online takes time and effort, so be prepared to browse every lending company in town and every holiday finance option online.
Just make sure that you do not settle for the first option offered to you. Compare and contrast your options for the most convenient one.
3. Check The Lender
Unfortunately, lending money is a lucrative scam, so make sure the deal you are being offered is legitimate. Check that your lender is properly registered with the Financial Conduct Authority.
What Are The Alternatives To Credit Check Holiday Loans?
If relying on your credit rating is not an option for you, or the idea of a holiday loan doesn’t strike your fancy, you don’t have to give up!
There are plenty of alternatives for you to consider if you want to get holiday finance.
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.
You can side-step the whole issue of owing money to anyone by forgoing borrowing, and just choosing to save!
It’s true that it’s difficult, and that it may take a while, but it’s the most affordable way to do it. You do not take any risks and won’t lose anything.
Pay Monthly Holidays
A pay monthly holiday is a financing option that is utilised by those who are looking for a more convenient and affordable way to pay for expenses that accompany travel and holidays. Seeing as it gives customers the permission to book a holiday today, and pay for it at a later date, it comes across as a fairly appealing option.
There are also pay-monthly holidays that are available to individuals with bad credit. More than less, this means that anyone can benefit from this lending option without having to worry about being rejected or limited by their poor credit history.
If you’re not proud of your credit score, then perhaps you may want to opt for a variant that does not require it.
A secured loan could be a good bet. It is secured, like the name says, with an asset you put up as collateral. However, while this option allows for a higher borrowing limit and a lower interest rate, it also puts you at risk of losing your asset in case of non-payment.
Caution: Statistics compiled by The Money Charity indicate that 21 properties were repossessed every day in Q3 of 2017 due to the failure of the repayment of loans.
Technically, a payday loan is a lending option which needs to be repaid by pay-day, but it has recently evolved into a loan that can be repaid in instalments over several months.
A payday loan is a convenient option for those who can afford to repay the money quickly, or if you have bad credit.
Whilst it may be a tempting option for those who need money relatively quickly, you can expect the interest rate to be quite high. This is due to the lack of security, particularly if you have bad credit.
A good old personal loan will do in a pinch, but it’s not much different to holiday loans in terms of rates and repayment terms. It’s based on your financial history, just like holiday loans, and it is generally offered in the same conditions.
The only difference is that they are not tailored to your needs to travel, much like a holiday loan is.
If you don’t own property, or don’t want to put it up as collateral, then you may want to consider a guarantor loan. This kind of loan requires someone else to sign with you and assume financial responsibility, should you default on the loan.
The only problem with this is that it is difficult to find someone willing to take on the financial responsibility, because it’s a risky position to be in. If you are unable to repay the loan, your guarantor is legally liable to cover that expense for you.
If you are interested in knowing more about this financing option, Citizens Advice has the available statistics for multiple lenders and how much they offer for guarantor loans.
Caution: It is true – if you are unable to repay your loan, your guarantor will have to take financial responsibility for you. Bear in mind that this is a risky position to put someone in, so make sure your guarantor trusts you completely.
A fairly common option is to put your holiday on a credit card. You’re not spending any tangible money, so you’re still technically going on holiday with no money. It works the same way any other expense on your card would, so you’ll still have to pay off the balance.
And while it seems easy and straight-forward, there are advantages and disadvantages to this choice:
What Are The Advantages Of A Credit Card?
It Is Quick And Easy
The biggest advantage here is the convenience it offers, as it is quick and easy. You can just put everything on your card and then you’re holiday ready!
You Can Get A 0% Credit Card
A very interesting possibility is getting a 0% credit card, which is essentially, a card that charges no interest.
However, this feature is only available for an initial period of a few months to a year. If you manage to pay the money back within that time frame, or at least most of it, this may be your most affordable option for holiday financing.
You Don’t Need To Take Out A Separate Loan
No one likes to go into debt, especially in several places at the same time. It can affect your credit score, as well as make it difficult to manage your finances in an efficient way.
Instead, putting your holiday on your card means you only need to repay money from one source, alternatively to several different ones.
What Are The Disadvantages Of A Credit Card?
You May Be Charged Hidden Costs
While putting the holiday expense on your credit card is convenient, you should be mindful of possible fees you may incur as a result of your card use.
You have to be careful, because a fee will be charged if you do not repay your monthly fee in time. You are also at risk of paying a penalty if you exceed your credit limit.
Caution: If you don’t manage to pay the balance off your credit card before the 0% grace period expires, you may very well pay a higher interest rate than you would on a holiday loan.
As you can see, there are numerous alternatives to pick from. So, even if holiday loans are not for you, there are still other holiday finance options for you out there.
Just browse the options presented here and compare and contrast advantages and disadvantages. While not every option will be suitable for your needs, you are bound to find something appropriate that will cover your holiday financing needs.
I’m struggling with debt – what should I do?
If you’re struggling with debt, then you should not take a loan out to cover any long-standing debt. This can cause further financial problems and it is always advised to never borrow more than you can actually afford.
If you are struggling from debt there are organisations that can provide advice to you for free. These websites include:
Still have unanswered questions? Find all the answers to the most frequently asked questions regarding holiday loans below.
How Much Can I Borrow?
The amount you can get is dependent on your credit rating. However, they usually sit around £100 to £5,000.
Is The Application Process Entirely Done Online?
Yes, all you have to do is fill in a few details online to apply for your holiday loan and receive an instant online decision. In other cases, however, you may be asked to provide additional documentation before your application can be approved.
How Do I Make Repayments On The Loan Taken Out?
Lenders usually use CPAs (continuous payment authority) set up via the debit card you registered with to collect the monthly repayments. If you prefer, you can pay manually by contacting the lender direct.
How Long Do I Have To Repay?
Lending periods vary, but there is a possible repayment term of between 1 – 60 months.
Can I Get A Holiday Loan With No Credit Check?
When it comes to borrowing money, one of the most frequently asked questions is whether there is an option that does not require a credit check. All lenders carry out credit checks, and any financial company that tells you otherwise should be deemed untrustworthy.
What Does APR Mean?
APR stands for ‘annual percentage rate’. This refers to the total interest you will need to pay per year on the entire sum of your holiday loan. This is important as it determines how high or low your monthly repayments are. The lower the APR, the lower your monthly repayments will be.