Vacation Loans for Bad Credit: How to Finance Your Trip in 2024

Vacation Loans for Bad Credit: How to Finance Your Trip in 2024


9 Min Read

Having a good work-life balance is quite important. Those who work hard should play hard too. Taking fewer days off than your body and mind need to recover can negatively affect your mental and physical health. When you expose chronic stress, it changes the structure of your brain, so you can end up with anxiety and depression.

A vacation helps you relax, relieve stress, and avoid unpleasant consequences. Unfortunately, there’s always a flip side of the coin. Going on vacation often comes with significant travel expenses.

However, there are various ways to finance your vacation, so you may easily find the one that is right for you. Even if you are looking for vacation loans for bad credit, there are several options to consider. Keep reading to know them all!

What Is Vacation Financing?

Vacation financing is a way to cover your travel-related costs with the help of financial institutions. If you don’t have enough savings to pay for your trip, you can apply for a vacation loan, get a lump sum deposit into your bank account, and use the money at your discretion. Then, you need to repay the funds in fixed monthly payments within the set repayment period.

Simply put, vacation loans are personal loans that people use for any needs, from debt consolidation to car rentals. Such loans have competitive interest rates that range from 5.99% to 35.99%, depending on your credit score. The amount you can get is determined based on your income and can reach $50,000. The repayment is made in affordable monthly payments within up to 60 months.

How Does a Travel & Vacation Loan Work?

As travel & vacation loans are just regular personal loans, they work the same way. Once you find the right lender, you need to check out its requirements and prepare a set of needed documents. When everything is ready, you can go through an application process.

If you apply for a traditional personal loan, you may be asked to visit a branch. After you apply, a conventional lender will check your credit report through major credit bureaus to estimate your creditworthiness. If it shows that you’re a reliable borrower, a lender will approve your loan request and contact you with a positive decision. A decision-making process can sometimes take from several days to several weeks.

The funds will be transferred in one lump sum to your active bank account. Then, you can use the amount to pay for any of your travel expenses. Next month, you start repaying a loan in fixed monthly installments within the set period.

As vacation loans are unsecured personal loans, you won’t be asked to provide collateral. Instead, you need to have a good credit score and sufficient income to repay the requested amount. People with bad credit scores may be offered secured alternatives to regular personal loans.

Are Travel Loans Available Online?

Sure, you can get a travel loan online. Alternative loan providers usually offer financial options of up to $5,000. Online travel loans have several advantages over traditional options but also come with a few drawbacks.

If you apply for a vacation loan from an online lender, the process will be even simpler. You can complete it from the comfort of your home or on your way to vacation. All you need is to fill out an online application form and attach income confirmation. An online personal loan is available with any credit history without providing a repayment guarantee.

Online options also take less to process due to the absence of a hard credit check. If you apply within a lender’s operating hours, you will get an approval decision in an hour. If positive, the money will arrive in your checking account as soon as the next business day. Then, you need to make on-time monthly payments. The process is usually automatic. You need to provide a lender with access to your bank account.

However, an online vacation loan comes with a higher interest rate compared to options from a bank or credit union. This is especially true for borrowers with bad or poor credit. Therefore, you should think twice and assess all your options before getting one.

vacation financing with bad credit score

How Much Does a Personal Loan Cost?

A personal loan cost consists of the following main components:

Interest rates. A personal loan interest rate ranges between 5.99% and 35.99%. The value depends on a borrower’s FICO score. The higher the rating, the lower the interest rate you can expect to get.

Fees. Besides paying interest, you may be charged additional fees. Most lenders set origination fees for processing your loan request and sending you money. An average origination fee is nearly 1% of the amount you borrow. However, some options may come with fees of up to 5%. Also, there may be penalties for late or early payments. They are called late fees and prepayment fees.

Keep in mind that bad credit personal loans can come with higher costs. This is because they are associated with more risks for lenders. Let’s take a look at an example.

The average vacation for two people costs nearly $3,840. Suppose that you need to finance a vacation with bad credit. With a 12-month loan term and a 16% annual percentage rate your monthly payment amount will be $348.41. The total loan cost after 12 months of repayment will be $4,180.88, with a $340.88 total interest paid.

The calculation above is for informational purposes only. The exact sums will depend on an actual interest rate a lender will set on your loan.

What Can I Use a Vacation Loan Amount for?

There are no restrictions or limits when it comes to vacation loans. After you receive a deposit, you can spend money as you wish. The most common travel expense categories include:

  • Airline tickets;
  • Accommodation;
  • Entertainment;
  • Food;
  • Shopping;
  • Insurance;
  • Unexpected travel expenses;
  • Rental cars and other transportation expenses.

Do Personal Loans Hurt Your Credit?

Traditional personal loans can hurt your credit in a few ways. When you apply for a loan, a lender checks your credit history through major credit bureaus. This check always downgrades your credit score. This is a temporary drop followed by a boost if you make on-time monthly payments. If you fail to pay on time, each late or missed payment will be reported to credit bureaus, hurting your credit score.

Online personal loans usually don’t require a hard inquiry. This means that the fact you apply won’t affect your credit rating. However, late payments can still drop your credit score. That is why you need to be cautious and always pay on schedule.

What Credit Score Do I Need to Get a Personal Loan?

Banks and credit unions usually require borrowers to have a credit score of at least 600. If your credit score is lower, you may be offered secured loan options. When you deal with online lenders, they commonly have no minimum credit score requirements. More than that, some online loan options are available for people who haven’t built credit yet.

How Can I Get a Vacation Loan with Bad Credit?

If your credit score is low, finding the right lender is the most important step toward your pleasant borrowing experience. If you want to borrow from a conventional lender, get ready to bring a co-signer, provide collateral, or get a higher interest rate. If it’s not your option, apply for vacation loans from online lenders. These loans don’t require additional security but can be more expensive than traditional ones.

To improve your chances of getting a vacation loan with bad credit, you can take several preventive steps:

  1. Check your credit reports for mistakes and fix them, if any. The higher your credit score, the better loan terms you will get, even if a lender sets no minimum credit score requirement.
  2. Prepare proof of how much you earn in advance. It can include not only your salary but a verified self-employment income, Social Security benefits, alimony, and other stable income sources.
  3. If you have enough time before your vacation, consider increasing your credit score. You can make it by getting a secured credit card or a credit-builder loan. Also, you need to make your other debt payments on time and keep track of your bill due dates.

Finance a vacation with bad credit

Pros and Cons of Vacation Loans for Bad Credit

Before you go into debt, consider the following positive and negative aspects of bad credit vacation loans.


  • Lump sum deposit. You can get a full sum on hand to finance a vacation you dream about. This way, you can plan ahead and create a realistic vacation budget;
  • Affordable payments. As your debt will be split by the number of months of your repayment term, it will be easier for you to repay the funds. As most vacation loans come with a fixed rate, your monthly payment will be predictable;
  • Competitive interest rates. Some bad credit loan lenders may offer you a vacation loan with a reasonable annual percentage rate. This will positively affect the total loan cost.


  • Long-term debt. You will be forced to pay off your loan long after you turn back home from your vacation. Additionally, longer loan terms result in a higher overall loan cost;
  • Increased financial burden. Vacation loans are potentially high-risk loans, especially if you have other debts to repay. Even one missed or late payment can lower your credit score. Plus, you will face penalties that will make your loan even more expensive.

Is It a Good Idea to Finance a Vacation?

There’s no single answer. Before advising, we need to consider your current financial situation and other circumstances. Vacation loans can be a wise solution for people with a stable income and a clear travel budget. Thus, if you want to finance your vacation, these are the major factors of whether you should go into debt.

If you’re sure you can repay the loan without delays and can’t finance a long-awaited vacation on your own, getting a personal loan can be a great idea. Try to avoid getting a loan if you already experience financial problems or need money just to maintain a lavish lifestyle. Just stay somewhere in between a vocal loan opponent and a big spender who is running up debt thoughtlessly.

Alternative to Vacation Loans

Vacation loans are not the only way to finance your trip. Here are a few more options that may suit you better.


Most financial experts advise you to take care of your vacation in advance and save money each month to avoid debt. Although it can be tough on a low budget, you can start small and see the difference. Even if you need additional financing, in the end, the amount to finance will be lower.

Credit Cards

Credit cards can replace regular vacation loans if you don’t know how much extra cash you may need. You can use one to pay for your stay, flight, car rent, souvenirs, and more within your credit limit. A credit card allows you to pay interest only on the amount you actually use. You can use it to pay for almost all your vacation expenses that you can’t cover with savings.

Many issuers also offer 0% APR credit cards, meaning that you won’t pay interest if you manage to repay the funds within the promotional period. But keep in mind that after this period ends, you can face high interest charges.

Bottom Line

If you really need a vacation but can’t finance it on your own, don’t put a price on your mental health. You can still afford a long-awaited dream vacation by getting a travel loan. Although this option comes with a few drawbacks, it can be a wise solution for people with stable incomes and clear repayment plans.

Remember that the best vacation loans are those with the lowest rates, minimal fees, and an affordable monthly payment. Go into debt only if you’re confident in your repayment opportunities.

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Kerry Vetter

Written by Kerry Vetter

Written by Kerry Vetter

Kerry is a finance expert thanks to her Boston College education during the 1990s. Today she shares this valuable knowledge through the pen and online from her home in Chestnut Hill, Massachusetts. The years of experience results in relevant, practical and wise advice.

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