Travel Loan: Should You Get One to, uhhh, Travel?

We all have our own personal needs. For every need, there is a type of loan that specifically addressed that need. One of them is the need to travel; hence the travel loan.

Travelling is a luxury. Aside from being able to go to a different place and experience different things (including food), you spend certain number of your days not working. Nonetheless, it’s a time well-spent with the family and you are only making the most out of your stay here in the Philippines.

Here’s the thing: can your budget allow you to travel? Even if you can, will you still have sufficient funds by the time you go back abroad? This leads you to the next question: should you apply for a travel loan in order to travel?

Check out these factors you need to consider to help you decide whether getting one is worth it:

Travel Factor No. 1: The need to borrow

This is the first factor you need to look into before you apply for a loan.

Travel loan can be convenient because it allows you to increase your buying power when going somewhere. On the other hand, do you have sufficient funds and steady income to pay for the loan? If not, perhaps it is best to postpone the trip instead and save up for it later.

Travel Factor No. 2: An existing credit card

Let’s say you really want to travel with your family even if it’s only here in the Philippines. Fine. Instead of getting a loan, do you have an existing credit card you can use to finance your travel expenses?

Travel loan may have lower interest rate compared to credit cards, but keep in mind that credit card companies give out perks and benefits to its clients. Check out their partner establishments for hotels, restaurants, and other recreational facilities and take advantage of them.

Travel Factor No. 3: Current financial situation 

Apart from your credit card, if any, you also have to look into your current financial standing. This means you need to check and evaluate how much you are earning and spending every month. You also need to take note of any existing loans and employment status in relation to the current situation of the country where you are working to make sure you can pay off your travel loan.

This is why it is important to create a budget. It will make it easier for you to check how much money is going to specific expenses and help you decide whether you can still accommodate another loan.

Travel Factor No. 4: The loan terms

Assuming that your salary allows you to get a travel loan on your next trip back to the Philippines. This doesn’t mean you will automatically apply for a loan.

Check out the interest rate and consider the lender that offers low rates. Clarify whether the loan is secured or unsecured, since unsecured ones may have higher interest rate, although it will protect your assets against possible foreclosure. Aside from this, make sure to ask about repayment terms. As a rule, travel loan must be repaid in less than a year, so make sure you negotiate the terms well.

Travel Factor No. 5: Your destination

Where do you plan to go with your family? Many OFWs opt to travel in the Philippines with their families to cure homesickness while there are still others who prefer bringing their family overseas.

Regardless of where you plan to go, it is a must to anticipate your expenses to help you determine whether getting a travel loan is necessary. If you plan to go overseas, how much is the air fare, hotel accommodation, food, exchange rate, and transportation expenses when going around the city. If you wish to stay here, gauge how much are the transportation costs, hotel accommodation, and food among others. Make sure you have enough cash to cover for these expenses.

So, is it advisable to get a travel loan? That depends on you. No one can stop you from borrowing money to give your family a grand vacation, but make sure to remember these three things:

  • The amount you will borrow should cover only the essential costs.
  • There will be an interest on top of the amount you will borrow.
  • Despite the availability and accessibility of travel loan, make sure to travel within your means.

After all, you don’t want to waste few years paying for a one-week vacation, do you?

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