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We hope you are done with the destination part.
Let’s start with the preparation check list!
Well the most important part ‘Travel Expense’. Are you well-prepared for your trip financially?
Or if money is a constraint here, then you can consider personal loan as a solution to your worries. However, it is best to take a personal loan for travel only if it is highly necessary. You should always compare the costs against the benefits of taking a personal loan to pay for your dream holiday.
A personal loan is offered for a short duration of time and is paid in the form of fixed monthly payments. Most personal loans are unsecured loans, i.e. no collateral is required for these kinds of loans, which is why the personal loan interest rate is higher than the interest rate charged on a home loan or a car loan.
You can get a personal loan from the available lenders, either online or offline. Most lenders do not have many restrictions on the usage of a personal loan, which is why these can be used to fund your vacation. The personal loan interest rate depends on your debt to income ratio and your credit worthiness. For someone with a credit score that is really good, the personal loan interest rate starts at attractive percentages, whereas, for someone with not a very good credit score, the rates can rise up.
Most of the financial advisors would say a no to the above-asked question. You can fall down the slope of bad financial habits if you use a loan to pay for unnecessary expenses such as wedding expenses or travel expenses. Ideally, a vacation should be paid for with the money that you already have with you. If there is not enough money, you should starting saving. However, there are exceptions and alternatives for valid reasons.
However, if you really require borrowing to go on a vacation, a personal loan is an optimal source as compared to other sources such as accumulating debt on your credit card. The reason behind this is that personal loans have fixed and predictable monthly payments, whereas, credit cards don’t set a limit for your spending, which means this can easily turn into overspending.
You should always remember even if you can afford the monthly payments of your loan, you are paying additional chunks on personal loan interest rate just to sponsor your trip. In addition, by avoiding this, you can save a huge on your savings.
So, what is the solution?
There are a few other alternative ways with which you can save money and cut your costs in order to fund your holiday, such as:
While planning for a trip, you must consider the expenses you will incur on the trip such as meal expenses, transportation expenses, etc. in addition to the hotel and flight expenses. Similar to your monthly budget, you should look for places where you can cut down unnecessary spending. It is also important to add flexibility to your travel budget in order to make space for emergency expenses.
If you do not follow a monthly budget, you will be shocked when you analyze your spending habits. A lot of people end up spending on unnecessary expenses which could easily be cut down and put into the savings for your trip. For instance, you eat out for your lunch every day, if you start packing lunch from home, you can end up saving a good amount which can then go into your travel savings. Or maybe, if you have a habit of drinking coffee every day, you can make coffee at home with your existing groceries and put a good amount into your travel budget. Beyond such things, there are expenses like your TV subscription, gym membership, shopping, etc. which can be cut down and added to the travel savings.
If you have accumulated a bunch of rewards on your credit card, you should redeem them against hotel stays, or flight bookings. This helps in saving on the major expenses of your travel, i.e. the stay and the airfare.
Summing it up!
A personal loan is not the only option to fund your dream vacation. It is always a better alternative to save for your dream vacation and travel without the stress of making monthly repayments and monthly personal loan interest rate payments.