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Best Vacation Loans in 2025
Ashee Lamba
Shivanand Pandey
Sonali Jadhav
What to know first: Before applying for a vacation loan in 2025, it’s crucial to understand the interest rates, repayment terms, and fees involved. Compare lenders and loan options to find the best deal. Be mindful of your budget and ensure that the loan fits your financial situation.
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Personal Loans for Vacation
Planning the perfect vacation but worried about the costs? A vacation loan could help you cover flights, hotels, excursions, and more. Borrowing for travel isn’t always ideal, but it can be a smart option if managed responsibly.
We’ll discuss everything you need to know about vacation loans in 2025 in this blog, including what a vacation loan is, Pros and cons of vacation financing, top lenders offering the best rates, how to apply for a travel loan and smart alternatives to borrowing. Let’s get started.
What Is a Vacation Loan?
A vacation loan is a type of unsecured personal loan designed specifically to cover travel-related expenses. Unlike secured loans such as mortgages or auto loans, vacation loans do not require collateral, meaning you don’t have to put up an asset like your house or car as security.
Instead, lenders evaluate your creditworthiness based on factors like your credit score, income, and debt-to-income ratio (DTI). A higher credit score and a lower DTI can increase your chances of approval and help you secure a better interest rate.
These loans provide flexibility, allowing borrowers to use the funds for flights, accommodations, activities, and other travel costs. However, since they are unsecured, interest rates may be higher than those for secured loans, making it essential to compare options and assess repayment terms before borrowing.
How Do Vacation Loans Work?
A vacation loan provides a lump sum of money to cover travel expenses, which you repay in fixed monthly installments over a set period. The interest rate depends on your creditworthiness, and funds can be used for various trip-related costs.
You borrow a fixed amount upfront.
Once approved, the lender disburses a lump sum, which you can use for your travel expenses. The loan amount depends on factors like credit score, income, and lender policies.
Repay in monthly installments over 2–7 years.
Vacation loans come with a fixed repayment term, typically between two and seven years. You’ll make monthly payments covering both the principal and interest.
Interest rates range from 6% to 36%, depending on creditworthiness.
Your interest rate is based on credit history, income, and debt-to-income ratio (DTI). Borrowers with strong credit may secure rates as low as 6%, while those with lower credit scores may face rates closer to 36%.
Funds can be used for flights, hotels, cruises, tours, and more.
The loan covers various travel expenses, including transportation, accommodations, activities, dining, and even travel insurance.
Are Vacation Loans a Good Idea?
Most financial experts recommend avoiding debt for discretionary expenses like vacations. Borrowing money for travel means you’ll be paying interest long after the trip is over, which can strain your finances. However, in some cases, a vacation loan might be a reasonable option.
- You can afford monthly payments without stress.
Before taking a loan, assess your budget to ensure that the monthly payments won’t impact your essential expenses or savings goals. If the loan fits comfortably within your financial plan, it may be manageable. - You qualify for a low APR (better than credit cards).
A vacation loan may be a more affordable financing option if you can secure a low-interest rate, ideally lower than what credit cards offer. This is especially true for borrowers with strong credit who qualify for single-digit APRs. - The trip is once-in-a-lifetime (e.g., honeymoon, milestone celebration).
Certain trips, like a honeymoon, anniversary, or dream vacation, may justify financing if you don’t have enough savings but want to seize the opportunity. In such cases, a well-planned loan with affordable terms can make sense.
Even if you meet these conditions, consider saving up or exploring 0% APR credit cards as alternatives before committing to a loan.
Pros and Cons of Vacation Loans
A vacation loan can provide quick funding for travel, often with lower interest rates than credit cards for borrowers with good credit. However, it also comes with risks, including high interest rates for bad credit and the potential for long-term debt. Before borrowing, it’s essential to weigh the benefits and drawbacks carefully.
| Pros | Cons |
|---|---|
| Lower rates than credit cards – Good-credit borrowers may secure better APRs than most credit cards. | High interest for bad credit – APRs can reach 36% for those with poor credit. |
| Fixed monthly payments – Predictable payments make budgeting easier with no surprise costs. | Long repayment terms – You might be paying for years after the trip is over. |
| Lump-sum funding – Receive all the money upfront to cover travel expenses. | Risk of overspending – Easy access to funds may tempt borrowers to borrow more than needed. |
| Fast approval – Some lenders provide funds within 24 hours. | Potential credit damage – Missing payments can hurt your credit score and financial health. |
How to Choose a Vacation Loan?
Start by exploring banks, credit unions, and online lenders if you’re considering a personal loan to fund your vacation. Each lender may offer different terms, so it’s essential to compare options carefully before making a decision.
The loan length and interest rate are the most important factors to compare. Most personal loans have fixed interest rates, meaning your monthly payment stays the same throughout the loan. However, always confirm that the loan has a fixed rate to avoid unexpected increases.
Hidden fees can add up quickly. Dawn-Marie Joseph, president of Estate Planning & Preservation in Williamston, Michigan, advises borrowers to carefully check for upfront and back-end fees and to fully understand the interest rate structure. Some lenders may increase your rate if you make a late payment, so it’s important to read the fine print.
Not all lenders are reputable, so it’s important to do thorough research before committing. JP Dowds recommends looking beyond sponsored ads and checking customer reviews, the Better Business Bureau (BBB), and other consumer protection resources to identify any red flags. If an offer sounds too good to be true, it probably is, warns Joseph. Choosing a trustworthy lender ensures a smoother borrowing experience without unexpected financial pitfalls.
How to Get a Vacation Loan?
Follow these five steps to secure the best terms and avoid unnecessary financial strain if you’re looking for a vacation loan:
1. Check Your Credit
- Your credit score affects your loan approval and interest rate.
- Look for errors like incorrect late payments, unfamiliar accounts, or inaccurate credit limits.
- Dispute any errors to improve your score.
- Pay off small debts to boost your creditworthiness before applying.
2. Know What Loan Terms You Need
- Estimate your total vacation cost, including flights, hotels, transportation, meals, and activities.
- Decide on a loan amount that covers expenses without borrowing more than necessary.
- Choose a repayment term that fits your budget—shorter terms mean higher payments but lower interest, while longer terms reduce payments but increase interest costs.
3. Pre-Qualify with Multiple Lenders
- Pre-qualifying allows you to compare loan offers without affecting your credit score.
- Most lenders offer an online pre-qualification process with estimated interest rates and terms.
- Compare multiple lenders to find the lowest interest rate and best repayment terms.
4. Gather Documents and Apply
- Once you choose a lender, gather the required documents:
Government-issued ID (driver’s license, passport)
Proof of income (W-2s, pay stubs, tax returns)
Social Security number
Bank account details - Submitting a full application triggers a hard credit inquiry, which can lower your score temporarily.
- Make sure you’re ready to commit before completing this step.
5. Get Funded and Plan for Repayment
- Many online lenders offer same-day or next-day funding; traditional banks may take a few days.
- Loan funds are usually deposited directly into your bank account.
- Monthly payments start about 30 days after receiving the loan.
- Set up automatic payments or calendar reminders to avoid late fees and credit damage.
Can I get a vacation loan with bad credit?
Yes, it is possible to get a vacation loan with bad credit, though your options may be more limited, and the terms may not be as favorable. Some lenders, like Uplift, specialize in travel loans and may be more flexible when working with borrowers who have lower credit scores. However, keep in mind that lenders generally prefer a credit score of 670 or higher to offer competitive interest rates and favorable loan terms.
You may still qualify for a loan if your credit score is below this threshold, but you will likely face higher interest rates, lower borrowing limits, and stricter repayment terms. Some lenders may also require additional proof of income or a co-signer to reduce their risk.
Moreover, having bad credit can impact the maximum loan amount you qualify for. Lenders assess your creditworthiness, debt-to-income ratio (DTI), and overall financial stability before deciding how much they are willing to lend. If your credit score is low, you may only be approved for a smaller loan amount, which might not cover all your vacation expenses.
To improve your chances of securing a better loan, consider paying down existing debt, improving your credit score, or exploring alternative financing options such as using a 0% APR credit card, a secured loan, or a personal savings plan.
Top Lenders for Vacation Loans in 2025
LightStream – Best for Good or Excellent Credit Borrowers
Est. APR: 6.49% – 25.29%
Loan Amount: $5,000 – $100,000
Minimum Credit Score: 660
LightStream is an excellent option for borrowers with strong credit histories. The lender stands out for offering loans with no fees and a Rate Beat Program, where they promise to beat a competitor’s interest rate under certain conditions.
Qualifications:
- Minimum credit score: 660 (may vary depending on loan purpose and amount).
- Maximum debt-to-income ratio: 50%.
- Minimum credit history: 3 years.
- Acceptable income sources include employment, retirement, rental income, alimony, child support, Social Security payments, and disability benefits.
- Must be a U.S. citizen or permanent resident with a U.S. bank account.
Available Term Lengths: 2 to 7 years
Fees: No origination or late fees
Discover® Personal Loans – Competitive Rates for Good Credit Borrowers
Est. APR: 7.99% – 24.99%
Loan Amount: $2,500 – $40,000
Minimum Credit Score: 660
Discover personal loans offer competitive interest rates with no origination fees, making them a great choice for borrowers with good to excellent credit.
Qualifications:
- Minimum credit score: 660.
- Minimum annual household income: $25,000.
- Must provide a valid U.S. address and email address.
- Must be 18 years or older with a valid Social Security number.
Available Term Lengths: 3 to 7 years
Fees: No origination fee, but a late fee of $39
SoFi Personal Loan – Best for High Loan Amounts
Est. APR: 8.99% – 29.99%
Loan Amount: $5,000 – $100,000
Minimum Credit Score: None
SoFi is known for offering large personal loans and consumer-friendly features such as unemployment protection and career coaching. It is ideal for borrowers with strong financial profiles.
Qualifications:
- Must be at least 18 years old in most states.
- Open to U.S. citizens, permanent or non-permanent residents (including DACA recipients and asylum seekers).
- Must be employed, have sufficient income, or have an offer to start a job within 90 days. However, if you’re seeking a personal loan without a job, options may still be available if you have strong credit, collateral, or alternative income sources.
Available Term Lengths: 2 to 7 years
Fees: Origination fee ranges from 0% to 7%; no late fees
Prosper – Best for Fair or Bad Credit Borrowers
Est. APR: 8.99% – 35.99%
Loan Amount: $2,000 – $50,000
Minimum Credit Score: 560
Prosper is a peer-to-peer lending platform offering personal loans to borrowers across the credit spectrum.
Qualifications:
- Minimum credit score: 560 (average borrower score is 709).
- Minimum income: $15,000.
- Maximum debt-to-income ratio: 50%.
- Must be at least 18 years old with a valid Social Security number and U.S. bank account.
Available Term Lengths: 2 to 5 years
Fees: Origination fee of 1% – 9.99%; late fees are $15 or 5% of the unpaid amount
Upstart – Best for Borrowers with Limited Credit History
Est. APR: 6.70% – 35.99%
Loan Amount: $1,000 – $50,000
Minimum Credit Score: None
Upstart uses artificial intelligence to evaluate creditworthiness, making it a great option for borrowers with little to no credit history.
Qualifications:
- Must be a U.S. citizen or permanent resident.
- Must be at least 18 years old.
- Requires a full-time or part-time job, job offer within six months, or another regular source of income.
Available Term Lengths: 3 to 5 years
Fees: Origination fees range from 0% to 12%; late fee is 5% of the unpaid amount or $15, whichever is greater
Best Egg – Best for Secured Loans
Est. APR: 7.99% – 35.99%
Loan Amount: $2,000 – $50,000
Minimum Credit Score: 600
Best Egg offers both unsecured and secured personal loans, making it an option for borrowers who want to use collateral.
Qualifications:
- Minimum credit score: 600.
- Maximum debt-to-income ratio: 70%.
- Minimum credit history: 3 years with at least one account.
Available Term Lengths: 3 to 5 years
Fees: Origination fee ranges from 0.99% – 9.99%
LendingClub – Best for Small Loan Amounts
Est. APR: 7.90% – 35.99%
Loan Amount: $1,000 – $40,000
Minimum Credit Score: 600
LendingClub is ideal for borrowers looking for smaller loan amounts and those wanting to consolidate debt.
Qualifications:
- Minimum credit score: 600.
- No minimum income requirement, but proof of income is required.
Available Term Lengths: 2 to 6 years
Fees: Origination fee ranges from 0% – 8%; late fee is $15 or 5% of the payment amount
Upgrade – Best for Flexible Loan Terms
Est. APR: 7.99% – 35.99%
Loan Amount: $1,000 – $50,000
Minimum Credit Score: 580
Upgrade is known for offering multiple rate discounts and direct payment to creditors.
Qualifications:
- Minimum credit score: 580.
- Maximum debt-to-income ratio: 75%.
- Minimum credit history: Two years.
Available Term Lengths: 2 to 7 years
Fees: Origination fee is 1.85% – 9.99%; late fee is $10
PNC Bank Personal Loan – Best for Flexible Repayment Options
Est. APR: 8.19% – 24.99%
Loan Amount: $1,000 – $35,000
Minimum Credit Score: None
PNC Bank offers a joint loan option and flexible repayment terms, but availability is limited.
Qualifications:
- No minimum credit score requirement.
- Requires proof of income from employment, alimony, retirement, child support, Social Security payments, investments, rental income, or inheritance.
Available Term Lengths: 6 months to 5 years
Fees: No origination fee; late fees are the greater of $40 or 10% of the amount due
How to Save Money on a Vacation Loan?
The key to saving money on a vacation loan is securing the lowest possible interest rate. Here are three strategies to help reduce borrowing costs:
Improve Your Credit Score
A higher credit score leads to lower interest rates. If you have time before your trip, work on improving your score by paying down existing debts, making timely payments, and avoiding new credit inquiries. A Lending Palm study found that borrowers who raised their credit scores from fair to very good saved an average of $1,925 on personal loans.
Apply with a Cosigner
Adding a cosigner, someone with a strong credit history, can increase your chances of approval and qualify you for a lower rate. However, a cosigner shares equal responsibility for repaying the loan, meaning any missed payments can affect their credit as well.
Opt for a Secured Loan
Secured loans require collateral, such as a savings account, vehicle, or property, which reduces the lender’s risk and often results in a lower interest rate. However, failure to make payments could lead to the loss of your pledged asset, so consider this option carefully.
How else can I pay for a vacation?
Before taking out a loan, consider these cost-effective alternatives:
The most budget-friendly way to pay for a vacation is to save up in advance. If you have enough time before booking, try these strategies:
- Use a High-Interest Savings Account: This allows your savings to grow over time, making it ideal for long-term vacation goals.
- Set Up an Online Piggy Bank: These automated savings tools help you set aside money regularly without much effort.
- Create a Travel Budget: Factor in expenses like flights, accommodations, food, tours, and entrance fees to avoid overspending.
A travel credit card can offer benefits like airport lounge access, complimentary travel insurance, and frequent flyer rewards. Some even have 0% APR promotional periods, allowing you to pay off your trip interest-free. However, these cards typically require good credit, may charge annual fees, and could have high interest rates once the promotional period ends.
Many travel companies, including Disney, offer vacation package financing such as savings accounts, rewards programs, and installment loans. These can provide exclusive discounts, though they may not always be the most affordable option.
A layaway program lets you reserve your trip with a deposit and pay the balance over time, usually with a flat fee instead of interest. This can be a more affordable alternative to loans and is accessible to all credit types, though you’ll still need to budget for the full cost of the trip.
If your trip has a meaningful purpose, such as a charity mission or an educational experience, you might raise funds through a crowdfunding campaign. Alternatively, you can ask friends and family to contribute toward your travel expenses instead of giving traditional gifts for birthdays or holidays.
A personal line of credit gives you flexible access to funds, allowing you to borrow only what you need. It typically comes with higher limits and lower interest rates than credit cards, though it is less commonly available than personal loans.
Alternatives to Vacation Loans
Check these alternative ways to finance your trip before applying for a loan:
- Savings – Start saving in advance if you have time before your trip. Open a dedicated travel savings account, automate monthly contributions, and plan your expenses by comparing flight, hotel, and transportation costs.
- Travel Credit Cards – A travel credit card can offer sign-up bonuses if you have good credit (690 or higher), travel perks like free checked bags and airport lounge access, and ongoing rewards that help offset future travel expenses.
- 0% Intro APR Credit Cards – If you qualify, a 0% APR credit card allows you to finance your trip without interest for 15 to 21 months. If you can pay off the balance within this period, you avoid interest altogether, making it a more affordable option than a vacation loan.
- Buy Now, Pay Later (BNPL) Loans – Some lenders like Uplift and Affirm partner with airlines and travel sites to offer BNPL options at checkout. These allow you to split payments into manageable installments, sometimes with 0% interest, and may be easier to qualify for than traditional personal loans.
How LendingPalm Chose the Best Vacation Loans
| Criteria | Description |
|---|---|
| Accessibility | Lenders that are easier to qualify for are ranked higher. Factors considered include lower credit score requirements, wide geographic availability, fast funding, and easy prequalification processes. |
| Rates and Terms | Affordability and flexibility were key. Competitive APRs, fewer fees, flexible loan terms, and APR discounts for autopay or loyal customers were prioritized. |
| Repayment Experience | The borrowing experience matters. Lenders were evaluated based on reputation, customer service, credit bureau reporting, and additional perks like financial coaching or hardship assistance. |
Top Vacation Loan Providers
Based on LendingPalm rating system, the best vacation loans come from Discover, LightStream, Prosper, SoFi, Upgrade, and Upstart. Lending Palm fact-checks and updates lender recommendations monthly to assure borrowers receive the most accurate and up-to-date information.
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FAQ’s
Frequently asked questions
Can I get a vacation loan with bad credit?
Yes, but expect higher interest rates ranging from 18% to 36%. Lenders like Upgrade, Upstart, and OneMain Financial work with lower credit scores, though approval isn’t guaranteed. A strong income, steady employment, and a low debt-to-income ratio improve your chances. Securing a co-signer or opting for a secured loan can also help with approval. Compare multiple lenders to find the best terms and lowest fees.
How fast can I get a vacation loan?
Some lenders, like SoFi and LightStream, offer same-day or next-day funding if you meet their eligibility criteria. Others may take two to five business days, depending on verification processes and bank processing times. Factors such as your credit score, income documentation, and lender policies affect the speed of approval. To expedite the process, apply during business hours and have all required documents ready.
What’s the average interest rate?
Interest rates vary based on your credit score, lender, and loan term. Borrowers with good credit (above 700) typically get rates between 6% and 12%. Those with fair or poor credit may see rates up to 36%. Fixed-rate loans offer predictable monthly payments, while variable-rate loans may change over time. Shopping around and prequalifying with multiple lenders can help secure the best rate.
Is a vacation loan better than a credit card?
It depends on the interest rate and repayment terms. A vacation loan with a lower APR than a credit card can be a cost-effective choice. However, if you qualify for a 0% intro APR credit card and pay off the balance within the promotional period, it may be the better option. Credit cards also offer rewards and travel perks, but carrying a balance results in high-interest charges. Always compare total borrowing costs before deciding.
Can I use a vacation loan for international travel?
Yes, vacation loans can be used for flights, accommodations, tours, and other travel expenses. Unlike travel-specific financing, personal loans provide flexibility in spending. Ensure you budget for currency exchange rates, foreign transaction fees, and other international costs. Some lenders may have restrictions on fund usage, so check the terms before applying.
Do vacation loans hurt your credit?
Applying for a loan triggers a hard inquiry, which may slightly lower your credit score. However, making on-time payments can improve your credit over time. Late or missed payments negatively impact your score and may result in penalties. A vacation loan also increases your debt load, which can affect your credit utilization ratio. Borrow responsibly to avoid long-term credit damage.
What’s the max loan amount?
Most lenders offer vacation loans ranging from $1,000 to $100,000, depending on your creditworthiness and income. Higher loan amounts require excellent credit, strong financial stability, and low existing debt. Borrowing more than needed can increase repayment costs, so calculate your budget carefully. Some lenders impose restrictions on how funds can be used, so review loan terms before committing.
Are there fees?
Some lenders charge origination fees between 1% and 8%, which are deducted from the loan amount before disbursement. Other potential fees include late payment penalties, insufficient funds fees, and prepayment penalties, though many lenders allow early repayment without extra charges. Comparing fee structures among different lenders can help you avoid unnecessary costs. Always read the fine print before accepting a loan offer.
Can I pay off my loan early?
Yes, most personal loans allow early repayment without penalties, helping you save on interest. Some lenders even offer discounts for setting up automatic payments or making extra payments. However, a few lenders impose prepayment penalties, so check the terms before signing. Paying off your loan early improves your debt-to-income ratio, which can boost your credit score.
Should I borrow for a vacation?
Only if you are financially stable and confident in your ability to repay. A vacation loan adds debt, and interest charges increase the overall cost of your trip. If the monthly payments strain your budget, consider saving up instead. Using a high-yield savings account or budgeting for travel expenses over time can help you enjoy a debt-free vacation. Always weigh the long-term financial impact before taking out a loan.
