Your best mates are planning the trip of a lifetime. While you’ve got some savings stashed away, it’s just not enough to cover the full experience.
The thing is, you’d still love to go. But is taking out a personal loan the best way to make it happen? It certainly can be, but before you jump in and jet off, here’s what you need to think about.
The right loan option for you
Sure, taking out the first loan you come across might get you on a plane quicker. But trust us, it pays to do your research. From rates and fees to terms and repayments, there are many things you should know
before applying. For travel or holidaying you’ll be shopping around for an unsecured loan – which can be simple to get, but will come with higher interest rates.
Know what you can afford
It’s the golden rule. Don’t borrow more than you can repay. While we’re all for taking the trip of a lifetime, we also know that travelling beyond your means is a one-way ticket to more debt.
Instead of paying off your loan for years to come, do some calculations (https://www.racq.com.au/loans/loan-rates-and-calculator) and figure out how to limit the amount you borrow to essential costs. Of course, essential costs can include cocktails in Rio, but it’s important to be realistic about how you’ll actually meet your repayments.
Read the fine print
It might not make for light reading, but it’s crucial that you give the terms and conditions of your loan a thorough read through. Travelling is meant to be fun and stress-free – the last thing you want is an unpleasant surprise. So before you sign on the dotted line, make sure everything is filled in and to your liking.
Peace of mind
You want to totally enjoy yourself on holiday. But forking out for a stolen camera or emergency medical bills can certainly dampen that idea. It doesn’t matter if you’re trekking through South America or shopping in Hawaii – surprises can happen. And when you’ve got a personal loan to pay off, those surprises can make life a whole lot trickier.
To protect yourself in case things go south, simply take out the right level of travel insurance
before you go.
The bottom line
A personal loan can take you places. If your finances are in good shape and you can afford to borrow the money, it’s a great option. Just do your research, look into the different options, and most importantly, enjoy your trip.