With the travel season picking up for Americans looking to explore their horizons, it may seem that an epic adventure is the way to go. The only issue is the way to pay for it.
Take a typical example of travelling from the States to Europe for just a couple of weeks. As a couple with airfare and staying at cost-effective locations, you’re still easily going to spend a few thousand dollars. If you’re travelling with children, feel free to add on an additional several thousand dollars. If you decide to go further, such as the far reaches of Southeast Asia, the ticket alone can be at least a thousand dollars per person, without factoring in the rest of the trip.
Some are thinking of taking out a loan to pay for it all but is a personal loan to travel the best idea?
Adrienne Sasson, a travel specialist at Rubinsohn Travel, located in Jenkintown, Pennsylvania, said, “Travel is all about those once-in-a-lifetime experiences. Turning to a personal loan to pay for it all isn’t something new.”
Sasson went on to say that many newlyweds will actually use a personal loan to travel for their weddings that may be in a different location than where they live.
Your current score for credit will determine how much the actual loan is and, thus, the trip will end up costing you. The greater the score, the better the terms and rates you’ll receive. The larger amount, you can also finance with a better credit score.
Sasson continues by saying, “Customers will see that the personal loan to travel for their trips to the Caribbean or even Mexico makes sense. Even if they go somewhere in Europe, a personal loan to travel easily can be better than a credit card.
“More tourism operators and travel agencies are offering their own version of paying later with minimal payments due upfront and monthly installments to pay off the rest of the trip,” said Sasson.
Looking at the benefits and issues of a personal loan to travel.
Let’s review some pros and cons of this type of debt.
Benefits of this type of loan
You may get a better rate when compared to a credit card. Also, Martina Rosado, who is a founder of Happy Travel Mag, stated that “With some loans, if you pay accordingly, you may not even end up paying much interest.”
Another key item is that this type of personal loan can be utilized for other reasons. For example, if your vacation plans are cancelled, you can repurpose the funds for something else. Rosado adds, “If you’re already approved and have the funds, you can use it how you see fit and you just have to make sure you’re able to pay the monthly installments.”
It’s never worth it to get into damaging levels of debt for a short-term holiday or destination wedding that could take years to recover from while affecting other aspects of your life.
The negative aspects of a personal loan to travel
It will still cost you more than just paying for everything with available funds. There will still be some form of cost for the personal loan to travel, whether it’s a fee or interest on the loan itself, making the overall trip simply more expensive.
Add that to the fact that the debt will need to be repaid, and the repayment period will be much longer typically than the trip itself, so it’s another aspect to consider. Rosado also adds, “A loan like this may be a sign you’re not able to afford the trip in general, and thus may not be able to repay any loan for that trip.”
Meaning that, in fact, a two-week trip could require up to the point of a couple of years to fully pay off, which could lead to a negative relationship with travel or even additional anxiety about debts.
Items to consider with a personal loan to travel
In the end, it is all subject to your overall financial overview and whether this additional debt factors into this personal financial picture.
Mikaela Anne Ferguson, who founded Voyageur Tripper, had this to say on the matter, “Everyone’s current finances are different, and that’s what will help decide if an additional loan makes sense. What other financial obligations do you have now, and will your income be enough post-vacation to make those payments? An assessment is in order before any funds are borrowed.”
Ferguson herself has taken out a personal loan to travel, but there was a great deal of research, due diligence and efforts made before taking out such a loan.
“I didn’t have any major financial responsibilities when I took out a personal loan to travel.” She said. “In fact, my debts were minimal, and there was work waiting for me when the vacation was over. Everyone is different, so simply make sure the personal loan to travel doesn’t become a burden.”
“My current strategy includes a line of credit to help finance my trips. I work on a budget, and then I set up recurring payments to ensure it’s paid off in a timely manner. “
“This comes with discipline, and make sure that you find your own system that works with your financials. You want to ensure that all of it can be paid back and you have the means to pay the monthly payments,” She concluded.