The white sand of Maldives, skiing on the Alps, and a wildlife safari in Tanzania – we all have different ideas for a holiday. There’s no denying that everyone has a unique concept of getting rejuvenated. However, going on vacation comes with a hefty price tag. Even if you are planning to go on a weekend getaway, you will need the finance to make it happen. Before you pack your suitcase, assess your financial circumstances. According to a survey by ABTA – The Travel Association in 2019, 88% of Brits took a holiday in the last 12 months. Whatever your ideal concept of a holiday is, you might need a personal loan to cover the expenses. So, is it worth to get a holiday loan?
What is a holiday loan?
It is not a special type of loan. Simply put, these loans are personal loan that you can take out to cover the cost of your holidays. The repayments can be done in several instalments as per your monthly income and outgoings.
As these are collateral-free loans, you do not have to pledge your home or any other asset to secure a loan. So, if there is a miss in the repayment, the lender cannot repossess your home. However, after a series of missed repayments, the lender may take legal help to recover the remaining amount you owe them. You may receive a County Court Judgement to repay the lender the rest of the money.
Therefore, before borrowing a loan, assess your income, outgoings and see if there is any room for making the repayments easily.
Is a holiday loan right for me?
Easy access to these loans makes such financing option very tempting. However, that should not be the only reason for you to get a loan. If you are in actual need of funds and you have exhausted all other sources to get money for your help – then you may consider a holiday loan.
Whether a holiday loan is right for you depends on the way you manage its repayment. Borrowing a loan will never go wrong for you if you pay it on time and in full. If you keep repaying the loan in a timely manner, your credit score will improve. Although it is not an instant thing, it will take time for reshaping your credit score if you have a poor credit record.
Draft a repayment plan according to what you earn and your monthly budget. Having a budget becomes extremely necessary when it comes to managing personal finances. Your every financial activity is recorded on your credit report.
Will a holiday loan impact my credit score?
When you apply for a personal loan or a credit card, your credit report is assessed by the lender or the credit card company. They evaluate your creditworthiness and affordability before making a decision. Many lenders perform a soft credit check for the initial screening of the applicant’s profile. A soft credit check doesn’t harm your credit score. It doesn’t leave any footprints on your record.
However, by law, every lender is bound to conduct a hard credit check on your report before making the final decision. A hard credit check will knock off a few points from your score. But when you start repaying the loan, your credit score will get a boost.
How to get the best holiday loan in the UK?
Comparing personal loans before you borrow is an amazing way to get the best possible loan in the UK. Not all lenders have the same eligibility criteria. You may find that some lenders only approve applicants who have an excellent credit score. While some lenders may be willing to work with people who have a bad credit score.
To find a loan that has favourable terms in accordance with your financial circumstances and credit health, it is essential that you compare several available loans in the market. There are free loan comparison websites that allow you to compare loans without any cost.
Fill in their application form and they will show you a list of the lenders who are willing to work with you. You will also get to know the interest rates they are offering you. As stated above, the lending criteria of lenders will vary, so, you may come across offers that have different interest rates. Check the offers and compare on the terms of Annual Percentage Rate (APR), monthly instalments that you will be expected to pay and if there are any additional fees like loan origination fee or prepayment penalty.