The Best Holiday Loans: The winter holiday season is a time for family and friends to rejoice. While the spirit is real, planning for the festivities always takes a lot of money. It can be an expensive time of year between Thanksgiving Day, Christmas and New Year.
You should do some planning before the holiday season starts.
If during the months of October, November, and December you don’t have the extra income in your budget to use for gifts, or a special savings account that you only use for the holiday season, then either you have to have the money in your savings account or you have to borrow the money from some source.
Previewing your bank and credit card statements in January can be a smart way to avoid unpleasant surprises. A vacation loan is a potentially useful resource to finance your seasonal expenditure, but make sure you know what you get into before you start.
Types of Holiday Loans
There are different types of holiday loans available and accessible to you. They are:
- Secured Holiday Loans – This is a loan that demands that you offer something (example, the equity in your home) as security in case you can not meet up with the holiday payment.
- Unsecured Holiday Loans – This holiday loans is one that does not demand you to offer any form of security to access the money
- Holiday Cash Loans – On top borrowing money for the holiday itself, you can top up the loan with extra cash to spend when you’re away
- Bank Holiday Payday Loans – If you and your family or friends want to take a quick trip away during the holiday but you’re a bit short of cash, Payday loans and short-term loans may be suitable for you to access.
- Holiday Loans (Bad Credit) – if you have a bad credit record (where you may have missed a few payments), there are specialist bad credit holiday loans lenders for you
- Poor Credit Holiday Loans – for people with poor credit (where you might have missed a few payments but have not had any County Court Judgement made against you), there are holiday loan lenders who are set up for you
Most Popular Holiday Loans Options?
- Personal Loan – This is the traditional unsecured loan with a term starting from one to five years, and a fixed interest rate. You have to have a good credit score in order for you to qualify since you are not required to put up any collateral. You can go to a commercial bank or a credit union to get this type of loan. A credit union is a better option because they only charge on the unpaid balance when you’re paying back. If you already have a very good or even an excellent credit or even have an account with credit union, this loan is just right for you.
- Personal Credit Line – A personal credit line is a good choice for a holiday loan when your need is high. A financial institution grants you credit and you withdraw when needed. It is unsecured and it has no ending date. As you pay back the principle, you can reuse the funds. These loans are usually used for an ongoing project. The interest rate will be a little higher than for a personal loan. and you must have an excellent credit score to qualify.
- Peer-to-Peer Loan (P2P) – Peer-to-peer lending is a new idea in lending that is popular with the holiday loan persons. Through an online loan platform, you borrow from individuals or investors. You request for loan on the loan on the loan platform and it goes out to many possible lenders. You must however, be creditworthy. A P2P loan is just like a personal loan through a bank except that you may encounter a slightly higher interest rates and you might get a longer term for the loan.
- Credit Card Loan – You can always use a credit card for purchases during the holiday, but the interest rates are usually higher than the other options. If you pay off the fees at the end of the first month, this is an acceptable and great option. If you allow yourself to accumulate debt, credit card debt can get you into financial trouble sooner than normal.
- Short-term loans. Short-term loans should only be used as a last option, but they can be helpful if you need to borrow a small amount of money. Be mindful of the fees and loan term. Some usually last two or four weeks, so your bill could come due even before the holidays are over.
How Should I Get a Holiday Loans?
Check your credit score with the credit bureaus to be sure that you can qualify.
Shop the banks, credit unions, and P2P platforms to see the best deals on holiday loans.
Have these factors in mind: Interest rate, fees, APR, and any prepayment penalties.
Ask about the terms and conditions of the loan.
Only apply for the amount that you need
The Benefits of Holiday Loans
You do not need collateral for personal loans, and credit approval is available to borrowers with anything from average to excellent credit. be ready to pay a higher interest rate if credit history isn’t strong
If your credit score is lower than you would like it to be, making timely monthly payments on a personal loan could help you raise your score.
Personal loans typically have lower interest rates than what you’d find with a credit card, which can help save you money during holiday spending. it also gives room for easier budgeting.
The Downsides of Holiday Loans
Some personal loans you can get may not have loan terms that are under 18 months or two years. That could put you in some sort of financial trouble if you have to set up another personal loan before you finish paying for the first. If you decide to go for a personal loan, make sure the one you select has no prepayment penalties, so you can pay it off faster if you want to.
Other risks of using a personal loan for the holidays could be borrowing more money than you need or ask for — and spending more than you typically would as a result of this.
Even though the holidays are fun-filled for many of us, the financial pressure you may feel can make them a stressful time. You always have options for paying your way through the holiday season by applying for a personal loan.
If you do select the personal loan option, look for a loan with short repayment terms and try not to borrow much more than you need.