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:
5 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.
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 so you can find an option that’s right for you.
LightStream
Rates (APR)
3.49% – 19.99%
with AutoPay
Loan Amounts
$5,000 – $100,000
Credit Score
660+
LightStream ranks as our best overall personal loan lender for people looking for vacation loans. They provide low rates, no fees, and a Rate Beat program in which they will beat any rate a competitor offers by 0.10 percentage points. Their streamlined application process makes it attractive to borrowers with a strong credit history.
- Credit score category: Good, fair
- Soft credit pull to check rates: Not available
- Deposit time: As soon as the same day
- Origination fee: 0%
- Late fee: None
- Discounts: 0.50% interest rate reduction for enrolling in autopay
- Repayment terms: 24 – 144 months
Upgrade
Rates (APR)
7.99% – 35.97%
Loan Amounts
$1,000 – $35,000
Credit Score
620+
Upgrade’s personal loans are a great option for people with bad or fair credit, as well as those that need smaller loans. Borrowers seeking vacation loans can check rates without affecting their credit score.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as the next day
- Origination fee: 2.9% – 8%
- Late fee: $10
- Repayment terms: 36 or 60 months
LendingClub
Rates (APR)
10.68% – 35.89%
Loan Amounts
$1,000 – $40,000
Credit Score
600+
LendingClub offers peer-to-peer lending options to those with bad and fair credit. The minimum loan amount makes this a good option for people seeking additional funding to afford their vacation.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as 4 business days
- Origination fee: 1% – 6%
- Late fee: $15 or 5% of payment amount
- Repayment terms: 36 or 60 months
Upstart
Rates (APR)
6.27% – 35.99%
Loan Amounts
$5,000 – $30,000
Credit Score
620+
Upstart streamlines the loan pricing and funding process by utilizing the power of machine learning and AI. They are another good option for borrowers with fair credit or bad credit as they offer competitive rates.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as the next day
- Origination fee: 0% – 10%
- Late fee: $5 or 15% of payment (whichever is higher)
- Repayment terms: 36 months or 60 months
Avant
Rates (APR)
9.95% – 35.99%
Loan Amounts
$2,000 – $35,000
Credit Score
580+
Avant is a good option for borrowers with lower credit scores as they offer competitive rates, quick funding, and a variety of repayment terms. Your credit score will not be affected by checking your rates.
- Credit score category: Fair, bad
- Soft credit pull to check rates: Yes
- Deposit time: As soon as the next day
- Origination fee: 4.75%
- Late fee: $25
- Repayment terms: 24 – 60 months
To compare other options, you can check out our guide to the best personal loans.
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
- 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.
