We all know the benefits of family travel. Quality time together, learning opportunities, the chance to experience life in other parts of the world, new cultures, etc. But what if you can’t afford to pay for those family vacations out of pocket? That leaves you with two options: You can either save up for your vacation or you can find another way to get the money.
The problem with saving is that your kids are only little for a short time, and if you spend a few years saving up to travel you could miss your window of time to travel together. That leaves one option: borrowing the money. Personal loans are a viable option for funding a family vacation, but that doesn’t necessarily mean it’s a good idea for everyone. Let’s look at some of the pros and cons of personal loans for family travel.
Is borrowing the only option?
Before taking out a travel loan, ask yourself if borrowing the money is really the only option. If you have savings, it may make more financial sense to use that for your dream family vacation and then start adding to your savings again once you return, rather than borrowing the money and ending up in debt. Your vacation will end up costing you less if you use your savings rather than borrowing money and paying interest. However, it’s nice to know that there are financial options available if you want to take a family vacation today and pay it off over time. Just be sure you can afford to take out a travel loan. If your job situation is stable and you can handle the payments, go for it!
Should you use your credit cards?
Many people fund at least part of a vacation on their credit cards, but is that really a great idea? In some cases, you’ll need a credit card to book certain things (such as a flight) but should you pay for your whole vacation this way? In some cases, yes. Although you’ll have to pay a high interest rate (often higher than that of a business loan) when you use your credit card, there are some cases in which the travel miles or other perks may make it worthwhile to put your vacation on your card and then pay it off.
What if your credit isn’t great?
It happens to the best of us. A few bad decisions in our financial past and suddenly we find ourselves in a less-than-stellar credit situation. If that’s you, taking out a travel loan may not be the best option for you. Even if you are approved for the loan, you’ll probably have to pay a higher interest rate on the loan than you would if you had better credit. In these cases, saving your pennies for travel is probably a better option.
If you are going to opt to borrow the money for your trip, you’ll have two basic options for your loan: a secured loan and an unsecured loan. A secured loan will likely carry with it a lower interest rate, but you’ll have to secure the loan with some form of collateral. An unsecured loan won’t require you to provide collateral, but you may pay more in interest.
When it comes to funding your family travel, it comes down to this: Would you rather travel today and pay it off tomorrow, possibly ultimately paying more for your vacation but ensuring you can create memories for your children while they are young, or would you rather save for a while and be able to travel without saddling yourself with debt? There’s really no right answer; it all depends on your personal preferences, your financial situation, and your ability to pay back the loan successfully.