Tahiti. Scotland. Australia. France. Iceland. No matter where your dream vacation promises to take you, the reality is that it will likely be expensive. Your best option for financing a trip, of course, is to plan. Draw up a budget, start saving, and book your trip only once you’ve saved enough money to pay for it. But sometimes circumstances work against your best savings efforts, and you might need to find a different way to take advantage of the trip of a lifetime. Enter: travel loans.

What is a Travel Loan?

Technically, a travel loan or vacation loan isn’t a separate category of loan; it’s simply a personal loan that you choose to use for taking a trip. Basically, you apply and are approved for a personal loan, receive the funds, and then use the money to cover all your travel expenses – flights, hotels, dinners, souvenirs, you name it. Then you pay back the loan in equal loan payments over a pre-specified length of time, usually anywhere from two to five years. A personal vacation loan is an unsecured loan, meaning you aren’t required to put up any collateral against your loan.

Lenders often advertise travel loans as quick and easy solutions to get you closer to a dream vacation. However, a vacation loan may not be the  best option for everyone. Consumers with bad credit, for example, might end up being approved only for loans with exorbitant personal loan rates that do more harm than help over time.

Let’s look at some of the main pros and cons of using a vacation loan to finance your adventure.

Also Read: Truths About 30-Year Fixed Mortgage Rates You Need to Know

Travel Loans: Pros

If you’re in a situation where nothing else will do, the best travel loans can offer some definite benefits, such as the following: 


If you’re in an emergency travel situation and you need cash fast, a personal loan can typically provide access to money within 24 hours.

Favorable Interest Rates

For borrowers with excellent credit, a personal vacation loan will typically offer a much lower annual percentage rate than a credit card. For example, a personal vacation loan often serves as a go-to for covering travel expenses. So if your only other option is carrying a balance on a high-interest credit card, you’d be better off using a personal loan to finance your vacation. But keep in mind that actual repayment terms will be different for everyone, depending on credit score and other gauges of creditworthiness.


When you use a personal loan to finance your vacation, it will come with specific loan terms. These terms include an annual percentage rate, a schedule of monthly payments, and a consistent, set payment amount. These terms can also help you stay focused toward paying off the debt and can help ensure that you pay it off as quickly as possible. The other bonus is that the predictability helps you plan for and ensure stability in your budget. This is easier to account for than the revolving payments typically associated with credit cards.

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Travel Loans: Cons

While there are some situations in which a  personal vacation loan may make sense, they do come with some downsides, which we’ve outlined below.


Most financial experts will advise against the use of debt for discretionary spending, whether by using a credit card or a personal loan. Debt always brings risk with it – if you’re unable to make your payments, you face late fees, get dings on your credit score, etc.

Extra Costs

Of course, by using debt to pay for your trip, you’re obligating yourself to pay more than the true cost of your vacation. You’re paying the actual travel costs, plus the interest charged for the loan. How much extra cost? That all depends on your credit score, income, and other factors the lender will consider. Generally, the better your credit score, the lower the interest you’ll pay on your loan, so those with excellent credit have that going for them.

Travel Loans

Long Repayment Terms

Some personal loans carry repayment terms of as long as five years – long after you’ve returned home and the luster of your amazing trip has faded. Some experts advise against using loans (i.e., debt) to pay for anything that doesn’t last as long as the debt repayment process. Arguably, a vacation doesn’t meet that suggestion, since it’s done in a matter of days or weeks, while you might be repaying the loan for years. But the memories of the vacation experiences can last years, perhaps making it worth the use of a loan. If you do go the personal vacation loan route, make sure that you fully understand what your monthly payment will be. Also, make sure you can account for it with your monthly budget.

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Alternatives to Travel Loans

Fortunately, personal travel loans aren’t the only way to afford a nice vacation. Below are some additional alternatives to think about before you apply for your loan.

A zero percent APR Credit Card

Consumers with good credit can generally qualify for a credit card that offers a zero percent annual percentage rate (APR) introductory period. That’s sometimes for up to the first 18 months or more that you have your card. Using this type of credit card allows you to pay for your trip in installments over time without your overall balance accruing any interest. As long as you know to pay off the entire balance before the introductory period is over, this can be an outstanding option for breaking up the cost of a major trip.

Travel Credit Cards

If traveling is your passion and you have a good credit history, you can always apply for a credit card that rewards you for your day-to-day purchases. It would do so by awarding you points that can be redeemed for travel – flights, hotels, rental cars, and more. Many travel credit cards also award a pretty hefty sign-up bonus if you spend a certain amount of money within the first few months. That can help you quickly rack up enough points for a travel award. 

Card Options

With this option, you have to be patient and wait for enough points to accrue to fund your trip. Some cards may offer you extra points for travel-related purchases. Others also allow you to cash in points to cover travel expenses you’ve already made. So, you have a pretty good amount of flexibility in how to best use a travel credit card to cover your needs.

If you don’t have a travel credit card, check to see what kind of rewards your current credit cards might offer. If you have cash-back rewards, for example, you can redeem those toward your trip. Or, if you can redeem for gift cards, that might help you pay for items you need for your trip.

Also Read: What to Know About First-Time Homebuyer Grants

An Existing Credit Card

We’re not advocating that you run a high balance on a credit card that will end up costing you more in the long run. Using a credit card judiciously can be a reasonable option, especially if you have almost enough money saved to cover most of your trip. Or, if you know you have money coming in but need to make a travel-related purchase before then. 

But be careful. If you run a high balance on a high-interest credit card and take your sweet time to pay it off, it can end up costing you thousands of extra dollars in interest costs.

Point-of-Sale Travel Financing

By partnering with major airlines and travel sites, some lenders, including  Affirm and  Uplift, will allow consumers to select financing options as they purchase their tickets. These lenders are typically serving those with average credit who might have difficulty qualifying for a travel credit card.


Of course, planning and  saving for your trip is, hands-down, the best way to pay for your dream vacation. If you have a trip in mind – or even if you don’t have a specific idea yet – you can open a dedicated  savings account and begin putting away small amounts of money toward your trip. Once you have the details on how much your flights, hotels, etc., will cost, you can set a specific target and then book your trip once you’ve reached your savings goal. 

Check Your Budget

If you take a good, hard look at your budget, you might be surprised to find places where could cut back on unnecessary expenses– anywhere from $50-200 a month is common. You can put that money into savings toward a major trip. Many people cut expenses like eating out, various subscriptions, gym memberships, etc., especially if these things aren’t adding value to everyday life.

If you’re taking a family vacation, you can even make a family game that encourages everyone to put away any extra money toward the big trip. For a bonus, you can have your savings amount automatically deducted from every paycheck so that you don’t forget to do it. When taking a trip entirely for leisure, it’s worth the wait to have the peace of mind that your  family adventure won’t plunge you into high-interest debt.

An Existing Line of Credit

While most experts won’t advocate opening a personal loan for a leisure trip, they may be more in favor of tapping an existing line of credit. An open home equity line of credit, for example, may be an option that offers a lower interest rate than either a credit card or a personal loan. Because these loans are secured with your home as collateral, they generally offer much lower interest rates. But be careful: if you aren’t able to make your monthly payment, it’s your home on the line. Make sure you’re financially positioned to meet your loan repayment obligations.

A personal line of credit may also be an option, which can be either secured or unsecured. As a form of revolving credit, personal lines of credit are more flexible than installment loans. With a line of credit, you only pay interest on what you need. You can also continue to borrow once you’ve begun to make payments on your outstanding balance. And if you have an existing HELOC or personal line of credit, you don’t have to go through the process of applying – you’re already there.

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How to Qualify for a Personal Travel Loan

Travel Loans

You can apply for a personal travel loan through just about any financial institution, such as a bank, a credit union, or an online lender that offers personal loans. Personal loans have very few restrictions on how the money can be used, so you can use the loan to cover travel expenses.

Get Prequalified

As with most loans, it’s a good idea to get prequalified for a personal vacation loan if you can. This will allow you to see everything about the loan including the annual percentage rate, repayment terms, and monthly payment. Thus, you can make sure you’re getting the best deal. Many loan qualification sites will allow you to prequalify and then compare offers from several different lenders before choosing the one that makes the most sense for you. 

Compare Lenders

Going through this process also lets you compare which lenders tack on extra fees, like a prepayment penalty and/or loan origination fee. Try to find a lending partner that doesn’t charge these extra fees that would make your vacation cost even more.

As with any installment loan, the lender will look at factors like your credit score, debt-to-income ratio, income, and sometimes even education and employment, before making a decision to accept your loan application and offering you a specific set of repayment terms tailored to your income and credit history. In some cases, you might need to provide references or contact information for your employer, especially if you have little credit history or a less-than-stellar credit score.

Also Read: How to Consolidate Credit Card Debt

Our Top Picks for Travel Loan Lenders

Once you’ve decided to go for a vacation loan, it’s important to pick a lending partner that will give you the most favorable terms. Below are some of our favorite lenders when it comes to getting a fair and appropriate percentage rate and repayment terms.


Upstart is especially good for borrowers with limited credit history but a promising financial future. It offers loan amounts from $1,000 to $50,000, with annual percentage rates ranging from 7.69 to 35.99 percent.

Lending Club

In addition to financing your vacation, Lending Club is also a sound option for debt consolidation. Its loan amounts range from $1,000 to $40,000, and annual percentage rates fall between 6.95 and 35.89 percent.

Best Egg

Best Egg offers a wide range of loan options and is known for its particularly fast service. You’ll be able to apply for loans anywhere from $2,000 to $35,000, and annual percentage rates will vary from 5.99 to 29.99 percent.

Rocket Loans

Rocket Loans is a sound option for borrowers with good credit, and with them, you’ll usually receive funds within one business day. Loan amounts vary from $2,000 to $45,000, and you’ll see annual percentage rates between 6.85 and 28.90 percent.

Discover Personal Loans

Discover is well-known for offering reliable products for consumers with good to excellent credit, and its personal loans are no exception. Discover offers loan amounts that range from $2,500-$35,000, with annual percentage rates that vary from 6.99 to 24.99 percent.

Marcus by Goldman Sachs

Marcus is well known for the flexibility of its loans, with no fees, low rates, and flexible repayment terms and options. You can find loans ranging from $3,500 to $40,000 and offering annual percentage rates anywhere from 5.99 to 28.99 percent.

Also Read: The Major Benefits of Using a Personal Finance Advisor

Final Considerations

There’s no denying that a vacation loan can send you on your trip of a lifetime a lot faster than waiting to save up the money or accumulate enough travel rewards. However, you should use a personal travel loan with caution. If you can, it’s always better to pay for your trip out of your savings so that you don’t take on high-cost debt. If you think a vacation loan is a good option for you, carefully analyze what you can pay out of savings. Also, look into how much money you’ll need to borrow to make up the difference and your ability to pay back the loan in a reasonable time.

The Choice is Yours

Ultimately, the choice to take out a travel loan is completely up to you. Most financial advisers would caution against using debt for anything that depreciates over time, such as a vacation. It’s over when it’s over, and it’s worth nothing to anyone but you. But others would assert that creating family memories and milestone moments is worth the risk and extra cost of taking on the debt – it all depends on your perspective.

Once you’re sure that a vacation loan makes sense for you, then carefully examine all options in terms of the best lender. Choose the loan that meets your minimum needs without excessive fees and prepayment penalties Doing the extra work to make sure you’re getting the most for your money can make saying “bon voyage” all the sweeter.

Have you ever used a vacation loan? Tell us about your adventure and the lender you used in the comments below.

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Doreen Buchanan

Need a loan to travel to turkey need a loan
Of the some of 3.500$ whet do I need to do.

Nora Borosak

Hi Doreen,

I recommend reaching out to the companies listed in the article such as Upstart and Lending Club to see if they can offer you a loan to meet your needs. Wishing you luck and safe travels. Thanks for reading!

Vickie zehendner

Hi I would like to know more about this