Know Before You Go
  • Personal loans can be a handy way to receive a lump sum and pay for your flights, accommodation, and other expenses.
  • Be sure to look at the basics: Interest rate, fees, fixed or variable rate, extra repayments, and so on.
  • If you want a way to shop overseas and balance cashflow, also consider a credit card, but if you don't pay your balance off in-full you'll likely be subject to rates higher than a personal loan.
  • Ask yourself this: Is it worth going into debt that you'll be repaying for years all for a few weeks of fun?

Have you recently been eyeing a Juicy van to take across the country, or checking flight prices to Japan but don’t have enough money to pay for your trip upfront?

Well, a personal holiday loan can be a convenient way to cover the costs of your travels and get you on the road ASAP.

How do personal loans for a holiday work?

A holiday loan is simply a personal loan used to help pay for a vacation. You borrow a lump sum of money, use this money on your holiday expenses such as airfares, accommodation, insurance, and tours, and then pay it off over an agreed repayment term (plus interest accrued).

Holiday loans are typically unsecured, however some lenders may allow you to use an asset as collateral.

Generally, you'll be able to borrow anywhere from a few thousand dollars up to $50,000-$100,000 depending on the lender.

Loan terms can vary from one to seven years, with the length of the loan determining your weekly/fortnightly/monthly repayment amount.

With most holiday personal loans, you are typically granted the loan amount as a lump sum following a successful application, and start making repayments immediately. But keep in mind that if you happen to overestimate the expenses associated with your vacation, you could find yourself obligated to pay interest on a larger loan amount than what is truly required.

See Also: Personal Loan Repayment Calculator

How to compare travel loans

When comparing holiday loans, consider the following factors:

Interest rates

Look for a competitive interest rate - a lower rate means less interest payable.

A fixed-rate allows you to lock in a specific interest rate for the life of the loan (making budgeting easier), whereas a variable rate can fluctuate over the life of the loan. Although you run the risk of the interest rate increasing, a variable personal loan often comes with fewer restrictions e.g. ability to repay the loan early without penalty.

Keep in mind rates will also depend on the provider, and whether the personal loan is secured or unsecured.


While you’re likely to come across application fees with most lenders, some personal holiday loans may come with hidden fees that could significantly add to the overall cost of your loan such as:

  • Ongoing fees e.g. annual fee

  • Late payment fees

  • Extra repayment fees

  • Break fees

Check out the product’s comparison rate to get a more accurate idea of the full cost of the loan. If a product has a comparison rate significantly higher than the interest rate, it probably means you will pay a lot in additional fees.

Loan amount

Ensure the loan amount covers your travel expenses, but don't borrow more than you need.

Loan term

Most personal loans have a minimum term of one year and a maximum of seven years.

Longer terms may have lower monthly repayments, but can cost more in interest over time. Whereas the shorter the term, the more expensive your repayments will be, but you’ll likely pay your loan off quicker and spend less on interest.

Extra features

Are you able to make extra repayments at no extra charge? Will there be a penalty if you pay off the loan earlier? Is there a redraw facility if you do make early repayments? These may be features you’ll want to take advantage of down the line.

Compare personal loans for holidays and vacations


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Important Information and Comparison Rate Warning

Credit card vs personal loan for a holiday

The truth is, when planning a trip of a lifetime, not all expenses come at once. For example, you might book the flights months in advance, then buy your accommodation closer to the departure date. This might make a lump sum such as a personal loan not as useful as you first thought.

This is where a credit card could step in, especially if you’re more concerned about cashflow than being actually able to afford the holiday. Many credit cards have interest free periods, usually around 55 days, and you can set up the balance to direct debit to align with your payday.

Not only that, many travel credit cards come with sign-up airline points bonuses, fee-free international transactions, complimentary travel insurance, or other perks. Just keep in mind it’s likely one card won’t provide ALL these perks.

Credit cards also usually come with enhanced fraud protection, which allows you to shop with confidence - say if you bought flights off a random travel booking website called ‘White Rabbit Milkshake’ and you’re not sure of its validity.

As always be sure to check the interest rate and annual fee applicable with credit cards. If you don’t pay your balance off in full by the due date, you’ll likely be facing an interest rate much higher than you would have received on a personal loan.

Considerations before taking out a personal loan for a holiday

Before committing to a holiday loan, it can be beneficial to do the following three steps:

  1. Gather all the information and costing you need to work out exactly how much your trip will cost, and thus, how big of a loan you’ll need.

  2. Ensure you can comfortably afford the loan payments within your existing budget.

  3. Calculate the total interest you'll pay over the loan term to understand the true cost of your holiday.

Pros of a holiday loan

  • Immediate travel: Allows you to embark on your dream vacation without waiting to save up

  • Fixed rates: Often comes with fixed interest rates for predictable monthly payments

  • Interest rates: Usually lower than those on a credit card

  • Approval time: Depending on the lender, funds are generally deposited within five business days

  • Variety: Plenty of banks and lenders offer holiday personal loans with different features, including the big-four

Cons of a holiday loan

  • Interest costs: Can be expensive due to interest payments over time along with other associated fees

  • Debt burden: Adds to your overall debt load, potentially affecting your financial stability

  • Impact credit score: When you apply for a personal loan, your lender will do a hard inquiry on your credit report, which could cause your credit score to take a slight dip. Applying for too many will show up as a negative.

  • Borrowing for a luxury: At the end of the day, your trip is probably going to be a few weeks long, and is considered a luxury - especially if it’s for leisure overseas. Do you really want to be paying off a loan five years later all for a month of fun? If you can’t afford it, you can’t afford it.

How to apply for a travel loan

Many providers will have an online portal where you can submit your travel loan application, otherwise, you may be able to apply over the phone or via a branch.

While each lender will have different requirements for what you need to provide to supplement your application, you should have the following handy:

  • Your personal information

  • Several ID documents (passport, driver’s license, Medicare card)

  • Proof of income (recent payslips)

  • Bank statements with details of your assets, debts, expenses, and liabilities

A lender may also request details about your holiday.

See Also: How to apply for a personal loan

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