A cartoon plane from a family vacation loan.
Family, Money, Travel

Family Vacation Loans – Good Or Bad

Everyone loves a good vacation, but it can get expensive in a hurry. That can lead to thoughts about taking out a loan to finance one, but is this a good idea. Take a look at some pros and cons of borrowing to travel.

Loans are serious matters and can have long term consequences. Have a look at the potential good and bad aspects of vacation loans before you make your decision.

Pros of Vacation Loans

Here are some good reasons to consider a loan for your travels.

You Can Vacation Now

One of the chief benefits to a vacation loan is the fact that you can go on vacation right away. No waiting months or even years while you save. With the “now” culture that we have in this country, this is often one of the most convincing reasons people have for taking out a loan. Nobody wants to wait until tomorrow.

Vacationing now is also important if timing is an issue. It does no good to save for a future family vacation if one of your children will be off to college in the Fall. A loan can help you make memories when they need to be made.

Make Your Vacation Better

With a loan, you may be able to do things that you would not otherwise be able to afford. This could be anything from staying at a nicer hotel to planning more excursions. With a loan, you do not have to cut corners to make your vacation more affordable.

Your Credit Is Good

For those of you with good credit, a travel or vacation loan might not be too costly. Very low interest means that the cost of financing might be as little as a few hundred dollars. That make the decision to accept financing much easier.

Cons of Vacation Loans

Here are some bad reasons to consider a loan for your travels.

There Will Be No Assets

When taking out a loan for a car or a new living room set, you have those items to use and enjoy for the foreseeable future. When you use a loan to pay for a vacation, all that you have left is your memories. For some, that might be enough but for others, a loan payment can be difficult to make when you have nothing to show for it.

Saving Is Smarter

Deep down inside, everyone knows that it is smarter to save than it is to borrow. When you save money for your vacation, you will be earning interest instead of paying it and that just makes more sense(cents).

Saving will also make you more frugal. It is harder to spend money that you struggled to stash away and that will make you more budget savvy when it is time to make plans.

Your Credit Is Bad

If credit is something that you struggle with, a loan will not be a good deal for you. Vacation loans will be an unsecured loan, and these always have higher interest rates. With bad credit, it is not going to be any better. That could mean that your vacation loan could cost you thousands of dollars over the time it takes to pay it back.

The Budget Is Tight

Just because you can qualify for a loan does not mean that you can really afford it. Take that potential family vacation loan payment into your budget and see how things look. If things are tight, you can not expect matters to just work themselves out.

To Sum It Up

In this country, we all want things now, but you have to consider your overall financial picture. For some, a vacation loan might make perfect sense, but for most, the list of cons will be overwhelming. It is up to you to take a look at your particular situation and make the right decision.

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