Navigation Menu

Many of us are ready to take a long-awaited vacation after putting it off for over two years. However, despite not having spent much while being locked inside our homes, inflation is sending the cost of travel sky high.

Traveling on a budget has become increasingly difficult since the cost of transportation, airfare, and lodging has all increased dramatically – made worse by the spike in the cost of feul, since Russian oil was removed from global supplies.

But if you’re really determined to pursue your travel goals this year, there are still ways to afford the cost. If you’re able to manage them responsibly, and within your means, vacation loans are available to cover your expenses.

We have compiled four types of loans you can consider.

4 Types of Loans You Can Get for a Vacation

What Are Vacation Loans?

Sydney Opera House Australia Money Cash RF

A personal loan used for financing travel is known as a vacation loan. This is an option that allows you to finance an expensive or a once-in-a-lifetime adventure through a fixed rate and choosing your term to set monthly installments.

Vacation loans can help you pay for any travel-related costs. For example, you may use the money to pay for a tour, a flight, or your lodging, or you could use it to cover the costs of your activities, transit, and meals.

To help you get started, here are the different kinds of vacation loans you can get.

The biggest thing we will stress however, is that you should only ever borrow within your means, and if you can’t realistically see yourself being able to make the repayments, you should consider other options.

Travel should not leave you in a worse or more stressful financial situation than before you left. So make sure you borrow responsibly if you choose this path, read the fine print, and compare many different bank offers.

#1 Unsecured Personal Loans

Money cash RF

Most banks don’t label their loans according to how they will be used, so a personal loan is typically what a ‘vacation loan’ is called as far as the bank product is concerned.

An unsecured personal loan is one that doesn’t need any collateral to apply. Your interest rate is based on several things, like the information you give the lender in your application and your credit history.

If you compare personal loan rates to credit card rates, you can find that personal loans are usually more favorable (though this isn’t always the case). However, the interest rate you receive will be determined by many factors, one of which is your credit rating.

The bank and other lending institutions will usually require a credit score of at least 750 for a personal loan or any other type of unsecured loan (we’re talking US credit scores here).

These loans are given out without the need for a guarantor.

#2 Credit Cards

Dim Sum Credit Card American Express RF

When planning a trip, using a credit card to pay for things like airfare and lodging can save time and hassle, and that ease of use continues even at your destination.

You don’t need to seek out an ATM or foreign exchange office when traveling abroad. As a result, you won’t have to worry about the logistics so much and can instead enjoy your trip.

Also, credit card rewards in points, miles, or cash back can help you get to your next holiday sooner.

As a bonus, using a specific credit card to pay for your vacation could provide you with travel protections. Reimbursement for misplaced bags, insurance against accidents, and assistance in an emergency are just some of the benefits offered by credit cards.

When using credit cards to finance a trip, make sure you’re aware of the interest rate you’re charged for delayed payments. The ideal solution is to pay it off in full each month, however you’re also able to only pay the minimum monthly repayment.

Just be aware that you’re charged interest on the difference between your minimum payment and your full payment, and if you spend more than your limit you may be charged higher fees for each day it remains maxed out.

#3 Home Equity Loans

Money cash house key RF

Nothing confines you to use your home equity loan for home-related purposes. Notably, there are typically no limitations placed on how these loans might be used, which means that you can also finance your vacation.

After the lender sends an assessor to determine your home’s value, you can receive the funds in a lump sum if you agree to the loan terms. At that time, you’ll be able to cover the cost of the trip and everything related to it.

Unlike some types of variable-interest loans, the interest rate on a home equity loan is often fixed and won’t increase for the duration of the loan.

Thus, if you’re ready to take a much-needed vacation but are worried about coming up with the cash right now, a home equity loan may be a good alternative if you’re sure you can repay the money within the loan’s specified time frame.

Once again though, borrow sensibly and don’t risk something as important as your home for the sake of a blow out vacation.

#4 Personal Lines of Credit

One option for financing a vacation is to tap into an existing line of credit. Instead of taking out a large personal loan and paying interest on the entire amount, a line of credit can provide you with greater financial flexibility.

You don’t have to put up your home or car as collateral for an unsecured line of credit, so you don’t have to worry about losing such valuable possessions.

However, interest rates for unsecured loans are often higher than those for secured loans, so you may pay a lot more for your trip than you would if you paid for it in cash.

For a vacation paid for with a line of credit, the amount of available credit at the time of booking is crucial; therefore, it’s wise to double-check your balance before making any firm plans.


While taking out a loan to fund a vacation is not ideal, it may make sense if you have already committed to going on a trip you cannot afford without borrowing the money.

If you think a vacation loan is a way to go,  shop around to find the best interest rate and repayment plan for your vacation needs.

We do urge you to consider this option carefully and thoughtfully though, having considered your past, present, and future financial situation, and to only borrow responsibly, and within your means for repayment.

Megan is an Australian Journalist and award-winning travel writer who has been blogging since 2007. Her husband Mike is the American naturalist and wildlife photographer behind Waking Up Wild; an online magazine dedicated to opening your eyes to the wonders of the wild & natural world.

Having visited 100+ countries across all seven continents, Megan’s travels focus on cultural immersion, authentic discovery and incredible journeys. She has a strong passion for ecotourism, and aims to promote responsible travel experiences.


Post a Reply

Your email address will not be published. Required fields are marked *