Travel and Holiday Loans

Name: Travel and Holiday Loans
Creator: Savvy
Published: 2020-12-16T11:53:38+10:30

Home > Personal Loans > Travel and Holiday Loans

It won't affect your credit score.

Written by , updated on July 4th, 2024

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

Unsecured personal loans

With an unsecured personal loan, you can potentially borrow as much as $75,000 without the need to attach any valuable assets, such as your car, as security. These loans are the most widely available and often the quickest, with same-day approval possible.

Secured personal loans

Secured personal loans, on the other hand, make use of collateral. This lowers your risk profile in the eyes of a lender, potentially lowering your interest rate and expanding your borrowing power beyond what you may be able to get through an unsecured loan.

Variable rate personal loans

Variable interest rates remain open to fluctuation during your term. This means you can benefit from decreasing rates and save on your loan if the market heads in that direction, although you’ll also pay more if rates start rising.

Fixed rate personal loans

Fixed interest rates are locked at the beginning of your loan and remain constant throughout your repayments. This acts as a valuable protection against interest rate increases, as your loan will be unaffected, but you’ll miss out on potential drops as well.

Debt consolidation loans

If you’re paying off multiple debts at the moment, particularly those with high interest (such as credit card debts), consolidating them into one payment can not only make them more convenient to manage but also potentially save you money overall.

Travel loans

Looking to take off on a holiday with your family but want to pay it off at your own speed? Travelling can be expensive, so you can distribute the cost of your next trip over a period you’re more comfortable with by taking out a personal loan to pay for it.

Wedding loans

There are so many costs that go into making your dream wedding a reality, from venue hire to catering to dresses and suits and so much more. By taking out a personal loan, you can start planning the big day you want, even if you can’t pay for it upfront.

Renovation loans

Home improvements are desirable for a range of homeowners to help keep their living space fresh and interesting, not to mention increase its value. You can get past the financial hit of renovations with a personal loan paid in instalments.

Self-employed loans

Personal loans aren’t limited to PAYG employees, though. If you’re running your own business, you can still be approved for financing by submitting tax returns and other alternative documents instead of payslips and utilise your funds however you wish.

Student & education loans

There’s a variety of expenses which come with being a student, ranging from the cost of your courses, textbooks and computer to your accommodation. Taking out a personal loan can make these costs more manageable by spacing them out.

Green loans

Some lenders offer green personal loans, which are designed to be used for energy-efficient appliances and products such as solar panel and air conditioning installation in your home. You can qualify for lower interest rates and fees with this loan.

Why compare personal loans through Savvy?

100% free

There's no need to worry about forking out to compare offers. Our service is free, so you can come back whenever you like.

Paperless applications

You won't need to worry about sifting through documents and visiting the post office, as they can all be submitted online.

Reputable lending partners

We've partnered with personal loan companies you can trust to ensure your comparison is a high-quality one.

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

Can I get a co-borrower to sign the loan with me?

Yes – applying for a joint personal loan with your partner is a great way to share your expenses. They can work especially well if you need access to a large amount, but your credit score is not strong enough to access this amount on its own.

Can I get financing for any destination I would like to travel to abroad?

Yes – because it's a loan designed for personal use without any asset collateral attached, you can use it to fly or travel anywhere you like. As long as you can get tickets or are able to drive there, a personal loan can cover it.

Will I be able to access a travel loan even if I have bad credit?

Yes – we're partnered with flexible lenders who are ready and willing to work with people who've struggled with their credit score in the past. This will result in a lower borrowing capacity and higher interest rate, however.

Will I be able to get financing even though I haven’t set a destination?

Yes – as mentioned, because your loan isn't tied to the value of your holiday, you can take it out before you've settled on a destination or expenses if you wish.

Can I fully refund my loan if my holiday is cancelled?

You probably won’t be able to per se, but don’t stress too much. If you’re yet to spend the money lent to you, you’ll typically be able to hand it back to the lender and cancel your loan.

Should I supplement the loan amount with my savings?

This can be a smart way of saving yourself money in the long run. The reality is that the less money you borrow, the less you’ll have to pay back in fees. In the long run, a shorter period of time paying interest on a loan could make a massive difference to your finances. It is important to not overreach financially in this respect; assess your finances and decide what setup works for you.

Can I get financing for a local cruise?

Yes – because these are unsecured personal loans, you can use the funds you're approved for to pay for any type of cruise, local or overseas, as well as any other travel expenses you may need covered.

Will I need a deposit for my holiday loan?

No – you can take out a personal loan without the need for a deposit.