They say that ‘change is as good as a holiday’; but for those of us that really need a holiday, a change sometimes just doesn’t cut it.
If you’re itching to live your dream vacation but have a bad credit hangover, finding a loan to cover your vacation costs can be a sobering experience.
How do loans for vacation work?
Whether it’s accommodation, a tour, or holiday travel, there’s no doubt that taking a vacation impacts your cash flow. Loans for Vacation with Finance One are unsecured personal loans that are used to fund your holiday. Getting loan approval early in your holiday planning process means that you could access a lump sum in your bank account to put a down payment at a travel agent or purchase flights at attractive rates.
- Accessing funds from your home loan; or
- Taking out an unsecured personal loan.
Home Loan vs Personal Loan
There are pros and cons of accessing either your home loan or an unsecured personal loan for your holiday costs.Home Loans
If you have an existing home loan, there is the possibility to approach your mortgage lender or a new lender to refinance your home loan. Refinancing involves using the equity that you have in your home to access further funds. This method could be an excellent option for those with an existing home loan. However, it does mean that often the equity in your home is then exhausted. Despite being at a presumably lower interest rate than a personal loan (as it’s a secured loan against your house), the total interest you pay over the life of the loan might be higher than that of a personal loan.Also, it will obviously increase your monthly mortgage payments, and could have other effects on your home loan. Before making any decisions, it is best to obtain independent legal and finance advice that takes into consideration your personal needs and situation.
Personal Loans
Many people use personal loans for travel. Personal loans allow you to borrow a set amount of money and repay it over a loan term via regular loan repayments, in accordance with your loan agreement. The loan repayment amount is determined by how much money you’ve borrowed, the loan term and your interest rate. A fixed-rate personal loan provides the advantage of fixed monthly payments — allowing you to forecast your budget well into the future.Who offers Personal Loans for travel?
For those with poor credit, the application process for getting a personal loan can be complicated. The lending criteria for travel finance is generally fairly strict with mainstream lenders, such as banks, credit unions and other financial institutions. With a suite of online lenders now active in the market, knowing which one to go with can be a confusing process.Contact Us
If you’ve experienced bad credit history in the past, contact Finance One, and we can assist you to apply for a secured or unsecured personal loan based on your personal financial needs. Get in touch with our team at Finance One Support to discuss your options today.
Talk to us NowWhat credit score is considered to be ‘bad credit’?
In Australia, credit scores range between 0 and 1,000 (or 1,200, depending on the credit reporting agency). Any score under 500 is generally considered to be a poor credit score. By law, a credit reporting body must provide you with a free copy of your credit report once every three months. Accessing your credit report is a fantastic starting point to understanding how your financial decisions have led to bad credit history.
What to put on your to-do list before applying for travel finance?
Before applying for travel finance, look to take proactive steps to make sure that you can set off on your dream getaway without any additional financial stress.
Get your bank account in order
When a lender assesses your loan application, they will look at your bank statements to determine if you conduct your spending well. Avoiding your account from becoming overdrawn, in the six months before applying for travel finance, can go a long way to proving good financial conductHave regular income
Every responsible lender will want to ensure that you can comfortably repay the loan and meet the monthly payments. Having consistent income helps to show stability. Lenders will look closely at your income, among other factors, to determine the affordability of the loan. Even travellers with the best credit scores can find it challenging to be approved with inconsistent income.Worried about being self-employed?
At Finance One, we take a compassionate approach and work with borrowers who have self-employed incomes or receive Centrelink benefits.
Avoid applying for other credit products
Although it can be tempting to apply with multiple lenders at once, multiple credit applications or products (such as a credit card) can reflect poorly on your credit file. Responsible lending means that your credit habits will be assessed, as these reflect on your credit file. Too many applications or open credit accounts can negatively impact your credit score, so be sure to limit these.Pay down other debts
If your financial situation permits, paying down (or paying off) other debts allows you to not only free up your own budget, but demonstrates your ability to repay a loan, frees up your available credit limit and means you have more money to put toward loan repayments (or souvenirs).Know what you’re getting into
Just as you’d spend hours sifting through your travel options and plans, so too should you do your homework on the travel finance available to you. Understanding the loan terms, repayment terms and the actual rate of interest that you could be charged are great starting points to knowing what you’re getting into, to ensure it’s not a financial decision that’s going to cause you financial strain.How to apply for a Loan for Travel with Finance One
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. Please note that approvals for loan applications are subject to satisfactory documentation being received to properly assess the application. Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528
