Using a Personal Loan for Vacation
You and your family have been dreaming about that perfect Disney vacation for years! You’ve managed your budget, and have saved up as much as you can. You need just a little extra to help pay for things like your rental car, food and flights. While you may be inclined to take out your credit card to cover those costs, keep in mind that doing so could add a high interest rate to an already-expensive purchase.
Can I pay for my vacation with a personal loan?
With flexible terms, lower rates and the ability to borrow up to $25,000, a Personal Loan can help bring your dream vacation to reality without racking up credit card debt. Compare your credit card interest rate to our Personal Loan rate, and you can see you may save yourself hundreds of dollars.
The average family of 4 can expect to spend around $5,700 on a 7-day Disney vacation.
*Money We Have, 1/15/18, https://www.moneywehave.com/how-much-does-it-cost-to-go-to-disney-world/
Personal loans may be more attractive for filling any funding gaps when planning your dream vacation. Putting a large charge on your credit card will add up over time thanks to higher interest rates. The example* below shows that using a credit card means you could end up paying almost double the amount of interest.
|Total Interest Paid
*All calculations based on bankrate.com payoff calculator.
Furthermore, many credit cards carry a variable interest rate. On the other hand, personal loans have fixed interest rates. This ensures that your monthly payment will be the same each month, provided you don’t accrue any late fees. Knowing exactly how much your monthly payment will be allows you to adjust your budget and determine the affordability of your personal loan. Personal loans also carry flexible terms, allowing you to select a term that best works with your financial picture. The available terms will depend on your financial institution. At MHV, personal loans carry terms up to 60 months, giving you the freedom to find a payment that will work with your budget.
Use our vacation loan payment calculator to estimate your monthly payment.
Is a vacation loan right for me?
There are some things to consider before borrowing money to go on vacation, though. First, be sure that you have saved up as much as you can for the trip. You’ll want to borrow only what you absolutely need. Second, keep in mind that a personal loan is a financial commitment. If taking out a personal loan is going to impact your savings goals, it may not be the right time to take that trip. In other words, don’t put your financial foundation in jeopardy to take a vacation.
What can I use a vacation loan for?
The funds you receive from your Personal Loan can be used for just about everything!
How do I save money on vacation?
While a Personal Loan can help fill in the funding gaps when it comes to paying for your trip, there are ways to help cut costs for your upcoming vacation, too. Here are some tips to save money on your next vacation.
Look for discount codes. Websites like Groupon often have discounts on restaurants, rental cars and attractions. Use your credit card Reward points if you can.
Sign up for email alerts on airfare and hotel deals. You’ll be able to take advantage of deals you may otherwise miss. Websites including TravelZoo or TravelPirates will give you alerts on vacation deals.
Plan ahead! The more time you give yourself, the more research you’ll be able to do on your destination and ways to make it affordable. You can very often get a discount for buying tickets in advance. Giving yourself more time also means you’ll also be able to save more money towards your vacation.
Set up a Vacation Savings. At MHV, you can establish an additional Savings Account and use it exclusively for vacation planning! You can even set up an automatic transfer into your Vacation Savings!
Look for accommodations that include a kitchenette. You can save a bundle by preparing your own breakfasts and lunches, and only go out for dinners. Research places on AirBnB, VRBO, and HomeToGo to find accommodations that will likely cost less than a hotel room.
Download our free Budget Tool
to help you plan for your vacation!
Do I qualify for a vacation loan?
Lenders will often look, at the very least, at your credit score and your debt-to-income ratio (DTI) before deciding to lend to you. Your credit score is a mathematical analysis of how likely you are to repay your loan on time. Your score factors in things like how many loans or credit cards you have, how well you pay your bills on time, how much of your available credit you’ve used and how old your oldest credit or loan account is. All of these factors are weighted and combined to assign you a score. It is very important to have a good understanding of what your credit score is before you begin the process of applying for a personal loan. If your score isn’t high enough, there are steps you can take to work on improving it.
DTI measures how much debt you currently have relative to your income. A DTI that is too high suggests you may be spread too financially thin to be able to make the payments on your personal loan. Even if you have a good credit score, a high DTI can cause some lenders to deny your application. Using a monthly budget tool is a great way to manage your finances and keep your debt at a manageable level.
For more information on understanding your credit, watch our brief explainer video here.
Creating memories that will last a lifetime is one of the greatest gifts you can give to yourself and your family! A personal loan may be the solution you need to make that happen.
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