Over three-quarters of Americans say they want to travel more than they currently do.Did you know you could get a vacation loan from a private lender? Yeah! You can! But is it smart? Click here to learn about the pros and cons.
What’s holding people back? It’s money, of course. That’s why a growing number of people are taking out personal loans for vacations.
We want to know whether this is a smart idea to give eager world travelers with an opportunity of a lifetime or financially risky choice which should be avoided.
If you’re considering taking out a vacation loan, keep reading to discover the pros and cons. Here we go!
Should You Get a Vacation Loan to Travel the World?
Con – You’ll Lose Money
Normally, you should borrow money when you have an appreciating asset. It’s the old adage – “you have to spend money to make money.”
For example, your home is probably going to grow in value over time. Therefore, it’s wise to get a mortgage loan because you’re able to pay it off with the gains from the rising value of the property. The same can be said for an investment in your business.
However, with traveling, you’re not going to increase the value of your investment. You’ll have to pay back interest on your personal loans, which could set you back for several years.
Pro – You Can’t Put a Price on Travel
But, that’s purely in financial terms! You can’t value the experience of travel in the same you can a business or home.
How much is it worth to broaden your mind? What is the price of seeing the world? What is the value of meeting people from a different culture?
Con – There Are Better Options
However, if you want to borrow money to go traveling, taking out a personal loan is not the only option available to you.
You can save up over a few years and splurge it all on a once-in-a-lifetime travel vacation. However, the other common source of borrowing money is through credit cards.
Furthermore, unlike personal loans, credit cards also give you additional benefits. You get purchase protection while traveling. This means that you don’t have to carry around cash all the time as you enter different countries.
There are also dozens of rewards available to you. In particular, points which can reduce the cost significantly of your flights or hotels.
Pro – Personal Loans for Bad Credit
Credit card issuers usually require a good credit score. If you have a history of bad credit, then you probably won’t be able to meet the requirements.
Only a small percentage of Americans have extremely poor credit. But, over one-third of Americans have quite bad credit. So, this could rule out many people from taking out credit cards for travel.
However, personal loans are available to people regardless of their credit rating. This provides thousands of people the chance to borrow money to go traveling around the world.
Con – You Don’t Need to Borrow Money
If you want to go on vacation, it’s extremely attractive to take out a personal loan to get the cash immediately. However, you shouldn’t take out a personal loan unless you really need the money.
If you’re considering a personal loan, make sure you review your financial circumstances before you make a decision.
Already got savings? You may discover that you don’t need to save up as much as you think until to be able to afford to go on vacation.
Pro – You Can Borrow a Lot
You can take out a personal loan to fund your whole vacation.
The average vacation costs up to $2,000 per week. If you have a family of four or more to cover, then you could be looking at nearly $10,000 per week.
You wouldn’t be able to cover your vacation with a credit card alone. That’s why personal loans allow you to borrow a lot of money which can fund your entire trip.
If you’re traveling around the world, then this is a huge advantage of personal loans.
Then, you can calculate how much you need to save after to pay off the loan. You can set up a repayment plan which determines your budget when you return from your vacation.
Con – Fixed Payments
Unlike with a credit card, which you can pay off over an extended period of time, personal loans have fixed payments.
This means that you have to pay back an agreed amount of money each month. There are serious financial consequences if you fail to pay back the right amount on time.
For example, the loan company could claim collateral or sue you for nonpayment if you fail to make the payments. Just make sure you budget accordingly in order to make your fixed payments on time.
Pro – Travel Now Not Later
Of course, it’s possible to save money now in order to travel later in life. However, sometimes life doesn’t quite work out like that.
If you feel it’s time to take the opportunity to go traveling or take the vacation of your dreams, then you might need to do it now.
By taking out quick loans, you can receive the cash immediately to make your dreams come true.
Are You Going to Take out a Vacation Loan?
Now you know the pros and cons of taking out a vacation loan.
There are many important things to consider before you apply for a personal loan. However, it could be the only answer to enable you to take the vacation you deserve.
Visit our website for more travel tips to discover how to make your travel trip everything you imagined.