Travel and Holiday Loans
Looking to plan your next holiday but running low on savings? Find your low rate personal loan by comparing with Savvy.
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Holidays offer the chance to get away from it all, whether you’re planning a family holiday, off on a gap year or looking to book a luxury cruise. However, travelling is not always cheap. If you need some financial support to fund your trip, you might consider a travel loan. This is where Savvy can help. We can compare offers from a range of lenders so you can find a loan that best fits your financial situation and travel plans. Get started with a free quote today!
What are travel personal loans and how do they work?
A travel loan, also referred to as a holiday loan, is a loan you can take out to help you fund various types of trips, from backpacking to cruises to honeymoons. It can be used for a range of costs, including:
- Flights
- Accommodation
- Visa and passport fees
- Wining and dining
- Transport
- Recreation
- Equipment
- Shopping
- Travel insurance
Travel loans fall under the umbrella of personal loans and function in the same way as most others. Most travel loans will be unsecured personal loans with a fixed interest rate designed for use towards a holiday or general travel.
Generally, lenders will offer potential borrowers an amount between $2,000 and $75,000 and provide the option to pay it back over a term of one year all the way up to seven. These elements, as well as other policies, will be determined by the lender, so they may vary between each different lender depending on the type of loan you receive and your own financial history.
This presents borrowers with a golden opportunity to compare lenders through whatever aspect of the loan they find the most important. We pride ourselves on comparing loans where they matter to you, so you can look at different lenders’ deals in our rate table.
How do I apply for a travel loan?
Applying for a travel or holiday loan is similar to applying for any other personal loan, with the requirements for qualifying as a potential borrower fairly straightforward. Eligibility criteria will differ slightly between lenders, but there will be common points that you have to meet before approval. These typically include:
- Age: you must be at least 18 years old.
- Residency: you must be an Australian citizen or permanent resident living in Australia – though some lenders may accept certain temporary visas.
- Income: you will need to meet minimum income requirements, typically receiving at least $22,000 a year.
- Credit rating: many lenders will require you to have a good credit score.
Producing documentation like proof of identity, record of income and current assets and debts will also be required to progress the application.
Prospective borrowers should aim to enter the application process with a positive credit score and minimal debt, as these will help you appear more attractive to lenders. If you’re looking to apply for a holiday loan, it’s worth checking out a wide variety of lenders to compare their criteria and policies to see if one in particular suits you above the rest. You’ll be able to compare lenders in our comparison table, side by side, and enquire on each lender’s website if you want to find out more.
How can I compare travel loans?
Travel loan seekers are afforded a wealth of options when it comes to choosing a loan. Here are some of the key factors to consider:
The length of the loan
Your loan term goes a long way to dictating the amount you’ll pay for each instalment; basically, the longer the loan, the less money you’ll pay. Personal loans tend to be capped at seven years, with a minimum of one year, but this may differ slightly between lenders. It is also important to note that the longer the loan, the more interest and fees you’ll accrue, so shorter loans may be the way to go if you’re looking to avoid that.
Fixed or variable rate
Borrowers have the choice of going with fixed or variable interest rate holiday loans. Fixed rate loans maintain the same interest rate over the life of the loan, while variable rate loans are subject to fluctuation.
Interest and other fees
Interest rates are easy to compare between lenders, but it’s also important to note how much each different personal loan will set you back in terms of fees. Lenders will have different policies when it comes to the exact amount they’ll charge, but application, instalment, annual, early and late repayment and early termination will all typically come with a cost. Some lenders may not charge for all of these, particularly early or additional repayment fees, so you should check with lenders in advance to find out their policies.
Any bonuses offered
You may find that some loans will build in some extra sweeteners to draw you towards them, which might be worth considering. An example of this could be discounts on certain aspects of the holiday or insurance. It may not end up deciding which loan you choose to go with, but it can certainly influence it.
What other types of holiday finance are there?
If you’re going travelling and need some financial assistance, there are other options available beyond personal loans. You may also want to consider:
- Credit cards: credit cards can be used for travel instead of a loan for smaller amounts, with certain types of cards designed for travel on offer to holiday-goers. They can provide great flexibility and money on demand, as well as garnering frequent flyer points that can provide a discount on future flights. However, be aware that failing to pay off your outstanding amount within the credit card payment cycle will incur higher interest rates and fees. As such, they’re probably a more sensible option for smaller cash injections up to $2,000. Furthermore, users could also be hampered with a high cash advance rate or foreign exchange fees on a credit card if used overseas.
- Line of credit: a line of credit can also be a viable option for those looking for a smaller cash boost, as borrowers can withdraw funds as they need them to provide greater flexibility. A line of credit is a pre-defined amount of money that is accessible when required and able to be paid back immediately or over a length of time that you establish with your financial institution. They tend to carry a lower average annual percentage rate (APR) than credit cards but will still usually have a monthly fee regardless of whether you have drawn down on funds.
Types of personal loan
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Top tips for planning your next holiday
Plan a cost-effective trip
A personal loan is a good financial boost that can be used to pay off holiday costs. However, you could end up paying more for your holiday than you should without a budget in place. Having a holiday destination in place already gives you the advantage of being able to plan around costs such as accommodation and travel, so you can apply for an adequate amount when applying for a loan. Saving on the side can help you budget for food and spending money which lowers costs.
Look out for travel deals and discounts
There are a few things that you can do to minimise the cost of going on holiday. Researching for the best travel deals and discounts on things such as accommodation, meals, rental cars and more will give you clarity on your budget. There are some credit cards that come with rewards and frequent flyer points that can be used to make your travel economical. Checking to see how you can best utilise your points and rewards can be a saving grace.
Make sure you have the right credit card
The type of credit card that you are planning to use abroad can affect your overall bill. Always keep in mind how your card’s interest rate will affect your monthly repayments. If you’re swiping abroad with an ordinary card you can attract a 3% foreign transaction fee, which can dampen anyone’s holiday mood. Using a 0% foreign transaction credit card can be useful as it charges no foreign transaction fee and converts to other currencies with no additional costs.
Look into travel insurance
Having travel insurance will not only give you peace of mind but also protect you when you need it most. Australians choose different ways to insure themselves, which can be through an insurer or using their credit card for travel insurance. However, before you jet set to your destination, it's important you check what your insurance covers. Some travel insurance policies only cover you once you've left Australian soil and can't be used locally.
Common questions about travel loans answered
Helpful personal loan guides
Still looking for the right personal loan?
Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.
