Travel Loans of June 2024

Secure travel loans online from one of the companies vetted by our experts. As of 22.06.2024, you have 1 options available. Boost your chances of approval by completing an application with a free credit score check.
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Updated:
11.06.2024
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Rating by Finanso®
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The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
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100.00 – 20000.00 $
Rate
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Interest rate

from 0.05 %
Term
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Loan term for the financial product

5 days – 3 months

A travel loan, often called a vacation loan, is a type of personal loan specifically used to cover travel expenses. These expenses can include flights, hotels, rental cars, meals, and other costs associated with a trip. Unlike credit cards, vacation loans work by providing a lump sum of money upfront, which is then repaid in fixed monthly installments over a set period, typically ranging from two to seven years. Travel loans are usually unsecured, meaning they do not require collateral, but they rely heavily on the borrower's credit score to determine the interest rate and loan terms.

Personal loans for travel are offered by a variety of lenders, including online lenders, banks, and credit unions. These loans can be beneficial for those who want to budget their vacation expenses with predictable monthly payments. However, comparing personal loans carefully is important, considering factors such as interest rates, origination fees, repayment terms, and lender reputation.

Features

  1. Unsecured Personal Loans. Travel loans are typically unsecured, meaning you don't need to provide collateral such as a car or home to secure the loan. This reduces the risk of losing personal assets if you're unable to make payments.

  2. Personal Loan Rates. The interest rates on travel loans are usually fixed and are a significant part of the loan's annual percentage rate (APR). A higher credit score generally results in lower interest rates, reducing the overall cost of borrowing.

  3. Loan Amounts. Lenders offer varying loan amounts, from small loans starting at around $1,000 to larger amounts exceeding $50,000. The loan amount you qualify for depends on your credit score, income, and financial history. Personal loan lenders may have a minimum loan amount or a maximum loan amount cap.

  4. Repayment Terms. Travel loans typically have repayment terms ranging from two to seven years. Shorter terms mean higher monthly payments but less interest paid overall, while longer terms have lower monthly payments but more interest over time.

Pros and Cons

Pros

Predictable Monthly Payments. With fixed monthly installments, you can easily budget your repayments. Knowing the exact amount due each month helps in planning your finances better.

No Collateral Required. Travel loans are typically unsecured, meaning you don't need to risk personal assets like your home or car to secure the loan.

Quick Access to Funds. Many lenders offer quick disbursement of funds, sometimes even on the same day or within a few business days, which is useful for last-minute travel plans.

Cons

Interest Costs. Even with a good interest rate, borrowing money incurs interest costs, which can add to the overall expense of your vacation.

Potential Debt Accumulation. Adding a travel loan to existing debts can increase financial stress and the risk of missed payments, which can negatively impact your credit score.

Potential Fees. Some lenders charge origination or prepayment fees, which are deducted from the loan amount and can reduce the total funds available for your travel expenses.

How to Get a Travel Loan

Apply for a loan

  1. Check Your Credit Score. Your credit score is a key factor in determining your eligibility for a travel loan and the interest rates you'll be offered. Check your credit score through your bank, credit bureaus, or a free credit monitoring service to know where you stand. Address any issues such as delinquent accounts or errors to improve your score if necessary.

  2. Determine Your Budget. Calculate the total cost of your trip, including flights, accommodation, rental cars, meals, and other travel expenses. Use a monthly budget worksheet and a personal loan calculator to determine how much you can afford to borrow and repay each month. This will help you avoid overextending your finances.

  3. Compare Personal Loans. Research multiple lenders to compare personal loans based on interest rates, origination fees, loan amounts, and repayment terms. Look for lenders that offer the best vacation loan rates and terms that fit your financial situation. Consider both traditional banks and online lenders for a broader comparison.

  4. Prequalify with Multiple Lenders. Prequalify for a loan with at least three different lenders. Prequalification involves a soft credit pull, which doesn't affect your credit score, and gives you an estimate of the rates and terms you might qualify for. This step allows you to shop around for the best deal without impacting your credit.

  5. Gather Required Documentation. Once you've chosen a lender, gather the necessary documents to complete your loan application. This typically includes proof of identity (such as a driver's license or passport), income verification (pay stubs or tax returns), and residency (utility bills or lease agreements). Having these documents ready can expedite the application process.

  6. Submit Your Application. Complete and submit your loan application online or in person, depending on the lender's process. Be prepared for a hard credit pull, which will temporarily affect your credit score. Ensure all information is accurate to avoid delays in approval.

  7. Review Loan Terms and Sign the Agreement. If approved, carefully review the loan terms, including the interest rate, monthly payments, repayment terms, and any fees. Make sure you understand all aspects of the loan agreement before signing. Clarify any doubts with the lender to ensure there are no surprises later.

  8. Receive Funds. After signing the loan agreement, the funds will be disbursed to your bank account, sometimes within one business day. Some lenders offer same-day funding for faster access to your loan proceeds. Use the funds as planned to cover your travel expenses.

Requirements

  1. Credit Score. Lenders typically require a minimum credit score of around 600, though some may approve loans for borrowers with scores as low as 580. Higher scores improve your chances of getting better rates and terms.

  2. Income Verification. Proof of stable income is required, usually in the form of recent pay stubs, W-2 forms, or tax returns. Some lenders may also accept proof of other income sources such as Social Security or rental income.

  3. Debt-to-Income Ratio (DTI). Lenders often look for a DTI ratio below 40%. This means your total monthly debt payments should be less than 40% of your gross monthly income.

  4. Employment History. A stable employment history, typically at least two years with the same employer, is preferred. Some lenders may consider a shorter period if the job change is within the same industry.

  5. Age Requirement. Borrowers must be at least 18 years old (or 19 in some states) to qualify for a travel loan.

  6. Residency. Proof of residency, such as a utility bill or lease agreement, is usually required. Applicants must be U.S. citizens or permanent residents.

  7. Bank Account. An active bank account is necessary for direct deposit of loan proceeds and automatic withdrawal of monthly payments.

Conditions

  1. Loan Amounts. Lenders typically offer travel loans ranging from $1,000 to $50,000. The amount you can borrow depends on your creditworthiness and income.

  2. Interest Rates. Interest rates for travel loans usually range from 6% to 36%, with the exact rate depending on your credit score and financial history. Fixed interest rates ensure that your monthly payments remain the same throughout the loan term.

  3. Repayment Terms. Repayment terms generally range from two to seven years. Shorter terms result in higher monthly payments but lower overall interest costs, while longer terms offer lower monthly payments but higher total interest costs.

  4. Origination Fees. Some lenders charge origination fees, which typically range from 1% to 6% of the loan amount. This fee is usually deducted from the loan proceeds.

  5. Prepayment Penalties. Many travel loans come with no prepayment penalties, allowing you to pay off the loan early without incurring additional costs.

  6. Funding Time. After approval, loan funds are generally disbursed within one to five business days. Some lenders offer same-day funding for faster access to money.

  7. Fixed Monthly Payments. Travel loans feature fixed monthly payments, which means the payment amount remains consistent throughout the loan term, aiding in budgeting and financial planning.

  8. Flexible Repayment Terms. Some lenders offer options to change your payment due date, skip a payment, or extend the repayment period under certain conditions.

Ways to Get the Money

  1. Direct Deposit to Bank Account. This is the most common method for receiving loan proceeds. Once approved, the lender will transfer the loan amount directly into your bank account. This process typically takes one to five business days, but some lenders offer same-day or next-day funding.

  2. Physical Check. Some lenders may offer the option to receive your loan funds via a physical check. This can be mailed to your address or picked up at a branch location. While this method might take longer due to postal delivery times, it can be a good option if you prefer not to share your bank account information online.

  3. Electronic Funds Transfer (EFT). Similar to direct deposit, an EFT transfers the loan amount directly to your bank account. It is often used interchangeably with direct deposit but may be processed through different channels. EFTs are secure and fast, usually completed within one to three business days.

Best Places to Get a Travel Loan

  1. Discover Personal Loans. Discover offers personal loans with flexible financing options. Whether you're setting sail on a cruise, embarking on a group tour, or planning an international adventure, Discover personal loans provide the financial support you need for traveling needs.

  2. SoFi. SoFi offers travel loans to finance your vacation, providing access to low fixed-rate personal loans ranging from $5,000 to $100,000. With competitive APRs starting from 8.99%, SoFi enables you to save money compared to high-interest credit cards, making your trip of a lifetime more affordable and achievable.

  3. TravelerFinancial™. TravelerFinancial™ specializes in providing access to loans tailored for vacation financing, offering quick and convenient funding for beach trips, family reunions, mountain getaways, and more. With loan amounts of up to $40,000 and flexible repayment terms, TravelerFinancial™ helps you plan and enjoy your dream vacation on your own terms.

  4. Avant. Travel loans from Avant allow you to borrow between $2,000 and $35,000 to finance your adventure of a lifetime. With APRs ranging from 9.95% to 35.99% and repayment periods of 12 to 60 months, Avant provides accessible financing options for diverse travel experiences, from beach vacations to international journeys.

Things to Pay Attention To

  1. Interest Rates. Compare interest rates from multiple lenders to ensure you're getting the best deal. Even a small difference in interest rates can significantly affect the total cost of your loan.

  2. Fees. Be aware of any fees associated with the loan, such as origination fees, late fees, or prepayment penalties. These fees can add to the overall cost of borrowing and impact your repayment strategy.

  3. Repayment Terms. Review the repayment terms carefully, including the loan term and monthly payment amount. Choose a repayment plan that fits your budget and financial goals.

  4. Loan Amount. Determine the amount you need to borrow carefully. Avoid borrowing more than necessary to prevent overextending your finances and accruing unnecessary interest charges.

How to Repay a Travel Loan?

  1. Review Loan Terms. Familiarize yourself with the repayment terms outlined in your loan agreement. Understand the loan amount, interest rate, repayment period, and monthly payment amount.

  2. Set Up Automatic Payments. Arrange for automatic payments from your bank account to ensure timely repayment of your travel loan. Most lenders offer this option, which helps you avoid missed payments and late fees.

  3. Prioritize Loan Payments. Make your travel loan payments a priority to avoid defaulting on the loan. Allocate funds to cover the minimum payment amount each month, even if you're facing financial challenges. If you're struggling to make payments, contact your lender immediately to discuss options such as loan modification or forbearance. Ignoring the problem can lead to additional fees and damage to your credit score.

  4. Consider Extra Payments. If possible, consider making extra payments towards your travel loan to pay off the debt faster and reduce interest costs. Even small additional payments can make a significant difference over time.

  5. Monitor Your Progress. Regularly monitor your loan balance and payment history to track your progress towards repayment. Stay informed about upcoming due dates and review your account statements for accuracy. Use online banking or the lender's mobile app to access your account information conveniently. Check your credit report regularly to ensure that loan payments are reported accurately.

  6. Review Refinancing Options. Consider refinancing your travel loan if you can qualify for a lower interest rate or better loan terms. Refinancing can help you save money on interest and reduce your monthly payment amount. Compare offers from multiple lenders and calculate the potential savings before refinancing. Be mindful of any fees or charges associated with the refinancing process.

Reasons for Getting Rejected for a Travel Loan

  1. Low Credit Score. Lenders often use credit scores to assess an individual's creditworthiness. A low or bad credit score, typically below 580, indicates a higher risk for the lender, leading to potential loan rejection. Late payments, high credit card balances, and accounts in collections can all contribute to a poor credit score. Improving your credit score through timely payments and debt reduction can increase your chances of approval.

  2. Insufficient Income. Lenders evaluate your income to determine your ability to repay the loan. If your income is too low to cover the loan payments comfortably, you may be denied a travel loan. Lenders may have minimum income requirements or debt-to-income ratio thresholds that applicants must meet. Consider increasing your income through additional sources or reducing existing debts to improve your financial profile.

  3. High Debt-to-Income Ratio. A high debt-to-income (DTI) ratio indicates that you're already carrying a significant amount of debt relative to your income. Lenders may view this as a red flag, especially if adding a travel loan would further strain your finances. Calculate your DTI by dividing your total monthly debt payments by your gross monthly income and multiplying by 100. Aim for a DTI below 40% to improve your chances of loan approval.

  4. Limited Credit History. Limited or thin credit history may make it difficult for lenders to assess your creditworthiness. Without a sufficient credit history, lenders may be hesitant to approve your loan application. Building credit history takes time and requires responsible credit usage. Consider applying for a secured credit card, becoming an authorized user on someone else's credit card, or taking out a small installment loan to establish a credit history.

Alternatives

Credit Cards

Use a travel rewards credit card or a card with a 0% introductory APR offer to finance your trip. Travel rewards cards offer perks such as airline miles, hotel points, and cashback on travel purchases. Pay off your credit card balance in full each month to avoid interest charges. Take advantage of sign-up bonuses and rewards programs to maximize benefits.

Home Equity Line of Credit (HELOC)

Tap into the equity in your home by applying for a HELOC, which allows you to borrow against the value of your home. HELOCs typically offer lower interest rates compared to personal loans. Be mindful of the potential risk of using your home as collateral. Failure to repay a HELOC could result in foreclosure, putting your home at risk.

401(k) Loan

Borrow from your 401(k) retirement savings plan to cover travel expenses. Many 401(k) plans allow participants to borrow up to 50% of their vested account balance or $50,000, whichever is less. Understand the terms and repayment requirements of a 401(k) loan, including interest rates and repayment timelines. Failure to repay the loan according to the plan's terms can result in taxes and penalties.

Personal Lines of Credit

A personal line of credit provides a flexible borrowing option, allowing you to withdraw funds up to a predetermined limit as needed. Interest is only charged on the amount borrowed, making it a versatile financing tool for travel expenses. This product is beneficial for those who prefer having access to funds on-demand rather than receiving a lump sum. Typically, it requires a good credit score and may come with variable interest rates.

Editorial Opinion

Travel loans can be a valuable financial tool for individuals seeking to fund their travel adventures without immediately depleting their savings. While they provide a convenient way to cover upfront expenses and spread the cost of travel over time, potential borrowers should carefully consider the terms and conditions of such loans to ensure they align with their financial goals and capabilities. Like any form of borrowing, travel loans come with associated costs, including interest payments and fees, which should be weighed against the benefits of financing a dream vacation.

Important

Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your state. You can verify this information with your state regulator or attorney general.

  2. Check if the lender is a member of a reputable association, such as the Community Financial Services Association of America. Membership in such organizations may provide an extra level of reliability.

  3. Carefully review all the terms and conditions of your payday loan contract.

  4. Thoroughly examine the interest rates on payday loans and ensure that your contract includes a detailed breakdown of the total cost of the loan.

  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.

  6. Choosing a payday lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.

Additional resources

FAQ

Are vacation loans worth it?

Whether vacation loans are worth it depends on individual financial circumstances, priorities, and the specific terms offered by lenders. While vacation loans can provide immediate access to funds for travel expenses, they come with associated costs such as interest rates and fees. It's essential for borrowers to carefully assess whether the benefits of financing a dream vacation outweigh the long-term financial implications. For some individuals, the ability to spread out the cost of travel over time and enjoy a memorable experience may justify taking out a vacation loan. However, others may prefer to save up for their travels to avoid debt and interest payments.

Do banks offer vacation loans?

Many banks and financial institutions offer vacation loans or personal loans that can be used to fund travel expenses. These loans typically come with fixed or variable interest rates, repayment terms, and borrowing limits. Borrowers can apply for a vacation loan through traditional banks, credit unions, or online lenders, each offering varying loan options and requirements. Before applying for a vacation loan, it's advisable to compare offers from multiple lenders to find the most competitive rates and terms that suit your needs.

Can I take out a loan for a plane ticket?

While it's possible to use a personal loan to cover expenses such as plane tickets, it's essential to consider the overall cost and affordability of borrowing. Plane tickets can be expensive, especially for international travel or peak season flights. Before taking out a loan for a plane ticket, individuals should explore alternative financing options, such as travel rewards credit cards or savings, and ensure they can comfortably afford the loan payments.