Discover the essential points to know about travel credit
Summer is here. So for this year you want to take advantage and go to the beach with your loved ones. But your income is not enough to finance the trip. To be able to leave anyway, you can apply for a travel credit from a loan organization. This is a consumer credit allowing you to make your travel plan a reality. Here is what you need to know about this type of loan.
What is a travel credit?
Travel credit is also called vacation credit. This is a personal loan that you can request from your bank. The loan will help you finance your travel and expenses once at your destination. Even if it is called travel credit, this type of loan is not affected. You can apply for credit as a personal loan at the bank. Once the capital is released, you are free to use it as you see fit.
Also, the credit can be used to finance your vacation, to buy the equipment you will need or just to pay for certain activities. In general, banks grant between 1,500 and 4,000 US dollars depending on the case. Depending on the profile of the borrower and the bank, it is possible to have up to US $ 21,500. In this case, the loan is more of a personal loan than a vacation loan.
Credit institutions often take a negative view of vacation credit. Also, the interest rates can be quite high. It is then advisable to make play the competition to obtain a better rate.
Conditions for obtaining a travel credit
Applying for a loan for a travel credit is similar to a consumer credit. You just go to a bank or a credit agency. These professionals will then offer you offers based on your profile. In general, travel credits are all the same for all financial institutions. To avoid scams, you still need to be vigilant on certain points.
First, go through a credit simulator. Of course, this tool is not immediately valid. Nonetheless, it will give you an overview of what you can borrow and the monthly payments. Today, many online banks offer a credit calculator.
You should also look into the terms of the credit. These vary from bank to bank. Also, it is important to seek a financial advisor or a credit comparator. This will allow you to know the terms of each credit institution. Note that the more risky your profile, the lower the amount the bank will grant.
Interest rate and monthly payments
As you probably know, the interest rate for a travel loan is quite high. In general, it ranges from 2.3 to 8%. This rate varies depending on the bank and the amount you are going to borrow. The loan repayment period also impacts the interest rate.
You are quite free for the repayment term. It varies from 12 to 60 months. This term applies to credits between 1,500 and 21,500 US dollars. Professionals in the field, however, advise not to exceed 12 months for reimbursement. This way, you can borrow again for the next vacation.
Typology of travel credits
There are two types of vacation credits. You can apply for a personal loan. In this case, the credit conditions are defined with your banker. The borrowed amount can be used as you see fit. You also apply for a loan from travel agencies. For this second option, you must use the capital for the trip.