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Eligibility requirements for vacation personal loans

Who qualifies for vacation personal loans? It depends on the lender you ask. However, here are some of the common eligibility requirements.

Age: You must be of legal age in your state to qualify.
Legal status: You often must be a U.S. citizen or permanent resident, or have a valid visa.
Bank account: You must have an active and verifiable bank account.
Service area: You must live within a lender’s service area and may need a verifiable physical address.
Credit score: You may need to have a credit score above a certain minimum. It’s best to have a good FICO score, which is one of 670 or higher. The higher your credit score, the more likely you are to be approved, and the better rates and terms you can get.
Credit reports: Ideally, you’ll have a decent credit history. Lenders often review credit reports from one or more of the three consumer credit bureaus: Experian, Equifax, and TransUnion. They may look at your payment history, credit utilization, credit mix, new credit inquiries, and public records.
Income: You must have a stable source of income that’ll enable you to repay the loan. Lenders may require a minimum annual or monthly income amount.
Debt-to-income ratio (DTI): In addition to your overall income, lenders consider your DTI in order to assess how much of your income is available to handle new debt. Lenders generally prefer a DTI less than 35%.

While these eligibility requirements are common, each lender has its own algorithm or rules by which it evaluates borrowers. It’s not uncommon to get approved by one lender and denied by another, especially if your FICO score falls into the fair range (580 to 669). As a result, it’s best to prequalify with multiple lenders that look to be a good fit.

Learn More: What Are the Requirements for a Personal Loan?

How to get a vacation loan

Getting a personal loan for a vacation can be as easy as going online, filling out a form, getting a quote, and signing a contract. However, it’ll benefit you to shop around first. Here are the steps we recommend:

Compare lenders: With many vacation loan lenders on the market, you can better your odds of getting a good deal by shopping around. Look for those that are a good fit for you based on the criteria listed above.
Prequalify: Once you create a shortlist of potential lenders, head over to their websites or use an online marketplace to see if you can get a quote without a hard credit check. Upon prequalification, lenders will provide you with one or more loan quotes to review. Just note that these aren't offers of credit, but what the lender expects to approve you for. You won't know your final rate until you apply.
Pick a loan option: After you've collected a handful of quotes, compare the rates and terms side by side to find the best deal for your situation.
Complete the application: Head back to the website of the winning lender and complete the full application. You may need to provide documents such as a government-issued identification card, utility bill, pay stubs, and bank statements. It’s at this point that the lender will conduct a hard credit inquiry.

If your final application is approved, review the contract and sign it if the terms are as agreed. The lender will then get to work on funding your vacation loan. The funds will be deposited into your bank account according to the funding times of that lender, which could be as soon as the same day.

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Pros and cons of vacation loans

Vacation loans are widely available and can help make an upcoming dream vacation possible, but they also come with a few cons that are worth considering.

Pros

Fund a vacation: The biggest pro of vacation loans is they can help you fund the vacation you want to take. You can receive a large lump sum upfront and use it to make vacation-related purchases such as booking airplane tickets, rental cars, and hotel stays.
Many options: A wide variety of financial institutions offer vacation personal loans. As a result, you can shop around to find the best fit for your situation.
Fast funds: Upon approval, you can get the funds for a vacation loan quickly, sometimes as soon as the same or next business day, depending on the lender.
Low APRs: Personal loan interest rates tend to be lower than the standard APR on most credit cards. According to the Federal Reserve, the average interest rate on a two-year personal loan was about 9 percentage points lower than the average credit card interest rate.

Cons

High APRs: If you have bad credit, your APR could be over 30%, which could make a vacation loan expensive. Or if you have very good credit, you may qualify for a 0% promotional offer on a credit card which you could use to buy your vacation.
Fees: Loans may come with fees, such as an origination fee, an application fee, or late fees, which add to your borrowing costs.

How to get a vacation loan with bad credit

If you have less-than-perfect credit, it may still be possible to get a vacation loan. That said, it'll likely be harder to get approved for an affordable loan. Your best bet is to identify bad-credit loan lenders and compare offers to find the most affordable deal.

If you can't find a vacation loan that works for you, you may want to hold off and work on improving your credit. Alternatively, you could enlist the help of a friend or family member with a strong credit profile who's willing to cosign a loan for you.

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FAQ

Do banks give loans for vacations?

Many banks offer personal loans you can use to cover the expenses of a vacation. Upon approval, you receive the loan and can use the funds as you please, aside from a few restrictions against uses, such as paying off student loans and gambling.

What is a vacation loan?

A vacation loan is an unsecured personal loan that a borrower uses to pay for the costs associated with a vacation. The lender provides a lump sum amount upfront to the borrower and the borrower repays it, plus interest and fees, over a set term. Loan amounts can range up to $100,000 or more, while terms can extend to 144 months or more, depending on the lender.

What expenses can a vacation loan cover?

A vacation loan can cover a wide variety of expenses associated with a vacation. For example, you may use the loan funds to book a cruise, airfare, and hotel accommodations, as well as to buy clothes for the trip, meals while you're on the trip, souvenirs, and more. Lenders don’t typically regulate how you spend the funds, as long as you’re not breaking any specific loan use restrictions they have in place.

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Lauren Graves