Credit for vacation – take out in an easy way
How to finance your dream vacation with credit? If a vacation trip exceeds the budget, you have two options: you can use the expensive overdraft facility or take out a loan for your vacation. A non-earmarked installment loan for private customers gives you the opportunity to finance your holiday in installments.
Above all, you should pay attention to an appropriate loan amount and a term that is not too long.
Fund your vacation in installments
Finally get away from everyday life and really relax: The people like to let their vacation cost something. In 2017, consumers spent a total of 73.4 million dollars on vacation trips, 5.9 million more than in the previous year. However, there is not always enough capital available to pay for your dream vacation in one fell swoop.
Anyone who does not want to do without a family vacation, honeymoon or a trip around the world between school and university can take out a loan for the trip.
What makes the vacation loan special?
The vacation loan is an uncommitted consumer loan. This means that borrowers can freely use the approved loan amount as they wish. This distinguishes consumer credit from, for example, a car loan or a real estate loan, where the money is tied to a specific purpose.
Financial institutions generally charge higher interest rates for consumer loans because they have no security in the event that the borrower cannot repay the borrowed amount. With a real estate loan, for example, the property serves as security, with a car loan the vehicle.
Where can I apply for a vacation loan?
For example, you can apply for a consumer loan for your vacation trip at your house bank. Alternatively, you can take out a so-called small loan from an online bank, i.e. an online loan. Small loans include sums of less than 10,000 dollars and are usually available within a few working days.
You also have the option of having consumer loans brokered by private investors. The mediation is usually done online. Tour operators also offer vacation loans.
Which option is best for you depends, among other things, on your personal situation. An independent loan comparison shows you which lender offers the cheapest offer for your needs.
Vacation on installments: How to calculate your credit installments
You repay the loan for your vacation in monthly installments. The rates are influenced by three criteria:
- the loan amount
- the chosen term
- loan interest
The monthly installments should not exceed your financial options. Calculate how much money you have available for monthly installments after deducting all fixed costs. Do not calculate your costs too tightly, but leave a cushion for unplanned expenses. The loan rate should ideally not be higher than two thirds of the amount that remains after deducting all costs.
How much should the loan amount be? Before you take out a loan for your vacation, you should first determine how much you want to spend on your trip. Please note that in addition to the actual travel costs, there are additional expenses at the holiday location, for example for museum visits, tours, restaurant visits and other activities. Also note that for a higher loan amount you either have to pay higher installments or you have to repay the loan over a longer period of time.
What loan term should you choose?
A longer term means lower credit rates. However, think about whether you really want to go into debt for a few weeks of vacation for several years. Ideally, the repayment phase for a vacation loan is no more than twelve months.
Pay attention to the effective interest rate!
The lower the interest rate, the cheaper the loan. However, there are two different interest rates. The debit interest rate alone denotes the interest that is calculated on the loan amount. In their advertising, lenders often only show the borrowing rate in order to make the loan appear as a cheap offer. However, further borrowing costs are added to the borrowing rate. The decisive factor for the loan comparison is therefore the effective interest rate, also known as the annual percentage rate. It shows the total cost of the loan during the repayment phase.
The requirements for a vacation loan
As with any other loan, lenders also want to be sure that you can pay back the loan for your trip with the holiday loan. That is why they check your solvency, the so-called creditworthiness, before lending. Along with the loan application, you must therefore submit some documents and evidence to the lender.
The exact documents you need vary slightly from bank to bank. Common are:
- proof of salary for the past two to three months
- for self-employed and freelancers the last tax assessment and / or a profit and loss account
- proof of pension for pensioners
- Proof of any further income, for example from renting and leasing
- Account statements for the past three to six months
- credit information
What else do I need to keep in mind?
Loan amount, term and effective interest are three important criteria for the loan comparison. If you would like to take out a loan for your vacation, there are a few more points you should consider:
- Are there any closing fees?
- How can you contact the lender? Is there a free hotline, advice by email or a free chat?
- Is the loan offer tied to the conclusion of certain additional, chargeable offers, such as travel cancellation insurance or residual debt insurance?
You should be skeptical if the lender asks for upfront fees. Advance fees are almost always an indication of fraudulent behavior.
It’s worth comparing vacation loans!
The effective interest rate is linked to the base rate of the bank. The interest on your vacation loan is also calculated on the basis of your creditworthiness and can differ from lender to lender by several percentage points. It is therefore worth comparing all offers carefully before taking out a loan for your trip. We will be happy to help you find a loan offer that you can use to finance your dream vacation. Please feel free to use our free loan comparison.