Need funds on hand so that you can take that break that you’ve been planning? A vacation loan may just be the thing you need. Read on to find out more.
It is quite the Singaporean trait to travel. Every year, hundreds of thousands of our fellow countrymen fly themselves out of our tiny island to all sorts of destinations, some nearby while others far flung.
Regardless of where one may be heading for a holiday, proper financial planning is required – especially if the vacation is for an extended period of time – to avoid burning out your funds when you least expect it.
If you do not wish to dip into your reserves, there is the option of vacation financing, where a vacation loan can take care of your upfront expenditure outlay so that you can go for that trip you’ve always wanted and subsequently service the payable via scheduled installments.
What is a vacation / holiday loan?
A vacation loan is a type of unsecured personal loan that is taken up specifically to finance your holidaying expenditure. The money that you get from the loan can be used for anything related to the vacation.
This is how it works:
- Apply for a loan from your preferred lender
- Receive the money in a lump sum and use it to pay for whatever you need on the vacation
- Pay back the loan amount subsequently in monthly payments, including interest accrued for the duration of the loan
And that is all there is to it.
Why is a vacation / holiday loan useful?
It can be difficult to budget and plan for a vacation if you also have to worry about the extent of coverage your current savings can provide, without compromising on having the fullest experience possible with the trip that you’re planning.
Even if you’re planning to draw down your savings to finance the holiday, you may also still be concerned about the availability of funds if an unexpected emergency occurs in the midst of your vacationing.
As such, the beauty of tapping a financing facility such as a vacation loan is that you can settle the totality of your vacation expenditure with it and how having to use your own money.
5 factors to consider before you apply for a vacation loan
While it is a simple and straightforward loan that you can apply for whenever you feel the need for it, there are still several questions that you should ask yourself first before making a decision, so that it does not turn out to be a problem further down the road.
A vacation loan typically comes at a lower interest rate in comparison to credit cards. Nevertheless, different lenders offer different rates throughout different times of the year, so it is always a good idea to check with a few lenders to get a sense of what you are offered and pick the best one.
Ability to pay
While it’s fun to receive an upfront sum of money to spend on, it is still a borrowing that has to be repaid later on, with interest to boot.
You should be certain about your future income being able to adequately and sufficiently cover the monthly repayments that are to follow, so that you don’t overcommit yourself and risk having no funds set aside for emergencies.
Is the vacation necessary?
It is always prudent and the best course of action to use your own money when it comes to recreational activities such as taking a vacation or holiday, so that you don’t have to worry about debt later.
Unless the trip is absolutely necessary, you may want to consider putting it off for the time being until such time when you have accumulated enough of your own funds to finance the trip without having to take up a loan.
Other sources of funding
If making the trip is unavoidable, are there other channels where you can get the funds from?
Perhaps it is worthwhile to consider borrowing from family and relatives or friends, as these sources of funds are probably interest-free and avoid the necessity of paperwork.
You could probably also negotiate a longer repayment period with these alternative funding sources.
Just because you feel like taking a loan, doesn’t mean that you’re qualified to apply for it.
Borrowing money through legitimate channels such as banks and moneylenders in Singapore is highly regulated and is subject to strict eligibility evaluation.
It is always advisable to check your loan eligibility before anything else.
How to take up a vacation loan
One of the easiest ways to acquire a vacation loan is by going to a licensed moneylender, and the process can be quite simple and easy.
There is typically less paperwork and processing time involved. In fact, with some moneylenders, you can get a loan quote and preliminary approval within just minutes of submitting an application.
You are also likely to get the approval loan sum faster via a moneylender than a bank.
Where to find the best vacation loans / holiday loans?
You can do a search on Google and go from one moneylender website to another and learn about the types of vacation or holiday loans they offer, and the terms that come with those loans. You can also call them up one by one and ask.
A much faster, easier and better solution however, would be to use a quote aggregation platform such as Loanhere.
With a simple enquiry request, Loanhere will generate your customised loan quotes from a curated selection of the best licensed moneylenders in Singapore and send them straight to your email almost instantly.
If you’re looking to apply for a wedding loan, get a quote now.