The time for staying at home has passed. Every day that goes by brings new opportunities to get out, enjoy real-life social interactions, and travel when you feel like it. Going on a trip this year will be like doing it for the very first time. We’ve been confined, quarantined, and restricted long enough. In 2022, you can safely go on vacation. Your biggest challenge will be financing it.

What is a vacation loan?

Vacation loans are personal loans that are used exclusively for vacation expenses. That can include airfare for travel, renting a hotel room or cottage, rental cars, and spending money. Vacation loans are unsecured, so you don’t have to put up any collateral to get them. The amount you qualify for will be based on your credit score.

How do they work?

Vacation loans work like any other personal loan. The only difference is in what you spend the money on. Before applying for one, create a vacation budget and figure out how much money you’ll need to accomplish everything on your to-do list. Use that number to choose the amount of your loan. You should also check your credit score to see if you’re eligible to get a loan.

There are numerous lenders who can provide you with a vacation loan. This includes traditional banks, credit unions, and online lending institutions. Your choice may be dependent upon your creditworthiness. Borrowers with lower credit scores can still qualify for vacation loans, but the fees and interest rate will be higher. Keep that in mind while you’re searching for a lender.

Personal loans are installment loans, meaning that you pay the money back in equal monthly installment payments. The number of months can be decided by the borrower. You can choose a short-term installment loan of a few months to a year or choose a multi-year term to make the monthly payments more affordable. Talk to your lender about what’s best for you.

Pros & Cons of vacation loans

Fast Approval and FundingAPR (Interest Rate)
Unsecured (No Collateral)Taking on New Debt
Cheaper than a Credit CardAffects Your Credit Score

There are positives and negatives when it comes to vacation loans

The drawbacks:

The annual percentage rate (APR) is charged for the life of the loan. If you choose a five-year repayment term, you’ll be paying interest for the whole time. You’ll also be taking on new debt, which shows up on your credit report and leaves you with a bill to pay. Failing to pay that bill will negatively impact your credit score.

Related: Tips for Traveling While Paying Off Debt

How to compare vacation loan lenders?

Credit Cards:

You could just use your credit cards to pay for your vacation, but credit card interest rates are, on average, much higher than personal loan rates.

Home Equity Loan:

This is an option, but most homeowners don’t want to risk defaulting and losing their home for the sake of taking a vacation.

401(k) Advance Loan:

This is a great option because you’re borrowing your own money. Check with your payroll administrator to see if you qualify.


Paying for a vacation with your savings is the most cost-effective, but chances are that’s not what you were saving for. Keep that money in the bank. Find another way.

Vacation loans for bad credit

Bad credit is any credit score that comes in under 680. Traditional banks won’t touch you if you’re under that number. Online lenders who specialize in bad credit loans will approve you, but the cost will be high. Interest rates go up as credit scores come down. If your score is really bad, using your credit cards might turn out to be cheaper.

How to qualify for a vacation loan

Once again, the steps are the same as with any other personal loan. You don’t need any kind of security (collateral), but you will need to submit to a “hard inquiry” on your credit report. To qualify for a vacation loan, you should do the following:

Check your
credit score

Shop around
for the best lender

Fill out an application
for approval

Submit your

Credit score requirements for personal loans vary according to the lender. Most banks want to see credit scores over 680, which is the “good” range for consumers. Anything under that is considered “bad” credit. We’ve included an additional section on that below.

How to get a vacation loan

Follow the four steps below to get a vacation loan:

Check youe
credit report


Pre-qualify with
multiple lenders

Gather your

Pre-qualification only requires a “soft inquiry” on your credit report, so it’s best to do that with multiple institutions. Soft credits don’t affect your credit score. As for documents, you’ll need proof of identity, income, and employment. Get those together before you apply.

How to compare vacation loan lenders

There are dozens of lenders to choose from when you’re looking for a vacation loan, so do your homework and compare each of them before submitting an application. The points you want to base your comparison on should include the following:

Interest rate (APR)

Origination and Monthly Fees

Payment Terms and Conditions


As stated above, the interest rate may be higher if you have a low credit score, but it will vary by lender, so shop around. You’ll also want to look for origination fees and monthly fees. Those can get expensive. The payment terms are the length of the repayment period and any penalties if you pay it off early. Convenience might mean simply finding an online lender.

Frequently asked questions

Yes, travel loans are a good option if you want to go on vacation and need extra cash to cover it. Travel loans are personal loans, so they’re easy to apply for and funding can be available to you quickly. They’re also a lot cheaper than credit cards.

Banks offer personal loans that can be used for going on vacation.