Holiday loans

To maintain our sanity in this busy world we live in, a holiday can be the perfect remedy to escape the chaos and unwind. Be it a best friend’s wedding in Europe, a relaxing honeymoon in Thailand, a luxury cruise or a backpacking adventure around South America…a travel loan can help turn your holiday dreams into a reality. So when the piggy bank isn’t quite full and you don’t have enough savings, a personal loan is a great way to finance that well-deserved holiday.

A travel loan can cover many parts of a holiday including; flights, accommodation, meals, car hire, travel insurance, spending money and more. Now learn more about travel loans by reading our guide below so you can be off exploring the world in no time!

Loan options for a holiday

There are two main options when choosing a holiday loan; you can take out a personal loan or go with a credit card. First you need to decide how much you need to borrow to make the holiday happen and that will help you choose which loan to go with. There is no right or wrong, so have a read below of the pros and cons of each to help you decide which option suits you and your financial situation best.

Personal loan:


  • Lower interest rate than credit cards
  • You can borrow a larger sum of money and pay in back over a longer period of time
  • There’s no temptation to keep spending as could happen with a credit card
  • Compare some of the best deals on unsecured personal loans


  • You can be charged for paying off the loan before the term has ended
  • You’ll need a good credit rating to take out an unsecured personal loan
  • It takes a longer time to apply so no jet setting off at the spur of the moment

Credit card:



  • Standard credit card interest rates can often be as high as 18% pa
  • If you don’t have good willpower it’s easy to find yourself in large amount of debt
  • You only need to make a minimum repayment each statement period so your debt can continue on until your next holiday

Read more about personal loans vs credit cards

Features to look for in a travel loan

There are ways to save money on a travel loan so be sure to shop around and consider the below features, so you get the best deal for your financial situation. Just think every cent saved on the holiday loan could get you another cocktail by the pool or even an extra night’s accommodation!

  • Good rates: A competitive interest rate is vital to a worthwhile loan. You have the choice between either a variable or fixed interest rate. A variable interest rate will fluctuate over the course of the loan but you may be able to snap lower rates with this option. A fixed rate will remain the same for the loan term, allowing you to budget for your repayments.
  • Flexible repayments: You want to have paid off your loan by the time your next holiday comes around! So try and find a loan that allows your repayments to coincide with when you get paid, be it fortnightly or monthly. Also make sure your personal loan provides you with the flexible option of an extra repayments facility, you never know when you might get some bonus cash.
  • Low fees: There is no shortage of fees associated with personal loans, these include; application fee, set up fee, monthly and/or annual fees, late repayment fees and charges for paying off the loan early. If you do your research, some lenders will offer you a holiday loan free of some of these fees or lower charges.

Dos and Don’ts of holiday loans

Before you get caught up in the hype and excitement of planning your getaway make sure you take the time to consider the following pointers before taking out a travel loan.

The Dos:

  • Do a budget for your trip; you don’t want to be caught out short of funds. A budget will also determine how big a loan you need. Remember there are a lot more costs to a holiday than just the flights and accommodation.
  • Do consider taking out a personal loan as a credit card could cost you a lot more in interest over a long period of time, especially when you have little self-control when it comes to whipping out the plastic. You can take out a short term personal loan for your holiday and pay it off over a few month of returning home. Head to the Mozo travel money section and touch up on the woes of overseas credit cards.
  • Do shop around for the right loan that will give you the best deal on the amount you want to borrow and in the time you can afford to repay it. Interest rates and fees can vary significantly from one lender to another so make sure you compare some of the most competitive personal loan deals on the market by clicking the link.

The Don’ts:

  • Don’t borrow more than you need. We cannot make this any clearer! You don’t want to remember your holiday for the massive debt it caused rather than the memorable happy moments. If you fail to make repayments on your travel loan you’ll end up with a bad credit rating and may never be able to get a holiday loan again. Now you don’t want that do you!?
  • Don’t take out a loan from a travel agency, as convenient as it may be. Interest rates and administration fees from travel agencies are a lot higher than personal loans or credit cards. Compare bank and P2P lenders options on Mozo.
  • Don’t forget to have access to emergency funds when you’re on holidays, you never know when an unforeseen situation may arise.

Loan Budgeting and repayments

We may sound like a broken record but we can’t emphasise enough how important it is to do a budget before you take out a personal loan. The last thing you want to do is borrow more than you can afford in repayments. Use the Mozo budget calculator to get an idea of where your money goes and how much you have left over. This will assist you in calculating how much you can afford to pay off your loan each fortnight or month. Now you also know if you can head off for a month long holiday to Europe staying in five star accommodation, or maybe a two week trip to Bali fits your budget a little better!

Repayments are based on the full amount of the loan, related fees, the loan term and interest rates. When you set up the loan you will agree with the lender on when you make the repayments, this could be weekly, fortnightly, monthly or an agreed date. You can make the repayments via direct loan repayment, direct debit or phone banking. Remember you’re likely to make repayments on your travel loan while you’re away, so don’t forget to budget for this.

Get an idea of how much your repayments will be by plugging some numbers in the Mozo repayment calculator.

What you’ll need when applying for a holiday loan

When you've picked the ‘winning’ loan, click on the blue 'go to site' button, this will take you to the provider's application website and you can apply for the loan from the comfort of your own home.

Here’s your checklist when it comes to applying a holiday loan:

  • Proof of identity - passport, drivers license and or Medicare card
  • Proof of income - you’ll need to provide several of your most recent pay slips
  • Financial details - make sure you have copies of your income, assets, debts, expenses and liabilities

Holiday money tips

#1 Check the expiry date on your cards before you leave

#2 Decide how you’re going to access the money you’ve borrowed when you’re away

#3 Pick up some local currency before you leave (not at the airport) so you don’t get caught out without cash when you arrive at your destination

#4 Don’t use numerous credit cards while you’re overseas, you’ll just rack up a heap in fees and interest. Stick with the credit card that will give you the cheapest rates on international withdrawals

#5 Let your bank know you are heading away, as they do become cautious about overseas credit and debt activity, you’d hate for your card to be cancelled when you’re abroad

#6 Before you leave, don’t forget to head over to the Mozo travel money section for more holiday money tips

Useful travel links