Travel and Holiday Loans

A travel or holiday loan is a personal 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:

When it comes to finding the right loan, it's crucial to know where to look. Savvy's got you covered! With trusted partners around the country and a team of expert consultants, we're here to help you navigate the process and lock in the best available deal!

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.

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.

• 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 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.

• 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.

Types of personal loans

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.

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.

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.

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 make them more convenient to manage and save you money.

Joint personal loans

Many lenders will give you the option to apply jointly with a partner. Doing so can boost your chances of approval, given that your loan will be serviced by two incomes instead of one. It may also be convenient for covering shared expenses.

Self-employed personal loans

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