What was once supposed to be a relaxing and enjoyable post-Covid getaway may quickly turn into a costly decision that can put a dent in both your credit and wallet.
4. You May Put Yourself in a Debt Trap
If you take out a vacation loan, you may check off a bucket list item now but find yourself in a debt trap later. You can avoid this by following responsible loan practices; however, you may find that challenging if you need more money before your original loan is paid off.
For example, let’s say you want to take one family vacation every year. If your loan has a repayment term of two years, you’ll still owe money when your next vacation comes around the following year. This may make it hard to afford another trip, so you might be eager to take out another loan to help cover the costs.
Not only will you have one year left on your first loan, but you’ll also have to make payments on your second vacation loan if you decide to take one out. Using loans in this manner can quickly increase your debt, making it hard to afford your monthly payments and leaving you in a spiraling debt trap that you can’t seem to escape—not where you want to be
Vacation Loan Alternatives
The risks that come with vacation loans aren’t worth the financial consequences. There are other strategies you can use to put money aside, take that dream vacation and avoid taking out a personal vacation loan, including: