5 best vacation loans to finance your next trip

Three female friends in hammock together in tropical locationImage: Three female friends in hammock together in tropical location

In a Nutshell

If you’re dreaming of your next vacation but don’t have the cash on hand, a vacation loan can help you pay for the trip. These unsecured loans come with low rates and flexible repayment terms.
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Do you want a vacation but aren’t sure how you’re going to pay for one? If so, you might consider taking out a vacation loan. Learn about the five best vacation loans available.



Vacation loans 

A vacation loan is a personal loan you use to pay for travel expenses. Vacation loans are often unsecured, which means you won’t have to put down any collateral. The rate you receive depends on the health of your credit, and you’ll repay the loan in fixed monthly installments.

Pros of a vacation loan

If you’re looking for ways to fund a trip, there may be some advantages to taking out a vacation loan. Depending on the lender, the loan approval process can be fairly quick, and you may be able to receive the funds within a week of applying.

A vacation loan is usually an installment loan, which has fixed monthly payments. When you apply for the loan, you may have some flexibility in choosing your loan terms. The longer the loan term, the lower your monthly payment will typically be. But a longer loan term will generally cost you more in interest.

The rates you’re offered for a personal loan could be lower than what you’d pay with a credit card. But your interest rate will depend on a variety of factors, including your credit scores.

Cons of a vacation loan

One of the biggest downsides to taking out a vacation loan may be that you’re going into debt to pay for an experience rather than tangible goods or needed services. All things considered, it may be better to wait and save up the money to pay for the trip.

And even if you qualify for low rates, vacation loans can come with fees — like origination or documentation charges — that make the loan more costly. In addition, some lenders charge a prepayment penalty.

It’s a good idea to compare offers from multiple lenders for your vacation loan. Look for lenders offering loans with lower or reduced charges and/or origination fees.

5 best vacation loans

Taking a vacation is a great way to unwind and create memories with your family. But paying for a vacation outright can be daunting. If you want to take a vacation but are short on savings, you might wish to compare vacation loans from the following lenders.

Best overall vacation loan: Marcus

Here’s why: With an unsecured personal loan from Marcus, you can use the loan funds for anything related to your vacation. You can apply for a loan between $3,500 and $20,000, with terms ranging from three to six years.

Marcus says many of its customers receive their loan funds within five days. And Marcus personal loans come with fixed rates and fixed monthly payments, so you’ll know exactly what you have to pay over the life of the loan.

But what really makes a vacation loan from Marcus stand out is that you won’t get stuck paying any fees. There are no sign-up fees, late fees or prepayment penalties.

Best for ‘buy-now, pay-later’: Affirm

Here’s why: “Buy-now, pay-later” services offer short-term financing that can be used for all kinds of different purchases, including travel. BNPL lender Affirm partners with travel brands that include Expedia, Priceline and Vrbo.

Though Affirm says it has “no hidden fees,” the cost of your loan depends on the payment option you select. Once you choose a payment option and are approved for a loan, Affirm gives you the option to set up auto-pay, so you don’t have to worry about forgetting to make a payment.

Best for flexible payments: Discover

Here’s why: Discover personal loans, which come with no origination fees, offer flexible payment options to help you fund your next vacation. You can apply for a loan amount between $2,500 and $35,000 and choose your repayment term. Before you apply, you can choose from a list of set loan lengths (between 36 and 84 months) and estimate how high your monthly payments will be.

You may be able to receive the funds as soon as the next business day. But a number of factors can delay your funding, and depending on your bank, there may be a wait before you can access your cash.

Discover offers a 30-day guarantee, so if your travel plans change within 30 days of taking out a loan, you can return the funds within those 30 days at no cost.

Best general loan for vacations: OneMain Financial

Here’s why: OneMain Financial doesn’t market any loans specifically for vacations — but it offers personal loans that can be used for a variety of purposes, including vacations. The lender has about 1,400 branches across the country, so this could be a good option if you prefer to apply in person.

All loans come with fixed interest rates, fixed monthly payments and no prepayment fees.

Best for low rates: LightStream

Here’s why: You can use LightStream personal loans for almost anything, according to the lender. What stands out is that LightStream promises to beat any qualifying rate from another lender if you can provide evidence that you were approved for a lower rate with that lender.

The lender offers unsecured personal loans between $5,000 and $100,000, with no fees — and same-day funding is possible. But note that depending on your bank, there may be a wait before you can access your cash.

Other options: Lines of credit

If you’ve opened up a line of credit in the past, you can use those funds to pay for your vacation. A line of credit can be more flexible than a personal loan since you only borrow what you actually need — and you only pay interest on what you actually borrow.

But other pros and cons can depend in part on the type of line of credit you get.

Pros and cons of using a line of credit

If you use a secured line of credit like a home equity line of credit, or HELOC, you’ll receive an open-ended line of credit that allows you to take advantage of the equity in your home. That’s because your home is used as collateral. The downside is that if you don’t repay what you borrow from a HELOC, you could ultimately lose your home.

With an unsecured line of credit, you don’t have to provide — and risk losing — any collateral, whether it’s your home, your car or other asset. But lenders typically charge more interest on credit that’s unsecured, meaning you’d likely end up paying far more for your vacation than it would cost in cash.

Successfully using a line of credit for a vacation may depend on how much credit you have available at booking time — you’ll want to double check how much of that credit you’ve already used before you commit to travel. Is there enough room in your credit line to pay for the trip? And will you have the means to pay back what you borrow?

Other options: Credit cards

If a vacation loan isn’t an option for you, you might be tempted to put the charges on a credit card. Though this may sound appealing, it may not be a good choice unless you can qualify for an introductory 0% APR on purchases. You’ll also want to keep in mind that you can only spend up to your credit limit.

Pros and cons of using a credit card

If you almost have enough money in savings to cover your trip but still need a small amount of money, a credit card can help you bridge the gap. Ideally, you’ll be able to use a card with a 0% introductory APR, so you won’t have to make interest payments during the promotional period.

And if the credit card offers travel rewards, you may be able to earn those rewards when paying for vacation expenses. But paying interest on large travel purchases can add up, so consider budgeting to pay off your travel while the introductory rate period on a new card still applies. If you’re using a card after its intro APR period has elapsed, paying off the travel as soon as you can is a smart idea because, at that point, you’ll likely be charged the card’s standard APR.


What’s next?

If you’ve been dreaming about your next trip, taking out a vacation loan can help you make it a reality sooner. But it’s always better to budget and wait until you can afford to pay for the trip with your savings if you can. If you’ve decided that a vacation loan is your best option, make sure to compare rates and terms with multiple lenders and see what kind of offers you receive. Look for the lender that offers the lowest rates with minimal fees.


About the author: Jamie Johnson is a Kansas City-based freelance writer who specializes in finance and business. She covers a variety of personal finance topics, including building credit, credit cards, personal loans and student loans… Read more.