Is taking out a personal loan for traveling a good or bad idea?
In an imaginary world, people have ample money to spend on travelling but in the real world, the scenario is bit different; people consider personal loan as the best option for travelling. And taking loans is a not bad idea, this is way too much better than a credit card. You can easily fund your holiday without any difficulties.
However, there are a few things you should know before applying for a loan. This is because for banks, it is an opportunity and you have to be a bit careful while borrowing the amount. Apart from personal loans, many other loans exist such as loans for bad credit with no guarantor and people on benefits.
If you decide to take a personal loan for travelling then make sure you read the following points carefully.
Personal Loan Vs Credit Card
As you read earlier that personal loan gives more satisfaction than a credit card. Although credit card can give you benefits like warranties, purchase protection, and reward points the interest rate is high as compared to the personal loan. And you can borrow a lot more in case of personal loans.
Borrow if you need
Personal loans are attractive because of its availability but it doesn’t make any sense if you borrow even when there is no need.
Before applying for a loan, sit and think that will you be able to repay the money on time and do you really don’t want to break your savings? If you have enough money then there is no need to go for the loan because it can save plenty of money. How? You won’t be paying interest for it. So take time and make a proper budget and see your saving is enough for your travel or not.
Find a correct loan
Banking is doing everything to lure customers so, it doesn’t mean you choose a loan because it is available. Before that, you should do proper research and compare the market and then choose one which suits you.
Checking interest rate is not a bad idea however you should check the processing and documentation charges and pre-closure charges too. It would be better if you check the fast approval rate and if it considers any associated monthly fees or not?
Don’t borrow more than your capability
This one is the most important thing that you consider before borrowing money. You should take that much amount you can easily repay and never borrow money more than your income because it may affect your children’s education or you will find hard to save money for your retirement. Never put this before your basic needs. And make sure you repay on time because if you fail then it will affect your credit score badly.
Go through terms and conditions of the loan
Maximum people find boring to read the instructions or they ignore it but if you do this then it may come with unpleasant surprises. So, it is better to read each term and condition of the loan and make sure it matches those requirements you agreed upon. If you find anything weird then you must visit the lender and ask your query and if you agree with that then proceed otherwise you can leave and visit some other lender.
Discuss with your family
It is important to share your thought with your family because for any bad result your family will be affected too. Discuss with your spouse or mother and father before taking the loan. Go for it only when everyone agrees with you.
If you are planning to travel solo then you might put your family as a guarantor. And you don’t want to let your family down then borrow the decent amount and never get too sloppy while repaying the loan.
Use money adequately
Now you decide to take a loan and you borrow a good amount of money but it is important that you use that money wisely; only use where you need. Because this money you have to repay with interest. It should not happen that for one week’s holiday, you are spending years paying back.
You must remember these points before applying for any personal loan. These points will help to take proper decision and will help you to enjoy at fullest.