December 8, 2021


travel, Always a step ahead

How to Get a Vacation Loan

After months of social distancing and sheltering in place, it’s only natural to be in need of a vacation. Maybe you’re dreaming of a beach on a tropical island or a penguin-watching expedition in Antarctica. Perhaps you would be just as happy to climb into the car with the people you enjoy most and drive cross-country to view the world’s largest ball of yarn. Wherever your getaway may take you, it might surprise you to learn that you can pay for your trip with a vacation loan.

Here, we’ll discuss what a vacation loan is, whether it’s a good idea to get one, and how to acquire one.

What is a vacation loan?

Vacation loans are typically unsecured personal loans. They’re meant to cover your travel expenses. Vacation loans are available from most personal loan lenders, even if they’re not labeled as a vacation loan. The reality is, the best personal loans can be used in any way you wish, including for travel.

Pros and cons of vacation loans

Before shopping for a vacation loan to finance your dream vacation, make sure this installment loan is right for you. Here are some pros and cons of committing to a travel loan.


  • Not having to wait to save up for a dream vacation
  • Quick access to emergency travel funds (for moments like having to visit a sick relative or attend a funeral)
  • Lower interest rates than most credit cards
  • Improved credit score when making each payment on time


  • Having to make long-term monthly payments to pay off the cost of the trip
  • Interest charges over the loan term add to the total cost of the trip
  • High interest rates for a borrower with bad credit
  • Having a new debt and loan payment could make it more difficult to qualify for another loan if you need it

How to get a vacation loan

If you decide that a vacation loan is the perfect way to pay for travel, the entire process — from loan application to loan offer to funding — is relatively easy with these six steps.

Step 1: Decide how much to borrow

Minimum and maximum loan amounts vary by lender. For example, some offer small loans (from $1,000 to $10,000). Others offer larger loans (from $5,000 to $100,000). Deciding how much you want to borrow achieves two things: It helps you narrow down which lenders best fit your needs and gives you a budget to work within.

Step 2: Shop for a lender

The right lender offers more than just the cheapest interest rate (although the interest rate you pay is important). A great loan offer comes with the lowest competitive rate and a repayment term that works for you. Ideally, a lender charges low (or no) fees, including an origination fee or a late fee. It’s the annual percentage rate (APR) that really matters. APR reflects the interest rate, points, and fees charged by the lender.

Because APR provides a true picture of how much you’ll pay for a loan, that’s the percentage to keep your eye on. If you have an excellent credit score, there’s a chance you can negotiate the fees down (or away completely). Don’t simply accept that you must pay all fees charged by the lender. Failure to negotiate could potentially mean leaving money on the table.

Step 3: Submit a loan application

A personal loan application asks for basic information, including your name, social security number, place of employment, and how much you earn. Once you submit the application, most lenders run a soft credit check that does not impact your credit score. Once it checks your credit history to determine your creditworthiness, the lender will approve or deny your application. It’s at that time that they’ll let you know how much your APR will be, including the interest rate and all fees.

Step 4: Proceed with your lender of choice

It’s only after a lender is informed that you wish to proceed with a personal loan that they run a hard credit check. This credit check will ding your credit score, but not by much. And making your regular monthly payment on the holiday loan should lead to a relatively quick rebound in your score.

Step 5: Provide additional documents as needed

As a lender conducts a final credit check to verify your financial information, it may ask for additional documentation. For example, if you’re self-employed, the lender may want two or three years worth of tax returns. The faster you get documentation to the lender, the faster it can fund your personal loan.

Step 6: Wait for funding

From the time of loan approval, it typically takes a lender one to 14 days to deposit the funds into your bank account.

Alternatives to a vacation loan

A vacation loan is not the only way to fund travel. Here are a few alternative ideas worth consideration.

Savings account

Sometimes, the planning is as much fun as the actual trip (or nearly as much fun). Consider how much you can afford to put away each month, and plan a trip around that amount. For example, if you can manage an extra $300 per month, you’ll have $1,800 for a nice road trip in six months or $3,600 in one year.

Credit card with 0% promotional rate

If you have good credit, consider applying for a credit card with a 0% promotional rate. These credit cards typically give you 12 to 18 months interest free. Let’s say your credit card offers a 0% APR for 18 months and you spend $5,000 on vacation. By making 18 equal payments of $278, you’ll have the trip paid in full before the promotional period expires.

Garage sale

If you’re still social distancing, now is a great time to go through your home — including the garage, basement, and attic — to find anything you no longer need or use. Take a photo and sell those items online through Facebook or your neighborhood website.

Sometimes, waiting to pay cash for a vacation is the best thing to do. And sometimes, financing makes sense. Here are a few examples of when to finance instead of paying cash.

  • When you’re traveling to be with the people you love in a time of need
  • When you’re just starting out in life and intend to use a small vacation loan to build your credit score
  • When you’re offered a once-in-a-lifetime trip

There’s nothing quite like a vacation, and the next one is likely to be extra special. When it comes to paying for that trip, though, run through your options and choose the one that works best for you, even if it means waiting a few extra months.

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