Why not to Finance your Vacation with a Personal Loan

Taking a vacation is one of the most enjoyable things to do. Travel broadens the horizons and gives a relaxing break from the day to day worries of life, the stresses of work and worry over the bills. Whilst many people may long to take a vacation, not everyone can afford to do so.  If you need to even think about taking out finance to pay for it you may well return from your relaxing vacation to face the misery of additional loan payments to deal with.

The best way to finance a vacation is to save up to pay for it, bearing in mind the additional expenses you will incur in meals out and holiday spending. Once you have the funds saved it is wise to then pay for the actual vacation itself by credit card to receive the automatic insurance coverage, knowing that you have the money on hand to pay off the full balance of your credit card without incurring additional interest.

If however you choose to take a personal loan to finance your vacation you will incur interest charges which will add to the total cost of your vacation, and you may well end up regretting such a move if you are still paying for the vacation a couple of years down the line. Imagine too if the vacation turns out to be an unmitigated disaster which you soon resent paying for month after month.

However if you know that you have a lump sum payment due to you, perhaps in the form of a work bonus or a maturing policy, then a personal loan is a handy tool, as you know you will have the funds to discharge the loan soon and take advantage of vacationing at the time of year which best suits you.

If you do decide to take a loan you would be better advised to take an unsecured loan rather than a secured loan. Imagine the scenario if you took a secured loan, perhaps using your home as collateral, and then returned from your vacation to find you no longer have a job. No vacation is worth the possibility of losing your home over. This of course is another excellent reason to actually finance your vacation from saved funds rather than borrowing.

Taking an unsecured loan will protect your collateral if you do run into financial difficulties but you will pay more in interest payments. However the interest on either type of loan will increase the overall cost of your vacation. If you do decide to use a loan then look for a short term one which has the option of early repayment.

With an uncertain economic climate it really doesn’t make sense to finance a vacation through loans or credit. It is better to delay your vacation until you have the necessary amount saved, and that way you can return far more relaxed from your break knowing that it was already paid for in full before you left.