Considering taking a personal travel loan for travel? In this post, you can find some insights and knowledge on what to consider before taking out travel loans, also known as vacation loans.
Most of us have a desperate urge to travel when we want to take a break and relax. It is healthy to go on vacation, as much as possible. However, planning finances can be stressful. The reason is that there is so much to think of. And of course, you need the funds to book your tickets, for entertainment, food and hotel expenses as well. Now, if you fear the fact that you will not be able to raise the significant amount needed for travel, you should consider getting a travel loan.
Now, there are some essential aspects that you need to keep in mind when opting for a travel loan, and we will give you insights into these aspects in this post.
Table of Contents (skip directly to the info you're looking for)
- 1 Understanding the concept and benefits of a travel loan – vacation loan
- 2 How to apply for a travel loan
- 3 Things to remember when acquiring a travel loan
Understanding the concept and benefits of a travel loan – vacation loan
If we have to define a travel loan in simple words, then it is an unsecured loan intended for traveling purposes. When you want to travel, then you can avail a personal loan because you can get fixed terms of payment. When the repayment terms are fixed, then it becomes easy for you to pay back the money.
When the loan gets approved, then you will get the funds in your account in about 5 days. Now, some people also make use of their credit cards for borrowing money, but that is not a smart approach. The reason is that you will have to pay a high-interest rate.
One option is to apply for a matkalaina. Wondering what that is? Well, it is a Finnish term for a travel loan.
How to apply for a travel loan
Applying for a travel loan has become convenient in recent years. You can acquire travel loans from online lenders too. However, you must go for credible and reliable lenders. Do not opt for the first option that comes your way.
The best approach will be to compare the quotes of different lenders and then make your pick. The best part is that it is easy to apply for a travel loan online.
What you need to do is fill out the application form. You will not have to indulge in extensive paperwork when you apply for the loan online. When you submit your application, then you will get access to different lender quotes.
Things to remember when acquiring a travel loan
1. Borrow only as much as you need
When you seek a loan for traveling, then it is advisable to only take as much as you require. What you need to keep in mind is that if you take a high amount, then the repayment amount will be high also.
You should assess how much travel amount you can acquire through your savings.
When you are planning to travel, then it is crucial to remain organized at all times. You should have all the essential documents ready. The good news is that you will not require extensive documents when you intend to travel.
2. Check the repayment terms
You must evaluate your repayment terms when you want to take a travel loan. The travel loan repayment tenure ranges from 12 to 60 months after acquiring the loan. The mistake most people do is that they opt for long payment tenure, thinking that they will pay a low-interest rate.
What most people overlook is that when you opt for long payment tenure, then you are paying more money at the end of the day. Always make it a point to check the terms and conditions of the lender.
There are times when you can manage a huge installment because you received your bonus, but you will have to see if your lender’s terms allow you to pay this way. Now, the crucial thing to remember is that if you miss a payment date, then you can be in trouble.
The reason is that the missed payment will have an impact on the credit score. Never take more credit if you cannot pay responsibly.
In most of the cases, people do not want to linger on their travel loan for a long time. You should also ask your lender if he allows roundup payments. The benefit of the roundup payments is that you give some extra cash to your lender, and this will eventually reduce the loan amount.
3. Keeping a check and balance on your credit score when availing a travel loan
When you are planning to take a travel, then there is one more significant aspect that needs your consideration. You need to have a mix of secured and unsecured loans because it is vital for maintaining a good credit history.
If you already have a large number of unsecured loans, then opting for another unsecured loan will make things worse for you.
4. The documents need to be ready
When it comes to the documentation, you will require address proof, passport-size photos, bank statements, and salary slips. What you need to keep in mind is that the documentation requirements may vary depending upon whether you are a self-employed person or salaried person.
Some lenders also need additional details like your travel plans, accommodation booking, and airfare details, so you should have the documentation ready.
When you are planning your trip, then there are some essential ways to cut down on the expenses. Remember, if you borrow a small amount, then it will become easy for you to return the amount.
Insider Tip: Consider traveling in the low season. Well, by the low season we mean that you should not travel during the holidays. It is preferable to avoid weekends also.
When you want to travel in comfort, then make sure that you prepare a checklist of your trip essentials. Once the checklist is in front of you, then you will get a fair idea about your expenses, and how to cut them down.
If at any time you feel that it is difficult for you to pay back the money, then consider refinancing your loan. It will be the best approach to reduce the interest rate. Follow the guidelines when availing of the travel loan, and you will not have to get disappointed at the end of the day.
Have you ever considered or got a travel loan for traveling? Share with us your experience below.