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How to Take Advantage of Holiday Loans in Australia

By December 15, 2019 No Comments

Australians love to travel. According to statistics, 11.1 million Australians returned from short stays overseas in 2018. This number has a 5.7% increase from 2017, which says a lot about how enthusiastic Australians are when it comes to travel. Now that the holiday season is upon us, you may be considering a trip for yourself or your family. Have you given the expenses some thoughts? Did getting a holiday loan in Australia ever cross your mind?  

What is a Holiday Loan?

Holidays come with lots of expenses—even more so if you are planning to take a vacation overseas. A holiday loan may be able to help you manage your finances for your travel plans. 

What is a holiday loan? A holiday loan or a travel loan is a type of unsecured personal loan. Generally, the purpose of this loan is to help the borrower cover the costs of their travel. Depending on how you intend to manage your funds, it can help you pay for airfares, accommodation, tours and even new travel accessories.

How Does a Holiday Loan work in Australia?

Since a holiday loan is a type of unsecured personal loan, it works in the same way as well. The amount of money that you can borrow depends on the lender and your circumstances. Keep in mind that the length of the loan will determine how much you need to pay your lender every month.

How Do You Pay for a Holiday Loan?

The lender will give you the money in one lump sum. Lenders typically send it directly to the borrower’s bank account. This arrangement allows you to easily access the funds so you can start planning your trip.

Usually, this kind of loan comes with a set repayment schedule throughout the life of the loan. Each one of your repayments will go towards paying off the amount you borrowed, or the principal, and the interest. 

Depending on your preferences, you can pay manually, or you can have our repayments automatically debited from your nominated bank account. You can also choose the frequency of each scheduled repayment throughout the life of the loan. The latter is ideal as it will help you avoid accidentally missing a payment.

Why Should You Take Advantage of Holiday Loans Offered in Australia?

Saving money is not as easy as it sounds. Holiday trips can cost a fortune—depending on your destination. It could take you ages to achieve the holiday vacation that you have been dreaming about for a long time. 

Here are the reasons why you should take advantage of holiday loans:

  • Fixed Interest Rate – Usually, holiday loans in Australia have a fixed interest rate wherein the amount of your repayment stays the same. This arrangement makes it easier for you to create your monthly budget. It also gives you a clear structure for repayments, since you are aware of what your financial commitments are and what the set end date is.
  • Quick Fund Transfer – Once your application for a holiday loan is approved, your lender can deposit the funds into your account within five days, which is quite fast compared to other types of loans.
  • Flexible Conditions – Typically, a credit card would charge you with a cash advance fee—you will not experience this with a holiday loan in Australia. This type of loan also allows you to spread out the cost of your holiday throughout your loan.

You don’t need to deprive yourself of a holiday due to financial restrictions or deny yourself of decent living conditions to be able to have one. 

Holiday Loans: An Important Part of Your Dream Vacation

Australians spend an average of $77 each week on holidays. That amount adds up to around $4,000 annually. You cannot call that a small amount of money. A holiday loan could be the ideal way to fund your trip.

A holiday loan can let you experience your dream holiday, now! And, believe it or not, it can also be a money-saving option. Having funds available gives you the benefit of cheaper airfares or accommodation when they become available, rather than waiting to save enough money.

What if You Have a Credit Card?

Planning a holiday trip is not only about your airfares and accommodation. These are just two of the many factors that you need to consider for your trip. There are many other expenses that you need to think of for your dream vacation. Honestly, it is easy to underestimate how much money you need for a trip. Even with a strict budget to stick to, can you really resist splurging in a foreign land?

Although it is a good idea to budget your purchases, there is no guarantee that you can follow your plan religiously. Can you honestly say that you could go to Japan, Thailand or Korea without buying one too many souvenirs? Resisting the temptation is difficult, so do the right thing and try not to overshoot a holiday budget. 

You may be thinking that a credit card can solve your problems. You are not wrong, but you are also creating a new problem for yourself. Credit cards have high-interest rates. You would indeed be able to cover your shortcomings with your credit card, but you will also be committing yourself to costly credit card repayments.

Holiday Loans are Cheaper than Credit Card

The rates of holiday loans in Australia are typically lower than credit card rates. You can add a little extra to the loan that you will apply for so that you will have some wiggle room for any unplanned purchases. You can enjoy your vacation without thinking of expensive credit card repayments. Your small holiday loan can help you cover your expenses.

Tips on How to Take Advantage of Your Holiday Loans

There is something magical about spending the holiday season away from home. Unfortunately, the journey to your dream holiday trip is not as enchanting. However, it does not mean that it has to be extremely difficult. 

Before the holidays roll in you should already have a plan in hand. If you do not have any extra income in your budget from October to December, then you either use the money in your savings account or borrow the money from some source.

Here are some tips to follow to make sure that you are taking advantage of your holiday loans and not the other way around:

1. Do your research and shop around.

You should shop around for the best holiday loan. Do not accept the first offer that you get. There might be a holiday loan somewhere in Australia that is better suited for your needs. You can look for loans in person or through the internet.

You should know that when you apply for a loan, the lender or bank will base your APR on your credit rating. The better your credit rating is, the lower your interest rate. When looking for the right holiday loan, compare the interest rate, monthly payment amount, and the length of the loan. 

2. Do not borrow more than what you need.

Earlier, we mentioned that you can underestimate your expenses. However, this does not mean that you should overestimate your budget on purpose. You should take out a holiday loan to cover your holiday trip expenses only. Prepare a detailed budget of what you might want to buy or experience on your trip so you have an idea how much you need.

You should also consider the monthly financial commitment you need to make to pay your loan back. If you feel like your income is not enough to meet that commitment, borrow less or make some budget cuts.

3. Don’t wait until the last minute to apply for a loan.

Some lenders approve loan applications within an hour, but others take a few days before getting back to you. Waiting until the last minute to get a holiday loan means that you might miss great airfare and accommodation discounts, or having to shop last-minute for your trip.

You are going on a vacation so you can relax, so don’t put yourself in a position where you will get stressed before you even get to the destination. 

4. Be practical with your purchases and save the difference.

The longer you owe money, the more you pay in interest. That is how loan works. You can save some money by paying your loan off before it matures. You need to check the fine print of your agreement with the lender to ensure that your loan does not have a prepayment penalty. Be practical and try to spend less on each item you buy on your trip. You can save the difference from these purchases. You do not need to deny yourself of buying souvenirs—it’s just that you should look for affordable options.

5. Think before you buy.

It is easy to forget about your budget plans when you are in another country. There are many items overseas that you don’t get to see in Australia and it is much harder to control your impulse to buy when you know that you are in a place for a limited time. However, you need to think hard before you buy. You need to consider if the purchase is practical.

6. Prepare a plan on how to pay off your loan.

You should know what you need to bring when you go on your dream holiday. All your essential travel documents should be in one place and you should plan everything to make sure that you enjoy your vacation. However, you should also have a plan on how to pay off your debt the same way that you have an idea on how to enjoy your trip.

Imagine worrying about your debts when you should be having a good time. Do not punish yourself that way.

The Takeaway

You do not need to deprive yourself of a holiday trip just because you do not have any extra income at the moment. You can take advantage of holiday loan offers in Australia so that you can plan your vacation now. However, keep in mind that you should be responsible when it comes to handling your finances. Loans can help you achieve goals and open up opportunities if you handle them well.

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