At a Glance

Christmas is just around the corner, and many people are going ahead and getting started on their shopping. At the time of writing, Christmas Day is just 65 days away. Although that might sound like plenty of time to get your finances under control to buy presents for your loved ones, it will come quicker than you think. Christmas loans are a great way to finance the holiday season, so no one must go without presents or lovely experiences. Read on for a complete guide on how to get a Christmas loan and what to use it for.

What are Christmas loans?

Christmas loans are personal loans used to fund things around the holiday season. You get to decide how you use your Christmas loan. You can use it to fly to see relatives, purchase presents, fund an extravagant Christmas dinner, or for any other purpose.

Your Christmas loan’s specific terms and conditions will depend on your lender. Always thoroughly read the paperwork when comparing lenders. Borrowers with excellent credit will have more favorable terms than those with poor credit. As with most personal loans, they can either be secured or unsecured, which means you will or will not need to put up collateral, respectively. If your income is high enough and your credit is good, you can get an unsecured loan, which is preferred over a secured loan, as most people do not want to put up a car, house, or other valued possessions as collateral for the loan.

Related: Secured vs. Unsecured Personal Loans

How do Christmas loans work?

Once you qualify for a Christmas loan, you will receive a lump sum of money—however much you got approved for and agreed to borrow. Christmas loans work in a similar way to other types of personal loans. You borrow a sum of money from a lender and agree to repay it over an agreed period in fixed installments, typically with interest. They tend to have higher interest rates than other types of loans, so it’s important to compare different deals before you apply.

You will be able to find personal loans for Christmas expenses from any bank or other primary lender. Each will determine its eligibility requirements and terms, so always shop around to find the lender that best fits your needs. Although some loans will not require a credit check, those will also have insanely high-interest rates, so avoid them if possible. Loans that do require credit checks might have stricter eligibility requirements, but they will not break the bank when it comes to interest.

How can you get a Christmas loan?

1. Take a credit check

Before applying for a Christmas loan, knowing where your credit stands is helpful. If you have a credit card, most will provide an overview of your credit score plus tools to improve your score. You can also find online credit monitoring services. As a rule of thumb, the stronger your credit score, the better your loan terms will be.

2. Compare lenders

Once you know your score, shop around to multiple lenders before narrowing down your list to get the best terms and rates. Some lenders will provide the option of prequalifying for a loan so you can see information about the loan without a pull on your credit report.

3. Understand your loan cost and align your budget

Keep in mind that your total loan cost is more than just the amount you want to borrow. There is interest, plus any fees, including origination, past due payment, and early repayment fees. Look at your monthly budget to ensure you have plenty of room to make your monthly loan payment for the entirety of your repayment period.

You can use Credello’s personal loan calculator to estimate your payments for different loan amounts, interest rates, and terms.

4. Submit a loan application

Once you have found a lender you like and know exactly how much you want to borrow, it is time to submit your loan application. Understand what information you will need to provide the lender. They might ask for proof of income, pay stubs, and bank statements and will run a hard credit inquiry. Also, ensure your credit bureau is unlocked if they run a credit inquiry to get the necessary information.

5. Keep pace with payments

Now that you have your loan, mark it on your calendar when your first payment is due. You might want to set up autopay from your bank account to avoid overdue payment fees. Always keep enough money in your bank account so you do not get charged overdraft fees.

Make your holiday season a debt-free one

Find lenders and solutions that fit your needs

Can you get a Christmas loan with bad credit?

You can get a Christmas loan with bad credit, but you must be more strategic. Some lenders will not require a credit check, but those will have the highest interest rates on the market, which might not be the route you want to go. The last thing you want is to get stuck in a debt trap where you must keep taking out loans to repay other loans.

If you have poor credit, you can work on improving your credit before applying for a loan, or you can opt for a secure loan, where you put up something for collateral. Make sure you know that you can repay the loan if you go this route, as you do not want your belongings to get repossessed.

Pros and cons of Christmas loans

Pros Cons
  • Fast funding–as little as one-day
  • High interest rates can add hundreds or thousands onto the total cost of the loan
  • Flexible use–can use the money for anything you need around the holidays
  • If your loan is secured, you could lose your collateral if you do not pay the loan back
  • Easy repayment–monthly payments are pre disclosed and fixed, so you always know what to expect

Alternatives to Christmas loans

If you decide to forgo the Christmas loan route, you are not entirely out of luck when it comes to the holiday season.

1. Buy now, pay later

Buy now, pay later, also referred to as layaway, lets you purchase a present and then pay it off over time. This option is great as it allows you to have presents under the tree on Christmas morning, even if you do not have the money for them until after Christmas. Some are interest-free if you pay for the item quickly, while others have low-interest rates but longer repayment terms.

See if buying now, pay later is an option when you are checking out online or go to the customer service desk to see if they have a BNPL or layaway plan in store.

Related: Survey on BNPL Shoppers

2. Credit cards

Credit cards are an excellent tool when used correctly. Each card will have its credit limit, so ensure you know it before shopping so you do not go over the limit or get declined. You can purchase flights, presents, or holiday decorations with a credit card and then pay them off over the next few months. Some cards have high-interest rates, but the great part of credit cards is that they typically offer low minimum payments.

Some cards will also give you cash back or rewards for using them, which can help offset present costs or even pay for your holiday travel.

Learn more: Credit Cards

3. Credit Union personal loans

If you are a credit union member, you can get a personal loan with a lower fixed interest rate than what is widely available to other borrowers. They also offer longer repayment terms, up to seven years, which is great if you can only make small monthly payments.

Learn more: Credit Union Personal Loans

4. Cash advances

are great if you need physical cash for shopping. You can get a cash advance at an ATM using your credit card, where your available credit will be used to withdraw money from your account. These typically come with fees, up to 5% of the total amount you want to borrow, but they can be a helpful tool in a pinch.


Yes, you can. Personal loans for Christmas shopping are great ways for parents to put presents under the tree for their children if they do not have the cash to do so upfront.

While you could get a form of Christmas loan with no credit check, these loans are more like payday loans, where they will have sky-high interest rates. You will have to provide other personal and income information for the lender to decide.

You are never guaranteed any form of loan, as lenders need to be able to see all of your information, like your credit score, income, and other factors, to see if you are “worthy” of borrowing the money from the institution. Even if you have excellent credit, you could get denied a Christmas loan for several reasons. It is essential to review eligibility requirements before applying.

Whether loans for Christmas shopping are a promising idea depends on your circumstances, wants, and needs. It all depends on how much you need when you think you might be able to repay the loan and what you want your holiday to be like.