Overseas travel by Australians is back in full swing, with more people dusting off their passports and heading abroad. According to the ABS, Australians took more than 11 million short-term overseas trips between June 2023 and June 2024 – and the trend looks set to continue. Roy Morgan data shows 23% of Australians plan to travel overseas in the next 12 months, while 57% are planning a domestic getaway.
If you’re among those looking to get away but are feeling the pinch, a travel loan could help. This is a type of personal loan you can use to cover the cost of your holiday, from flights and accommodation to spending money. Whether it’s a quick local escape or a long-haul adventure, a travel loan lets you pay upfront and spread the cost over time – so you can stay on top of your finances and focus on the fun.
Pros and cons of travel loans
Pros
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No collateral required
Most holiday personal loans are unsecured, meaning you don’t need to offer up assets like your car or home as security. This lowers your risk while still giving you access to the funds you need.
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Flexible use of funds
You can use a personal loan to cover almost any holiday expense, such as flights, accommodation, car hire, tours, meals, and more. Unlike some other options, you’re not locked into a specific type of spending.
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Fast access to cash
Many lenders offer fast approval and funding within 24 hours. This can be helpful if you need to book a last-minute trip or want to take advantage of travel deals.
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Enjoy the holiday you really want
A personal loan can help you plan your dream getaway, rather than find yourself limited by what’s in your savings.
Cons
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Added cost through fees and interest want
You’ll pay back more than you borrow due to interest and fees, which can add up depending on the loan term and amount.
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Ongoing repayments after your trip
While the holiday ends, the loan doesn’t – you’ll need to continue making repayments for months or even years afterward.
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Temptation to borrow more than necessary
Having access to a lump sum can make it tempting to overspend. It’s important to set a budget and borrow only what you need.
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Potential credit impact
Applying for and taking out a loan affects your credit file. If you miss repayments or borrow too much, it can negatively impact your credit score.
How to compare travel loans
Travel loans vary by lender, and the right choice can help you save money and stay in control of your budget while you’re away. Here are the key factors to consider:
Loan term
The term you choose affects both your repayments and the total cost of your loan. A longer term can reduce your monthly repayments, which may be useful if you want to keep costs low during your trip. However, longer terms also mean you’ll pay more in interest overall. If you can afford higher repayments, a shorter term may be more cost-effective in the long run.
Interest rates
Interest is what you’ll pay on top of the amount you borrow, and it makes up a big part of your loan’s overall cost. The rate you’re offered will depend largely on your personal profile, but it can also vary between lenders. You may also have the option to choose between a fixed rate personal loan or one with a variable interest rate. Fixed rates stay the same for the life of the loan, which can help with budgeting, while variable rates may start lower but can go up or down over time.
To get a better idea of the true cost of the loan, it’s important to look at the comparison rate – the interest rate plus fees and charges.
Fees and charges
In addition to interest, it’s important to look at the fees attached to the loan. Common fees include:
- Application or establishment fees
- Ongoing monthly or annual fees
- Early repayment or exit fees
- Late payment fees
Some lenders may offer low-fee or no-fee options, especially for early repayments, which can be beneficial if you plan to repay the loan quickly after your trip.
Why apply for a personal loan with Savvy?
Travel loan vs credit card vs Afterpay
When planning a holiday, you have a few options to cover the costs if you’re not paying upfront with savings. Other than using a personal travel loan, you might consider a credit card or a buy now, pay later (BNPL) service like Afterpay to fund your getaway – but it's important to understand how they compare to decide the best fit for your trip. Let's take a look:
| Travel loan | Credit card | Afterpay / BNPL | |
|---|---|---|---|
| How it works | Lump sum paid to your account to use for any holiday costs | Revolving line of credit you can use as needed | Pay off purchases in instalments (usually 4) over a few weeks |
| Amount available | Typically $2,000 – $50,000+ | Credit limits from $1,000 – $20,000+ | Lower amounts, often up to $2,000 per provider |
| Interest and fees | Fixed or variable interest rates, typically lower than credit cards
May come with application fees, late payment and early repayment fees
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High interest unless balance paid in full each month
May have annual usage fees, late payment fees and transaction fees
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No interest, but late fees apply |
| Repayment terms | Fixed terms, usually 1–7 years | Ongoing, flexible repayment dates | Short-term, typically 4 instalments over 6–8 weeks |
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While credit cards and BNPL services can be handy for smaller or short-term expenses, they’re not always the most effective way to fund a holiday. A personal loan gives you access to a larger, fixed amount upfront with clear repayment terms, helping you budget confidently and stay in control of your finances.
Tips to save on your next holiday
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Set a budget
It’s easy to overspend on holiday, but setting a budget helps you stay in control. Knowing your travel costs upfront means you can borrow the right amount and plan for daily expenses like food, activities and spending money – so you can enjoy your trip without dreading the bill at the end.
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Book in advance
Flights, accommodation and activities are often cheaper when booked ahead. Set fare alerts and compare prices to grab the best deals before prices go up closer to departure.
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Use the right payment card
You could be paying substantial foreign transaction fees with each swipe with your regular bank card overseas, so it’s worth looking into travel money cards, debit cards with no international fees or a 0% foreign transaction credit cards to save on these costs.
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Look out for travel deals and discounts
Use comparison sites like Traveloka to search for the best travel deals and discounts on accommodation, meals, rental cars, and more. Some credit cards also come with rewards and frequent flyer points that can help you save further.
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Look into travel insurance
Whether you take it out through a standalone policy or a credit card, travel insurance can protect you from unexpected expenses like cancellations or medical costs.
How to apply for a travel loan online
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Complete our simple online application form
First, you’ll need to fill out our quick and easy personal loan online form. Tell us about yourself, your finances, the loan you’re after and why you need it in just a few minutes.
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Compare your options with Savvy
Once you’ve done this, you’ll be able to assess the products on offer from our partnered lenders. A member of our team will reach out to help you choose the best available offer.
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Send your documents and formally apply
If you’re happy with one of the options available, you can go ahead and formally apply. We’ll handle this for you; simply send the required documents through our online portal and we’ll do the rest.
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Get approved and sign your contract
We’ll let you know when you’re formally approved, which can happen in a matter of hours, and all you’ll need to do is sign your loan contract electronically to receive your funds as soon as the same day.
Personal Loan Repayment Calculator
It’s important to have an idea of what different loans might cost you overall before you apply. Fortunately, Savvy’s personal loan repayment calculator is simple to use and tells you everything you need to know about how much different offers might add up to overall based on a variety of different factors.
Your estimated repayments
$98.62
| Total interest paid: | Total amount to pay: |
| $1233.43 | $5,143.99 |
