Vacation Loans: How to Finance Your Trip
Vacation loans can help you cover a pricy getaway, but will increase the cost due to interest and leave you paying for your experience long after it’s over. Plan ahead to save what you can, use credit cards carefully, and borrow responsibly if you need to finance a vacation.
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A good vacation can help you recharge and develop family memories—but it can be costly. According to a study published by savings and investment company Twine, the average respondent spent $564 on a weekend summer trip and $1,928 on a week-long summer vacation.
Paying for this can be daunting when four in 10 Americans would have trouble paying for a $400 emergency expense. Vacation loans are one way to cover the funding gap—but they’re not always a good idea.
This guide will tell you what you need to know before taking out a personal loan for a vacation.
In this guide:
- 6 best vacation loans
- Are vacation loans really a good idea?
- Pros & cons of vacation loans
- How to finance a vacation
6 best vacation loans
Personal loans often make the best vacation loans because they are typically unsecured, and you can use personal loans for almost anything. Borrowers often use them for debt consolidation, home improvement, or as a form of vacation financing.
You can find personal loans through local banks and credit unions, as well as online lenders. We rated the best vacation loans from banks and online lenders based on each credit type, so you can find a lender that’s right for you.
Vacation loans for good credit
Borrowers with a credit score of around 660 to 700 or higher can usually qualify for a vacation loan from a lender that requires good credit.
LightStream
LightStream’s streamlined application process makes it attractive to borrowers with a strong credit history looking for travel loans. This lender is a division of the FDIC-insured SunTrust Bank.
Lender info
- LendEDU rating: 5.00 / 5.00
- Minimum credit score: lightstream-perl-44-mincreditscore
- Loan amount: lightstream-perl-40-amountlow to lightstream-perl-40-amounthigh
- Loan terms: lightstream-perl-40-termlengthrange_m
- APRs: lightstream-perl-40-alllow to lightstream-perl-40-allhigh
- Full review: LightStream Personal Loan Review
SoFi
SoFi can be a great option for borrowers who need multiple loans or other financial products, as it offers a multi-loan discount among other member benefits, including career counseling and financial planning advice.
Lender info
- LendEDU rating: 4.87 / 5.00
- Minimum credit score: sofi-perl-36-mincreditscore
- Loan amount: sofi-perl-36-amountlow to sofi-perl-36-amounthigh
- Loan terms: sofi-perl-36-termlengthrange_y
- APRs: sofi-perl-36-alllow% to sofi-perl-36-allhigh%
- Full review: SoFi Personal Loans Review
Vacation loans for fair credit
If you have a credit score between 620 and 660, you’ll likely be better off with a lender catering to fair credit borrowers.
Marcus
Marcus by Goldman Sachs offers loans at low interest rates, as well as online checking and savings accounts.
Lender info
- LendEDU rating: 5.00 / 5.00
- Minimum credit score: marcus-perl-56-mincreditscore
- Loan amount: marcus-perl-56-amountlow to marcus-perl-56-amounthigh
- Loan terms: marcus-perl-56-termlengthrange_m
- APRs: marcus-perl-56-alllow to marcus-perl-56-allhigh
- Full review: Marcus Personal Loans Review
FreedomPlus
Personal loans from FreedomPlus have an affordable interest rate and no prepayment penalties. The lender caters to both fair and poor credit borrowers.
Lender info
- LendEDU rating: 4.38 / 5.00
- Minimum credit score: Not disclosed
- Loan amount: freedomplus-perl-53-amountlow to freedomplus-perl-53-amounthigh
- Loan terms: freedomplus-perl-53-termlengthrange_y
- APRs: freedomplus-perl-53-alllow to freedomplus-perl-53-allhigh
- Full review: FreedomPlus Personal Loans Review
Vacation loans for bad credit
Borrowers with a credit score below 620 are generally considered to have poor credit and have fewer loan options, but some bad credit personal loan lenders offer travel loans at reasonable rates.
OneMain Financial
OneMain Financial is a major lender, with loans issued to an estimated 15 million customers. You can apply for its affordable bad credit vacation loans online, but will have to finish the application process at a local branch.
Lender info
- LendEDU rating: 5.00 / 5.00
- Minimum credit score: Not disclosed
- Loan amount: onemainfinancial-perl-51-amountlow to onemainfinancial-perl-51-amounthigh
- Loan terms: onemainfinancial-perl-51-termlengthrange_m
- APRs: onemainfinancial-perl-51-alllow to onemainfinancial-perl-51-allhigh
- Full review: OneMain Financial Personal Loans Review
LoanMe
LoanMe offers bad credit loans for vacations and other purposes. It’s more flexible in determining your creditworthiness, but watch out for high interest rates and fees that lead to an exorbitant annual percentage rate.
Lender info
- LendEDU rating: 4.88 / 5.00
- Minimum credit score: Not disclosed
- Loan amount: loanme-perl-1109-amountlow to loanme-perl-1109-amounthigh
- Loan terms: Not disclosed
- APRs: Not disclosed
- Full review: LoanMe Personal Loans Review
How we rate vacation loans
We rate personal loans based on the weighted average of several data points relative to other products in the same credit category: bad credit, fair credit, and good credit.
Are vacation loans really a good idea?
Always be cautious about going into debt to buy anything that isn’t a necessity. Borrowing for any purchase usually makes it more expensive due to interest. And committing to repayment over a period affects your future budget.
If you must finance a vacation, you can be far better off taking out a personal loan than taking on a large amount of high-interest credit card debt or putting your property at risk by using a home equity loan.
Before you borrow, though, think critically about your monthly budget. Aim to borrow no more than you can comfortably afford to repay over three to six months to keep your travel loan from interfering with other financial goals.
Pros & cons of vacation loans
Pros
- They’re a low-cost borrowing option: If you have good credit, you are likely to qualify for a much lower loan rate than what you might pay with a credit card.
- Personal loans are flexible: You’ll find a variety of loan amounts and repayment terms, so you can likely land on a monthly payment that fits your budget.
- Repay when you’d like: Few lenders charge prepayment penalties, so you can pay off your loan early and save money on interest.
Cons
- Interest rates could still be high: You might get a lower interest rate than you would with a credit card, but consumers with bad credit may not qualify for the best personal loan terms, either.
- You’ll be paying off your vacation for a long time: Your vacation will end after a week or two, but you’ll pay for it for several months after you come home.
- Interest adds costs to your trip: If you finance your $5,000 vacation at 10% interest, for example, you’ll repay a total amount of $5,807 over three years.*
- You’ll forgo credit card rewards: Personal loans don’t let you earn rewards for spending, while many credit cards do—especially on travel costs like hotels, restaurants, and flights.
- Loans may come with fees: Personal loans may come with upfront fees, such as an origination fee, that you wouldn’t pay with a credit card.
*Interest determined using our personal loan calculator.
How to finance a vacation
Follow these tips to borrow responsibly and keep your vacation loan from compromising your future financial goals.
1. Make a budget and start saving
Plan far in advance of your trip to know how much you’ll spend. Figure out what your costs will be, and work savings into your budget. You may need to trim expenses, either by cutting costs leading up to your vacation or finding ways to make your trip cheaper.
2. Use a travel card for specific expenses
If you’ve saved for your vacation and can pay off a credit card balance in full before the end of the month, you could benefit from charging certain travel expenses on a travel rewards credit card, especially if you sign up for a new card with a sign-up bonus.
While you may not want to put every expense on your card, charging the types of spending your card rewards the most could be a great way to earn back some of the money you spend on your trip.
3. Consider an unsecured vacation loan for remaining expenses
If you have additional expenses you can’t cover or repay with savings, consider borrowing an unsecured loan. It will likely have a lower rate than credit card debt, saving you money when you have to pay off your vacation over time.
Review our list of the best personal loans, and get prequalified quotes from several before applying to compare loan offers and find the lowest rates and best loan terms for your budget.
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How can a get a vacation loan with bad credit
Hey Justyne,
Here is an article that will give you some more information on personal loans for bad credit:
https://lendedu.com/blog/personal-loans-for-bad-credit
How can I get a vacation loan now?
Hey Lisa! Check out this page below that will go over some of the best personal loan options:
https://lendedu.com/blog/best-personal-loans