Travel Loan: What You Must KnowAugust 27, 2019
The swaying palms, pristine white-sand beaches, lush green valleys, and snow-capped mountains sound interesting but have expenses associated if you are planning to travel and see the world.
Until and unless you have enough airline miles, travel points, and cash, airfares, hotel expenses, and eating at restaurants will cost you. There are expenses like sightseeing fees, activities, and other transportation costs when you are traveling. The cab fares from one tourist spot to the other in the same city will add up to your traveling expenses. There is no doubt about the same. Then, if you have not enough funds, paying for all such expenses will become difficult for you. In such a case, you will need to borrow money from a lender to meet your traveling costs.
You can also use your travel credit card but need to make the monthly payments on time to keep continue using the benefits. If you are planning to travel with a loan, then you should analyze its pros and cons. You must adhere to the fundamental rules and research some lenders who offer money on flexible terms and rates of interest.
According to an article published on https://www.huffpost.com, you must try to save money when traveling. You can look for some free activities too besides the paid ones. Museums, for example, often have the pay what you can option once in a week. Sounds interesting, right? Well, read on to learn more about travel loan.
The problems of borrowing cash for travel
You must borrow only when you invest in property or some business. Travel is intangible. Once the experience ends, there is nothing to hold on to for you. If you are taking a loan for traveling, the trip must be worth the cash. Moreover, you do not pay only the money you borrow but also other fees and charges as applicable.
Any average credit card will charge you an interest of 17 percent and the fees with add up quickly. For example, if you take a loan of $5,000 for a trip to Bangkok and take 10 years to repay, you will end up paying $10,811 for 120 months.
Ways to borrow money when traveling
Before applying for a travel loan, figure out the long-term implications of the same. Are you traveling to a place worth visiting and spending so much? What are your priorities? Buying a home or going for a Hawaii trip and spending heavily? Well, to help you make an informed decision, here are some of the right ways to take out a loan from a lender:
Set a realistic budget
It is not possible to know how much you will spend on food and scuba diving. Then, it is better to prepare a realistic budget before you make air and hotel bookings. Determine how much flight tickets and hotel accommodation will cost you. Take some time out of your busy schedule and research on food bills as well as activity costs. You cannot overspend if you have a limited budget.
Figure out how much your vacation will set you back. If you can determine a rough estimate, you can work hard to earn that money or at least half the amount. It is not a good idea to take out a loan for taking a vacation in the first place.
Even if you take a loan, make sure that you have the means to repay the amount after you return from the trip. Borrow only the amount you need and not in excess. It’s no use paying for an amount you did not use and become financially stressed. Take your time, think, and then decide. You can take loans at reasonable rates from platforms like https://www.libertylending.com/ or similar ones.
Make the best use of reward points
In case, you have a healthy credit score and can plan early, make the best use of your reward points to cover some of the expenses of the vacation. You can earn free air miles and rewards to pay for your hotel and fight charges. There is no doubt about the same.
Then, to earn points, you need to stick to a strategy. You should research on travel cards with reward points and their benefits. If you choose the best reward-based cards, you can travel on a budget all around the world without taking a huge loan or breaking your bank.
Do a comparative analysis of travel loans and credit cards
The two major funding options for traveling are credit cards and a personal loan for travel. When you take a personal loan, the lender offers a fixed repayment schedule, fixed interest rate, and a fixed monthly date to pay off your loan. A credit card, on the contrary, will charge you for the trip as you travel and you pay off only the amount you have used. Then, when it comes to credit cards, they have high-interest rates compared to personal loans. You can apply for both the methods online.
If you opt for a travel credit card, you will get some unique benefits like interruption insurance, canceling trips, no foreign transaction charges, and baggage delay insurance. Besides, you can earn travel points, rewards or attractive cash backs, depending on your travel expenses. You can use these points to settle the total cost or use them on a later trip. Then, make note of the expiry date of the reward points. You will need to use all the points before they expire.
Then, travel credit cards have high-interest rates and increase your trip costs radically. Therefore, think before taking any decision. That is the reason why you should opt for a low-interest credit card offering zero percent APR on your purchases for a stipulated time.
Whether you choose a travel credit card or a personal loan at a low rate of interest, you must weigh the pros and cons of both. Take some time. There is no need to rush. Compare all the available options and how they fare with regard to benefits, points, rewards, and interest rates. Take a trip, enjoy the sights, but do not take any rash decision. Your trip should be memorable and not affect your financial condition.