Tuesday, November 08, 2011

Pros and cons of travel loans for vacation

A couple of times people have asked for my thoughts on travel loans for vacation. Although I have never done this personally, I have had friends who did this. This seems to work out well for them. 

The thought is intriguing so I spent some time researching options. There are some pros and cons to think about when financing a vacation. We'll look at some of those here.

Welcome to Manitoba, Canada.
My no-loan trip of a lifetime.
Travel loans are sometimes used to pay for a honeymoon, anniversary or other expensive getaway. Loans are often considered for trips that are once-in-a-lifetime experiences. Memories and family togetherness can be worth any cost.

One of the reason that travel loans are used is to spread payments out over a period of time. Many people find it easier to spread vacation payments out in small amounts than to come up with a large sum.

One of the cons of taking out a travel loan for vacation is the interest rate. The cost of any loan can be substantially increased by high interest rates. What may seem like a bargain originally can add up to hundreds more when interested is factored into the cost.

Illness and natural disasters can wreak havoc on the best of plans. Another consideration that borrowers should think is insurance. This can protect your investment and recover costs in the event of an unexpected trip cancellation.

Vacation loans can come from a variety of sources. Credit cards are frequently used. Other potential sources include banks, credit unions and other lending institutions. Because interest rates vary it can be important to compare the different financial institutions to find the best deal.

You deserve to have the getaway of your dreams. There are many reasons to consider travel loans for a trip. The decision of whether or not to take out such a loan is an individual decision. As with any other type of financing taking out travel loans for a vacation should be done only after considering all the pros and cons.

Read more about my trip of a lifetime drive to Alaska: