Holiday Loans: Online Lenders & Borrowing Advice

Extra expenses during the holiday season can add up fast with the costs of gifts, entertainment, travel, and events. It’s an expensive time of year, and if you’re questioning how to afford it, you’re not alone. In 2022, 57% of Americans reported it was harder to afford what they wanted, including costs associated with the holidays.

Holiday loans help bridge the gap between the money in your bank account and the money you plan to spend during the season. The loans, sometimes called Christmas loans, provide a simple way to access cash for holiday expenses.

Here are the top personal loan lenders for holiday expenses—plus other financing options you might consider instead.

In this guide:

What is a holiday loan?
How does a holiday loan work?
Where to get a loan for the holidays
How much does a holiday loan cost?
Are holiday loans a good idea?
Compare other holiday financing options
Tips for holiday financing

What is a holiday loan?

Holiday loans are unsecured personal loans borrowers use for holiday expenses. You can use personal loans for almost anything, including holiday-related costs, such as presents, travel, or special events. You can apply for loans through national banks, community banks, credit unions, or online lenders.

A notable perk of holiday loans is that interest rates are often lower than with other financing options, such as like credit cards. The funding timeline is also quick. You can often receive funds the same day you apply.

It might seem excessive to apply for a loan for holiday expenses. But if you plan to spend the money regardless, it can make sense to use a loan to minimize interest and fees.

How does a holiday loan work?

Holiday loans work like any other personal loan: You get a lump sum upfront and agree to pay it back, along with interest, in monthly installments over a predetermined period—often several years.

To apply, select a lender, and complete the application process. Lenders have unique eligibility criteria, but most want borrowers to have solid credit scores. However, some lenders specialize in funding for borrowers with fair or thin (little to no) credit, as we’ll discuss in more detail below.

Funding timelines differ, but you’ll usually receive funds within one or two business days. You might get the funds faster if you already have an account with the lender.

Here’s what you can typically expect throughout the application process for a holiday loan.

Compare lenders: The best lender for you depends on your finances, credit score, and desired loan amount. Research lenders, and determine three or four options that seem like the best fit.
Gather documents: Most lenders require income verification and identity verification. Ensure you have a government-issued identification card and can access your pay stub or tax return online.
Prequalify: You can typically prequalify for a loan with a soft credit check, which doesn’t affect your score. Prequalify with your top lenders to find the most competitive offer.
Complete the application: Once you pick a lender, it’s time to apply. It’s often a quick process, especially when you’ve already gathered the necessary paperwork.
Receive your funds: After you finalize the application, you can expect to get funds within a few minutes or days, depending on the lender. Lenders transfer the money right to your bank account.

Tip

Prequalifying can give you an idea of the loan terms without affecting your credit score. However, if you’re considering lenders that don’t offer prequalification, be sure to apply for multiple loans within a 45-day window and accept the one that offers the best terms. Credit bureaus typically count these multiple applications as a single hard inquiry, minimizing the impact on your credit score.

Where to get a loan for the holidays

The best holiday loan lender depends on your finances, credit score, and priorities. For example, you might have better approval odds with specific lenders if you have a high credit score. But if you want funds immediately, you might select a lender based on funding timelines.

Here are the top holiday loan lenders for different borrowers. Click each lender’s name in the table for more about its holiday loans.

Lender	Best for	LendEDU editorial rating (out of 5)
Upgrade	Bad credit	4.9
Upstart	Online loans	4.8
LightStream	Excellent credit	4.8
Navy Federal Credit Union	Quick funding	4.6

Upgrade – Best for bad-credit holiday loans

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Editorial rating: 4.9 out of 5

Rates (APR): 8.49% – 35.97%
Loan amounts: $1,000 – $50,000
Minimum credit score: 580

Upgrade specializes in loans for borrowers with low-to-fair credit scores. You can check your interest rate on the company’s website without affecting your score. Loan amounts are as low as $1,000, which is handy for more minor holiday expenses. The funding timeline is fast: You can get funds within 24 hours of approval, making it an excellent option for last-minute costs.

However, the origination fee ranges from 1.85% to 9.99% of the loan amount. Upgrade deducts the fee from the loan balance, so you might need to apply for a larger loan than you need to accommodate the expense.

Credit score category: Fair, bad
Soft credit pull to check rates? Yes
Deposit time: 1 business day
Origination fee: 1.85% – 9.99%
Repayment terms: 24 – 84 months

Upstart – Best for online holiday loans

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Editorial rating: 4.8 out of 5

Rates (APR): 6.4% – 35.99% APR
Loan amounts: $1,000 – $50,000
Minimum credit score: 580

Upstart is an online lending platform that partners with banks and credit unions to provide personal loans you can use for almost anything, including holiday expenses. Upstart uses an inclusive lending model that considers additional eligibility variables, such as education and employment, so the loans are more accessible.

Minimum loan amounts are small, starting at $1,000, and checking your rate won’t hurt your credit score. Both features make Upstart a solid option for holiday loans. However, you might have to pay an origination fee of up to 12%, making it a more costly choice than lenders with no fees.

Credit score category: Fair, thin
Soft credit pull to check rates? Yes
Deposit time: 1 business day
Origination fee: 0% – 12%
Repayment terms: 3 or 5 years

LightStream – Best holiday loans for excellent credit

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Editorial rating: 4.8 out of 5

Rates (APR): 7.99% – 25.49%
Loan amounts: $5,000 – $100,000
Minimum credit score: 660

LightStream offers competitive rates and no fees, making it a top lender for borrowers with high credit scores. Once approved, you can get funds the same day, which is helpful for unexpected holiday expenses. You can’t prequalify with a soft credit check, but you can view potential terms without affecting your score.

Minimum loan amounts start at $5,000, which might be too high for some holiday loans. But if you have extensive travel costs or other high expenses during the season, a $5,000 loan might make sense.

Credit score category: Excellent, great
Soft credit pull to check rates? No
Deposit time: Same-day funding
Origination fee: None
Repayment terms: 24 – 144 months

Navy Federal Credit Union – Best holiday loans with quick funding

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Editorial rating: 4.6 out of 5

Rates (APR): 8.99% – 18.00%
Loan amounts: $250 – $50,000
Minimum credit score: None
Must have a connection to the U.S. military to qualify

Once you’re approved, Navy Federal Credit Union can fund loans within minutes or hours, making it an excellent pick for holiday expenses. The credit union also stands out with low loan amounts: You can borrow as little as $250. Navy Federal might be a terrific choice if you overspend by a few hundred dollars during the holidays.

However, you must be a member of the credit union to join, and this requires you to have a connection to the military. You must be an active-duty member, retiree, or immediate family member. Navy Federal Credit Union isn’t for everyone, but it’s a solid option for holiday loans if you can qualify.

Credit score category: Good
Soft credit pull to check rates? Yes
Deposit time: Instant or up to 24 hours
Origination fee: None
Repayment terms: Up to 60 months

How much does a holiday loan cost?

Shoppers reported plans to spend $1,652 on holiday shopping in 2023, according to a survey from the Deloitte Center for Consumer Insights. It’s a substantial amount of money to spend over a short period. Here’s what it can look like if you decide to fund your holiday costs with a holiday loan:

Suppose you intend to spend around the national average of $1,600 on the holidays this year. You don’t have savings, so you opt for a holiday loan in that amount.

Your interest rate affects how much you pay, but as you can see in the examples below, your repayment term you choose can have a much larger impact on the overall cost:

	Interest rate	Term length	Total loan cost	Difference in cost compared to Loan 1
Loan 1	10%	1 year	$1,687.99	—
Loan 2	20%	1 year	$1,778.58	+$90.59
Loan 3	10%	5 years	$1,951.73	+$351.73

Calculating the cost of a loan is essential to determine whether it makes sense for your finances. Borrowing money always has a cost, but you can minimize the expense by comparing loan offers and finding the best terms.

Are holiday loans a good idea?

Whether holiday loans are wise can depend on your circumstances and finances. Holiday loans can be helpful if you need quick access to money and can afford the payments. But depending on the loan terms, you might pay hundreds of dollars toward interest and fees.

Here are several benefits and drawbacks to consider when deciding whether a holiday loan makes sense.

Pros

Quick funding

Holiday loans are quick. Once approved, you can typically expect to receive funds within one business day. Fast funding is helpful when dealing with unexpected or last-minute holiday expenses.
Lower interest rates

Holiday loans often have lower interest rates than other lending options, such as credit cards or payday loans. These loans allow you to minimize the amount you pay toward interest.
Small loan amounts

Many personal loan lenders offer loans for $1,000 or less. Considering the average American spends around $1,600 on the holidays, $1,000 might be the perfect amount.

Cons

Interest charges

Personal loans charge interest, which can add up fast, especially if you qualify for a higher rate or choose a long repayment term.
Loan fees

Many lenders charge origination fees ranging from 1% to 12% of the loan amount. These fees make borrowing money more expensive.
Extended repayment

Holiday loans have longer repayment terms than options such as loan apps or buy now, pay later. Longer terms equate to more interest charges, which increases the cost of borrowing.

Avoid needing a holiday loan next year

Erin Kinkade

CFP®

I recommend adding monthly savings to your budget for birthdays and holidays to deposit into a separate savings account. Although not common today, you’ll find that many older folks are accustomed to a savings called a Christmas account. This plan is my No. 1 recommendation.

But if you’ve depleted your savings and the holidays are approaching, here’s what she suggests:

“A one-year personal loan could help bridge the gap until you build up savings for the next year. Ultimately, gift-giving is not a necessity, so taking out a loan for it may not be the best option. But it’s likely a better option than a credit card. Buy now, pay later options—such as Afterpay, Klarna, Affirm, or PayPal—might be better.

“I suggest determining a set price of what you want to spend, shopping lenders, and determining whether your budget can absorb the repayment and savings for next year. If you can’t repay the loan and continue saving, I recommend you forgo a loan for holiday expenses and reduce spending to what your cash flow can afford alone.”

Compare other holiday financing options

Holiday loans can be a terrific solution for unexpected expenses, but as Erin Kinkade mentioned above, it’s wise to consider other options too. They all have potential benefits and drawbacks. Depending on your circumstances, one might be better than the rest.

If a holiday loan isn’t the right solution, consider these alternatives.

	Cost	Repayment	Pro	Con
Personal loan	6.4% – 36% APR (as of November 2023)	12 – 84 months	Fixed interest rates are often lower than other financing options.	Costs can add up due to fees and extended repayment terms.
Cash	No extra costs	None	The cheapest way to pay for holiday expenses. (No interest or fees.)	Only an option if you can access the funds in savings.
Credit card	22.7% average APR (in November 2023)	6 years on average	A convenient way to pay for last-minute holiday expenses.	Interest rates are high, and it takes years to pay off the balance if you only pay the minimum amount.
Buy now, pay later	0% – 36%, depending on the company	3 – 36 months, depending on the lender	Pay for purchases over several months, and select it as your payment method when you check out online.	If you use this option too frequently, you might not be able to afford your monthly payments.
Loan app	$5 – $15 monthly fee, depending on lender	Your next paycheck	Apps provide payday advances for several hundred dollars, which can help you pay for holiday expenses between paychecks.	You must pay a monthly fee, and if you miss a payment or fall behind, the interest charges are high.

Tips for holiday financing

Avoiding debt during the holidays can help reduce your stress and maximize your enjoyment. However, it’s not always possible. To reduce the debt you take on, consider these tips as you prepare for the holidays this year.

1. Set a holiday budget (as soon as possible)

When you set a budget, be realistic about your income and expenses. Consider how much you can borrow for the holidays based on your monthly costs.

For example, imagine your monthly expenses are $4,000, and you earn $4,400. You might be able to afford $400 monthly payments, but a $300 monthly payment might make more sense because it leaves room for unexpected expenses.

In the new year, as CFP® Erin Kinkade recommended above, you can create a budget to save money each month and avoid taking out a holiday loan next year. Even small amounts can add up. If you save $25 each month during the year, you’ll have an extra $300 for holiday expenses next December. Separate savings accounts can help ensure you don’t accidentally spend the money you save.

2. Look for ways to trim expenses

It’s tempting to embrace the holiday spirit and spend money with abandon during the festive season. But once the holiday glow wears off, you’re stuck with balances you must repay. Avoid the cycle of overspending, and cut back where you can.

Take a hard look at your holiday expenses to determine what you can skip. You could talk with your family members and set a gift budget. Or maybe you can use points to travel or convince your coworkers to skip the gift exchange and have a potluck instead.

Get creative, and don’t be afraid to offer new suggestions. The holidays are expensive for everyone, and most people appreciate the chance to save money.

3. Avoid holiday financing traps

Be a savvy shopper this holiday season, and watch out for expensive financing.

Payday or holiday cash loans

Payday loans come with high interest rates and often have hidden fees. That places them among the most expensive financing options. It always costs money to borrow, but better loan options are available. Unless you don’t have any other choice, it’s best to avoid this kind of holiday loan.

Instead, consider a personal loan from a bank, credit union, or online lender. Your rate will vary based on your credit score, but bad-credit loans exist. Look for interest rates between 6% and 15% if you have good-to-fair credit or 15% to 30% if your credit is poor.

Store cards

A branded credit card from your favorite store may seem appealing around the holidays, but the costs can outweigh the savings. You can’t use many of the card outside that store, and they often have high interest rates and poor rewards.

If you open a credit card for holiday spending, look for one with an introductory offer of 0% APR. These offers can help you finance your holiday spending fee-free while earning points or signup bonuses. But be sure to pay off your purchases before the introductory offer expires. You might pay even higher interest rates and fees if you don’t.