How Much Personal Loan Can I Borrow For My Holiday?

How Much Personal Loan Can I Borrow For My Holiday?

 

Number of travellers:


  • Generally, the lesser number of travellers need lesser the amount of a personal loan. You may find- after your calculations- that as a couple, you need a small holiday loan than if you were a family with five members.
  • Destination:
  • The destination itself affects how much personal loan you may have to apply for. This varies in tune with the exchange rate of the country you’re travelling to. For example, a country where £100 can pay for your hotel bills and travelling to five tourist spots is cheaper than a country where you have to pay £200 as hotel charges.
  • How much you can spare from your own savings:

  • You’ll likely to use up a few hundred pounds from your savings to reduce the amount of your debt. However, it’s better to borrow a large sum of money. As you borrow more, interest rates fall and your debt tends to get cheaper.

 

For example, you can borrow a sum between £7000 and £15,000 over four years at an interest rate of 3%.

 

What is APR?

 

The Annual Percentage Rate (Annual Percentage Rate) is the rate at which lenders are ready to give personal loans. This refers to the interest rate plus any fees and charges you may have to pay. Remember that this is the representative rate that only 51% of all successful applicants will get. It’s like a deal that only the lucky get. The rest 49% will be offered a rate a bit higher than the headline rate depending on risk-based pricing.

 

Risk-based pricing is the percentage of risk you pose to a lender. If you’re a person with a history of poorly managed finances, a lender will offer you a higher rate for an unsecured personal loan. Get insured holiday loans from Bbad credit loans in the UK.

 

Is My Credit Score Important To Get A Holiday Personal Loan?

 

Yes. As personal loans are unsecured loans, the lender is likely to run a credit search on your file before any further communication with you. Once you apply for a personal loan for your holiday, a lender will see whether you have a good or bad credit score. This leaves a mark on your credit file and shows the next lender how many you’ve already applied to. If you apply to too many lenders at once, it shows that you’re desperate for credit and can further deteriorate your credit score.

 

Pros and Cons of Holiday Personal Loans

 

The Pros

 

  • Your payments are fixed, making it easier to budget
  • You can spread the cost of your loan to reduce monthly repayments
  • You can take a payment holiday at the start of the agreement
  • There is no to little risk as they’re unsecured
  • The application process is simple and fast

 

The Cons

 

  • If you have a bad credit history, you may be refused a loan
  • Even if you get a loan, it may come only at a high interest rate
  • The high APR may make you think twice
  • You have to repay the loan even if the holiday is long over
  • Savings are essentially free
  • Debt means risk and if you don’t repay, your lender may take you to court

 

Source - Blog