Holiday Loans from 6.99% p.a.

When Borrowing for Travel Makes Financial Sense

Travel is one of life's most enriching experiences, and Australians are among the world's most enthusiastic travellers. The average Australian household spends approximately $5,000-$15,000 on domestic and international travel annually. For bigger trips — a European holiday, a family cruise, or an extended gap — the costs can easily reach $20,000-$40,000.

The question of whether to save or borrow for a holiday is more nuanced than it first appears. Saving is always the lowest-cost option, but there are legitimate scenarios where a holiday loan is the smarter financial move:

Price-sensitive timing: Airfares and accommodation to popular destinations can fluctuate significantly. If you have found a deal that will not last — such as a heavily discounted tour package, a flight sale, or off-peak resort pricing — booking now with a loan at 8-10% interest could save you more than the interest cost if prices rise 20-30% by the time you have saved enough.

Life-stage travel: Some trips have natural windows. Travelling with young children before they start school, visiting elderly relatives overseas, milestone anniversaries, or taking a gap year between career changes — these opportunities do not always align with when your savings are ready.

Income-rich, savings-light situations: If you have recently made a large purchase like a home and your savings are depleted but your income is strong and stable, a short-term holiday loan can be perfectly sensible. The key is ensuring repayments fit comfortably within your budget.

Responsible Travel Borrowing: A Practical Framework

We believe in responsible lending, and that means being transparent about when a holiday loan is and is not appropriate. Before recommending a travel loan, our brokers assess your overall financial position against a practical framework:

The 10% rule: Your holiday loan repayment should not exceed 10% of your monthly take-home pay. For someone earning $5,000 net per month, that means repayments of no more than $500. A $10,000 loan at 8.99% over 24 months has repayments of approximately $457/month — well within this threshold.

Emergency buffer: You should have at least one month of expenses in accessible savings before taking on a holiday loan. Borrowing for discretionary spending while having zero emergency reserves puts you in a vulnerable position if unexpected costs arise.

No existing high-interest debt: If you are carrying credit card balances or other high-interest debts, addressing those first (through a debt consolidation loan) should take priority over funding travel. It makes no financial sense to borrow at 8% for a holiday while paying 20% on existing credit card debt.

Holiday Loan vs Credit Card vs Buy Now Pay Later

Many travellers reach for their credit card when booking flights and accommodation, but this can be an expensive habit. Let us compare the three most common ways Australians finance travel:

A personal loan at 8.99% for $10,000 over 3 years means fixed monthly repayments of $318 and total interest of $1,438. You know exactly when the debt will be cleared and the total cost is predictable.

The same $10,000 on a credit card at 20% making minimum repayments (2% of balance) would take over 30 years to repay and cost more than $18,000 in interest. Even making $318 monthly payments (matching the personal loan), you would pay $1,753 in interest over 3 years — $315 more than the personal loan.

Buy now, pay later services can work for smaller travel components like flights ($500-$2,000) but become unwieldy for larger bookings. Late fees accumulate if you miss instalments, and having multiple BNPL obligations can impact your credit assessment when applying for future finance products including home loans.

Tips to Reduce Your Holiday Costs

Even with a loan, there are proven strategies to stretch your holiday budget further. Book flights during airline sales (typically January, June, and November in Australia). Consider shoulder seasons — travelling to Europe in May or September instead of July/August can save 30-40% on accommodation while still enjoying pleasant weather.

Use price comparison tools and set fare alerts months before your intended travel dates. Package deals combining flights and accommodation often provide genuine savings of 15-25% compared to booking separately. For domestic travel, road trips with a group can dramatically reduce per-person costs compared to flying.