Almost all prices have risen, and holidays are no exception. The average cost per person to go on a one-week holiday in the US is $2,268. Your travel budget -This is up from $1,993 in 2024. Some travelers rely on vacation loans to make their trip possible.
However, paying for vacation by borrowing money is a dangerous economic choice. If you are considering this type of borrowing, it is important to weigh how a vacation loan works and how it works and how it works with the advantages and disadvantages.
Is a vacation loan a good idea?
Vacation loans will help you make your dream trips, but we recommend using them. Before considering a vacation loan, you should try to save money and budget for your trip so you can afford to pay in cash.
“Traveling offers rich experiences and potential personal and professional growth experiences, making it a wise investment in certain circumstances. However, paying debt for leisure travel without a clear financial plan can lead to unnecessary financial burdens in the long run.”
Getting a loan for essential expenses like holidays can put a strain on your budget and limit future economic opportunities, Harris says.
Leave loans can be justified in two situations.
- When traveling due to an inevitable emergency (such as caring for a sick loved one).
- Tap you when you’re on a once-in-a-lifetime trip like a honeymoon and you’re sure you can pay off your loan without missing out on payments Emergency Fund Or delay more important financial goals.
If you are considering taking out a leave loan, look closely at your budget and consider the pros and cons first.
The advantages of using a vacation loan
- Modified monthly payments: Payments are fixed, so you pay the same amount each month, making it easier to plan ahead.
- Possibility of low interest rates: Depending on your credit, personal loans often Credit Card. If you were planning on paying for your trip using a credit card, a vacation loan could be a low-cost alternative.
- Help fund emergency trips (or higher cost trips): If you are traveling inevitably rather than joy and it is time sensitive, a vacation loan may be a great option to enable your travel plans.
Cons of using a vacation loan
- Interest increases travel costs: Taking the loan will add interest to the cost of the trip itself, adding to the overall costs. If you have a large credit, interest rates can be lower, but poor credit borrowers can see interest rates as high as 36%, making vacation loans an expensive option.
- Fees can reduce the value of your loan. Many lenders will charge Origination feededucted from the loan proceeds before you receive them. As a result, you may have to rent more than you intend to cover your fees.
- Monthly payments: A loan is a long-term debt. You may pay back your trip after months or years of fact.
- It can have a negative impact on your credit score. If you are late, or Loan defaultyour credit can take a serious blow – and lenders may even take you to court.
How do vacation loans work?
Holiday loan is Unsecured personal loans It is used to cover travel and vacation related expenses. Vacation loans can be used to cover all travel expenses, including transportation, accommodation, food, entertainment and more. You can get leave loans from lenders who offer personal loans, including banks, credit unions and online lenders.
“Aspiring vacationers can borrow a lump sum and repay the amount and interest they borrow through fixed monthly payments over a period of time,” said Dani Pascarella, founder and CEO of OneEleven Financial Wellness. “There’s no difference from personal loans used for other reasons.” As Pascarella points out, using a leave loan means your vacation will be inherently expensive.
“You’re also going to spend months or years paying off your loan, meaning you can’t use that money on anything else you need in the future,” adds Pascarella.
How to get a vacation loan
1. Please check your credit score. The minimum values for different lenders vary Credit score requirementshowever, generally, to qualify for the lender’s minimum fee, you need a good credit to a good credit. Your credit score is also an important factor in determining the fees you receive. If your credit is less than the star, look at the lenders you will work with Bad trust borrower. However, be careful. These lenders may charge interest rates above the typical credit card interest rate.
2. Research lender. Compare and find lenders Best personal loan interest rates. Many lenders will allow you Get prequalified Show prices without discrediting. When comparing options, consider the fees charged, minimum and maximum loan amounts, terms of payment, and additional features offered by each lender.
3. Submit your application form. Once you have selected a lender, please submit a formal application, including identifying documents such as ID, W2S, Pay Stub, and more. If approved, the next step is to sign a loan agreement, receive the funds and begin paying off the loan in monthly installments.
How did inflation affect travel expenses?
The US economy has been suffering from stubborn inflation for the past few years. Inflation is slightly above The Fed’s goal. However, the airfare consumer price index for February 2025 fell by 4%. U.S. Labor Bureau’s Bureau of Labor Statistics.
According to the American Travel Association Travel Price Index In March 2025, “the prices of travel-related products and services fell monthly.” Gas and airline prices reduced costs, but hotels, recreation and food all increased slightly.
Still, some travel-related costs remained higher. For example, recreation-related costs will increase by 4.1% between 2023 and 2024, and beverage and beverage costs will increase by 4% over the same period.
According to Bankrate’s Summer Vacation Survey, about two-thirds (65%) of Americans planning to skip this summer vacation, cited affordability as the main reason.
4 vacation loan lenders to consider
prosperity
prosperity The loan offers a low annual rate (APR) of 8.99%. Loan amounts range from $2,000 to $50,000. As a peer-to-peer lender, your loan is funded by individual investors in Prosper’s network, not by direct lenders. You can qualify for a loan with a low credit score of 600, but you can add a trusted travel companion as a co-applicant for a low-cost opportunity.
Avant Guard
in spite of in front The higher rates and fees are worth looking for borrowers with a lower credit score of 550. You can borrow between $2,000 and $35,000 from Avant for your vacation. Rates range from 9.95% to 35.99%, with 2-5-year loan terms. Please note that Avant charges up to 9.99% administrative fees and delayed and dishonest payment fees.
Lightstream
If you have good credit or good credit and are planning an expensive vacation, check out Lightstream. The 6.99-25.29% rate is the lowest in the business and will not charge you if you pay late. Plus, sign up for Autopay and get a rate discount worth 0.5% points. The amount ranges from $5,000 to $100,000. However, prequalification is not a Lightstream option, so check the rate with other lenders first.
Sophie
Sophie The loan starts at $5,000. Like Lightstream, its repayment terms are 2-7 years. This makes the loan ideal for large and expensive trips. SOFI allows you to get funds immediately on the day you are approved.
Vacation loan alternatives
Before taking out a leave loan, research these alternatives.
- Budget and Save: Long before you travel, start putting your money aside from each paycheck. Saved enough to cover your trippossibly a Thinking Fund. Vacations are a great way to create new memories and avoid daily crushes, but you should avoid borrowing for a leisure trip.
- Travel and Reward Cards: Many Credit card issuer We offer perks and reward programs for your trip. This will help you reduce travel expenses. Some cards even allow you to award airline miles when you spend and pay off your card. Your card may also offer cancellation insurance or paid foreign transactions. However, be careful. Credit card debt can grow rapidly and put your financial health at risk. This could be a good option if you’re confident you’ll be able to pay off your balance quickly.
- Travel at larger groups and split costs: Sharing accommodations can significantly reduce costs.
- Find a discount: Do your research to find the cheapest flights, hotel rooms and more. Most of the time there are deals to find online.
- Choose a free vacation: If the vacation you are planning breaks your budget, consider a shorter trip or switch to a less affordable destination.
- Wait until the offseason: At certain times, prices are higher in certain areas. For example, it is more expensive to go to the Bahamas during the summer than to go in the summer or winter. Consider visiting selected locations during the offseason and taking advantage of low prices and less crowded destinations.
Financially preparing for your trip
Read bankrate tips and insights to help you save money and make the most of your travel plans before booking your next vacation.
learn more
Conclusion
Vacations offer great opportunities to relax, spend time with loved ones and explore new cultures and places, but they are not essential costs or something you should pay for a significant amount of debt.
If you can’t wait to save money to cover your vacation costs and are confident you can pay off your debts, a leave loan can offer you one way to fund your upcoming trips. Make sure to do research and compare funding options before making a decision. Saving money and finding a deal is always a better option than taking on debt.
