Planning your dream holiday should be an exciting process. However, making sure that you can fund your trip can be daunting. By knowing different options to fund your dream holiday, you can make the best choice for you.
In this blog, we’re going to breakdown some of the methods you can use to finance your dream holiday.
1. Save, save, save
If you are in the position to use personal savings to pay for your trip, this may be the best option. By avoiding borrowing, you don’t have to pay interest and you will avoid being committed to a repayment plan.
If you have enough time to save up for your holiday, creating a personal holiday fund and paying into it regularly will help you save up the cash you need to travel.
By planning ahead and implementing a few tips and tricks, you can cut costs on your trip, saving you money on the overall cost of the holiday.
Here’s a few handy ways you can save money before and during your travels:
- Booking in advance: The earlier you book your flights and accommodation, the cheaper they tend to be. Sometimes you can find good deals very close to the date of your travels, however, most of the time it is much cheaper and more reliable to book your tickets in advance.
- Be as flexible as possible: It is best to be flexible with the dates you pick to go on holiday. If you can travel outside of peak times, such as school holidays, you can avoid paying higher prices.
Similarly, you can save by being flexible in terms of your destination. Some tourist hotspots will have areas nearby that are much cheaper to stay in, allowing you to visit your dream destination whilst saving on accommodation costs. You can also use comparison websites to find the best dates for cheap flights, and if your open to visiting different destinations, they can help suggest alternatives to your dream destination.
- Do your research: By researching your destination ahead of time you can avoid nasty charges and unnecessary expenses.
- Avoid spending money in tourist traps by researching areas and activities before you travel using websites like TripAdvisor.
- Learn if your debit or credit card will incur extra fees for currency conversion.
- Make the most of public transport; find out if you can save money with a day / week pass to avoid pricey taxis.
2. Use a credit card
Another method you can use to pay for your holiday is a credit card. You may be able to use it to pay for a part, or all of your holiday, depending on your borrowing limit.
If you use this method, it would be best to opt for a 0% interest credit card. With this method, you can spread the repayments for your holiday out over a set period without having to pay any interest, so long as you make the minimum monthly repayments. However, it is vital that you make sure you have repaid the full balance by the time the 0% interest promotional period ends to make sure you do not incur any charges.
3. Unsecured loans
Getting an unsecured loan is another method you can use to fund a once in a lifetime dream trip. They are usually quick to arrange and unlike secured loans, they are not secured against your property. However, an unsecured loan can be more of a risk for lenders, so having complex circumstances may affect your chances of obtaining one. If you were to take out a loan and successfully pay it off on time your credit score may be boosted. However, if you miss any loan repayments, your credit score will be impacted negatively.
4. Secured loans
A secured loan uses a property that you own as security. This can be a helpful option for someone who is struggling to get an unsecured loan.
Having the loan secured against your property can open up larger loan sizes and better interest rates, so it can be a beneficial option to use. However, if you fail to meet your monthly instalments, your lender may repossess your property.
Is a holiday loan a good idea?
A holiday loan can be an effective way to pay for a holiday if you do not have the full amount saved. Spreading the costs out over a longer term can take the pressure off by making repayments lower, and taking out a loan may help you build your credit score if you consistently meet your repayments. However, the longer the loan term, the more you are likely to repay back in interest overall and therefore, a holiday loan is probably more appropriate for a once in a lifetime dream trip if you cannot save enough to pay for it without the use of finance.
Loans can also vary in terms of repayment terms and the interest rates, depending on the type you use. Therefore, it is important that you research different options carefully to determine what would be the right option for you.
Summary
It’s ideal if you’re in the position to save up and use your own money to pay for a holiday. However, if you need to borrow money to pay for a trip, you should research your options thoroughly.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
