If you could head out to any destination in the world, where would you go? Do you have enough budget for your next trip? If not, get a loan for your dream travel adventure and go rock the road!
You might have a special place in mind – one that you’ve tirelessly searched up and scrolled through geotagged pictures on Instagram, or perhaps saved posts on your Pinterest account. Whether it is a specific attraction, a festivity or cultural experience, or just the overall destination you’re after, turning your dream travel experience into reality is an important thing to tick off of your bucket list.
Get a Loan for Your Dream Travel Adventure
Traveling can be extremely fulfilling and enriching. It rewards us with memorable experiences and widens our perspectives, not to mention gives us a break we deserve. This is why we often go to such lengths to realize our travel plans. We save up religiously, scour online sources for great deals, and schedule our trips against affordable flight rates.
Sometimes, people also finance their dream vacations by taking out a personal loan. Maybe this is your case too. But, I hope not, of course. But if ever, get a loan for your dream travel adventure now and make your trip unforgettable!
How Does a Vacation Loan Work?
A vacation loan is a type of unsecured personal loan—meaning, there is no need to declare an asset against a loan amount—that you can use for travel expenses. Personal loans are offered by several banks and non-banking financial companies (NBFCs).
Employed individuals can qualify for such loans based on their repayment ability, credit score, and salary. Travelers elect to get this kind of loan because of its flexibility in terms of repayment schemes as well as low interest.
Travel Credit Cards
Other than taking out a vacation loan, you can reach for your good old credit card to finance your trip. However, always consider the steep interest rates before making any purchases. Meanwhile, travel reward credit cards help you earn points from travel-related purchases. They come with a lot of perks, including travel insurance, complimentary meals and drinks, upgrades, free checked bags, access to premium airport lounges, and many more.
One good thing about travel credit cards is that it’s much safer to tote along on any trip than cash. Plus, you would only have to repay for amounts you spend.
What to Consider for Vacation Loan?
Here are some things you may want to consider before taking out a vacation loan.
1. Loan Amount
Before taking out a loan, you must have a complete picture of your total expenses. Try to include everything you can think of to get an accurate figure for your travel needs. This will help you determine how much to apply for.
2. Interest Rate
Personal loans appear to be relatively painless and hassle-free to avail, so why not go ahead and take one on? While it may look simple, unsecured loans yield heavier interest rates in comparison to secured loans.
When your getaway is over and you have to endure several months (or years) of repayment, you might find that the loan has become a burden and your vacation was not worth the trouble.
The affordability of a trip is a huge part of travel planning. Budgeting for your trip should be done well in advance, considering your income and savings. If there’s a small difference between your travel budget and your current funds, you may not have to apply for a vacation loan. Instead, save up for the lacking amount before your travel date.
Apart from your credit balance and existing loans, also assess where your savings are at. It wouldn’t be wise to spend your emergency funds for travel, so ensure that you have enough savings to add to your travel funds. This might also mean you would need to borrow less on a travel loan or not need to take out a loan at all.
5. Expected Expenses
Traveling certainly does not come cheap – other than travel-related expenses like flights, accommodations, food, tours, and transportation, you also have to make sure you have extra funds in case of emergencies. But, if you want to make your travel cheaper, you may want to check on our tips to find cheap flights.
Things to Ask Yourself
You’ve got your getaway planned, did your research, and now are ready to take out a personal loan. Bear in mind that just because you could, doesn’t mean you should.
Here are some questions to go over before borrowing.
Can I Afford a Travel Loan?
Borrowing funds for your travel expenses necessitates having a good idea of your income and spending. Also, keep in mind that your monthly income should accommodate repayment during a fixed period.
Ideally, the loan repayment should not be more than 30% of your income every month. If the amount you save is more than enough for repayment, then a travel loan may be something you can handle.
Is My Dream Travel Even Worth the Hassle?
While traveling has innumerable benefits, keep in mind that taking out a loan will not exactly bring you a return on your investment. It is good to proceed with your loan only when you are certain that it is worth the long-term adjustments, such as interest rates and repayment.
Should I Just Wait Until I’m More Financially Prepared?
Ultimately, a loan is financial responsibility. You may be in a rush to tick an item off your bucket list only to find yourself in financial trouble later on. Thus, even if you do decide to take out a loan, make sure you are in a secure place to do so and that you’re well aware of the risks. Otherwise, it would be much safer to postpone your dream vacation for later.
Save Today, Travel Later
We would all like to believe that money can’t buy us happiness, but the reality is that being secure in our finances truly gives us access to the finer things in life we can appreciate—our dream travel experience included.
Travel loans may appear to be a quick ticket to the getaway you’ve always wanted, but remember that just because the option is there, doesn’t necessarily mean you should go for it.
Being an unsecured loan, travel loans will come with fixed repayment durations and interest rates that you should be prepared to handle long after your holiday buzz has passed.
Whether you elect to apply for a travel loan or not, always be sure to know about the risks, so your dream vacation doesn’t turn into a disaster in the end. Get a loan for your dream travel adventure and make your dream come true!
Kimberly Tan is a financial advisor from PawnHero who loves to freelance writing about personal finance. She is very passionate about helping people in managing their finances and seeing them succeed in it. Reading books while drinking tea is her favorite thing to do in her free time.