Travellers Loan: How They Work and Where to Get the Best Deals

Are you looking for ways to fund an emergency travel plan, top up your holiday savings, or cover unexpected trip expenses? Getting a traveller’s loan can help!

However, where do you start, and how much can you get? And Is a travel loan even worth it?

Continue reading to understand how travel loans work in Australia and get the answers to your top questions about them.

What this article covers:

What Is a Travel Loan?

A travel loan is a type of personal loan designed to help borrowers fund travel-associated expenses. These include airfares, accommodation, travel insurance, car rental, tour packages, travel accessories, and more.

Traveller loans are often unsecured loans. You don’t need to provide collateral, such as a car, to obtain the loan. They work just like other unsecured personal loans, but they’re typically marketed to people who need a way to fund travel-associated expenses. 

Most lenders offer travel loans from $2,000 to $50,000 with a loan term between one and seven years.

travellers loan

Cost of a Travel Loan

Before taking out any long or short-term loan, consider the associated costs. That way, you can determine whether it’s worth it for you. If not, shop around for better deals, or seek alternatives. 

When it comes to traveller loans, here are the costs you can expect:

  • Travel Loan Fees

Here are the typical fees associated with a traveller’s loan:

  • Establishment fee: Upon approval, this one-time upfront fee is added to your loan amount. It’s usually a percentage of the loan amount.
  • Monthly fee: It’s paid every time you’re making loan repayments.
  • Exit or early repayment fees: These are charges for repaying your loan before the term ends.
  • Late payment fee: It’s the fee charged when you don’t make loan repayments on time.

The specific fees charged vary by lender. Some lenders don’t charge early repayment fees, while others do. 

Always check the fees and other charges associated with any short-term personal loan—including loans for students, loans for 18-year-olds, and loans for new employees—before applying.

loan for travellers

  • Travel Loan Interest Rates

Another cost associated with traveller loans is interest rates. Most lenders offer both variable and fixed interest rate loans.

A fixed-rate means your repayment remains unchanged throughout the loan’s term. On the other hand, a variable rate means the interest rate and repayment amount can fluctuate during the loan term.

The average interest rate for these loans is about 9% for a variable rate and 11% for a fixed rate. Most lenders customise interest rates based on your credit score. The higher your credit score, the cheaper the rates and vice versa. 

But generally, unsecured personal loans have higher interest rates than secured ones because they present more risk to the lender. It’s especially true when looking for loans for job seekers, loans for low-income earners, or loans for casual workers where the lender feels like they’re taking more risk.

Benefits and Drawbacks of a Personal Loan for Travel

Why should you take out a personal loan for travel? Here are the benefits of travel loans:

  • A simple and quick online application process
  • The funds are deposited within hours or a few days
  • Most travel loans are cheaper than using a credit card
  • Multiple lenders offer these loans
  • It might improve your credit score if you make on-time repayments. 
  • It offers protection against unexpected expenses, such as medical emergencies or flight cancellations.

Below are the potential drawbacks of travel loans.

  • You might keep repaying for your travel cost long after your trip has ended.
  • You may not get another loan before repaying, especially with lenders who consider existing loans.

travel loan

Travel Loan Eligibility

The eligibility criteria for personal loans vary by lender, but the basic requirements are: 

  • Be an Australian citizen or permanent resident
  • Be 18 + years old
  • Have a sufficient regular income

Factors to Consider When Shopping Around for Travel Loans

Don’t just select the first lender you come across. Instead, shop for the best loan that meets your financial needs and helps you achieve your travel goals.

Some of the factors you should keep in mind are:

  • Comparison Rate

Understanding the fees and rates is crucial because they determine how much you’ll end up paying back in total.

When you’re looking at different offers, focus on the comparison rate. Lenders must advertise it alongside the interest rate. 

The comparison rate is a percentage figure that includes the interest rate and any fees associated with the loan. It gives you a more accurate idea of the actual loan cost and makes it easier to compare different loans from different lenders.

  • Type of Interest Rate

Does the lender offer both variable and fixed-rate loans? Identify the loan type that will work best for your financial situation and confirm if the lender offers it.

Each option has its advantages and disadvantages. 

loan travellers

Fixed-rate loans are a good option if you prefer stability and predictability in your repayments and want to avoid surprises. Your repayments won’t change over the loan’s lifetime, which is excellent if you have a long repayment term. However, if the market rate drops, you’ll still pay the same interest rate, missing out on potential savings.

Your repayments may increase or decrease with a variable interest rate, depending on the market conditions. They are a good option for short-term loans if you’re comfortable with some uncertainty. You might have challenges budgeting for your repayments but could potentially save money if interest rates decrease.

  • Travel Budget

Before shopping around for personal loans, you should have a clear travel budget. The maximum travel loan for most lenders is $50,000. 

Check if the lender can offer you the loan amount you want. Keep in mind that the amount you’re eligible for may vary depending on the lender and your financial situation. Some lenders may offer higher loan amounts, while others may have stricter eligibility criteria.

  • Loan Features

You can also look at the loan features that matter to you. For example, do you want to make payments weekly, fortnightly, or monthly? 

Do you want to be able to make extra loan payments or complete the loan early without penalties? 

Look for those features that are important to you when comparing the different offers.

How to Get a Travel Loan: The Easy Way

While you can shop around and compare multiple lenders, we know a better way. Apply for a traveller’s loan using Orange Loans—the best lender finder in Australia.

We have a database of the best and ASIC-accredited lenders who can review your application in minutes and process the funds in the shortest time possible. 

Ready to get the money to fund your trip? Here’s an overview of our quick and easy online application process:

  1. Complete the online application and submit it
  2. Check out the offer from the lender we pair you with
  3. Sign the loan contract if you like the loan details 
  4. Receive the funds

Our role is to connect you with the best loan providers. After signing the loan agreement, you’ll deal directly with the lender.

travel loans

FAQs

Is It Possible to Get a Travel Loan?

Yes. You can get a travel loan in Australia through Orange Loans. However, the loan amount you can get depends on your travel budget and overall financial situation.

How Does a Travel Loan Work?

A travel loan works like other personal loans. The loan amount ranges from $2,000 to $5,000 for most lenders and is often unsecured.

Can I Get a Loan to Travel Abroad?

Yes. Most travel loan lenders do not have restrictions on the places to visit with the funds.

Are Travel Loans Worth It?

Whether a travel loan is worth it or not depends on your circumstances and financial situation. But always shop for the best deal.

Conclusion

A traveller’s loan can be an excellent way to finance your spontaneous trip or the dream vacation that can’t wait. It also offers a safety net to cover unexpected expenses associated with travel, such as flight cancellations or medical emergencies. 

Whenever you need a long or short-term loan, turn to Orange Loans, and we’ll sort you out quickly!

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