Can You Afford Your Next Trip? – The Best Holiday Loan Options
Once in a while we all get that craving to get away from our nine to five routines. Staycations are one thing but a holiday far away from the bustling city is a whole other level of complete rest and relaxation. Routines tend to get stressful and everyone needs a temporary escape in order to function sanely throughout the succeeding months.
Can I afford it? More often than not, that is the first thing that comes to mind. We wouldn’t want to spend on something that would put a large dent in our wallets. That doesn’t necessarily have to be the case each time you take a holiday. You see all these people on social media taking holidays nearly every other month and you know they do not have jobs that would give them a large lumpsum. How do they do it?
The market for personal loans has become more prominent in the last few decades and so have credit cards. To some people, a credit card is one scary serpent giving you access to live beyond your means but that does not necessarily have to be the case. Dynamics have changed over the past few decades and credit cards can now be arranged to fit your lifestyle. Low cost credit cards have come to play and if you are able to keep it at a zero balance with each billing period, you ensure that you are still within your monthly budget. This is great for those who want to avoid paying interest, too. However, you are only given forty-five days (for most credit cards) to pay for your consumption before you start incurring interest fees. If you need a bit more of an allowance than forty-five days, you can choose to pay off your dues over time. This would, of course, incur you interest fees already but at least it would not take a large amount in one go. Often no frill credit cards have a much lower rate of interest and can be more popular for holiday loans.
Other low-cost options include a personal loan from your bank, which is usually on a reasonably low interest rate (around the 10% mark).
The issue is that not everyone will qualify for a low-cost loan or credit card options and require high cost loans to either entirely, or more often the case, partly fund their trip. The most common higher cost loan contract is known as a MACC which is between 2k to 5k with interest rates typically capped at 48% interest including fees per year. If paid off sooner, the rates can be lower. While it’s not ideal to be insuring this type of high interest debt, this segment of the market has been popular in funding loans recently. The payment terms are typically 6 months to 2 years, and you get to choose a repayment time period that would suit your cashflow.
You should not stress about finances when taking a holiday. Financial institutions work to provide you with options that would best fit what you need on your trip and your current lifestyle. They key is not to over extend yourself so when you return from your holiday you are not faced with a financial hangover.
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