If you’ve got the travel bug, it’s hard to resist the urge to plan trips and see new places. Often, the only thing stopping you is the almighty dollar. Traveling isn’t always cheap, and it becomes even harder on your wallet if you don’t have any sources of income while on your journey.
One option that has become more popular is getting a loan to travel the world. If that sounds like an exciting idea to you, here’s your guide for what type of loan you’ll need, how to get one and whether it’s a wise decision.
What Type of Loan Can You Get to Travel?
There’s no such thing as a travel loan, which means you’ll need to apply for a personal loan in this situation. Personal loans are one of the more flexible loan options, as the name suggests. People use them for a variety of reasons, such as:
- Financing a big purchase
- Consolidating debt
- Covering unexpected bills
Banks and credit unions are the best choice for low interest loans, but they also tend to be the strictest with their application requirements. Still, you should go to them first to see what kind of chances you have at approval.
Online lenders are another option. You may not be able to get interest rates quite as low, but that also depends on your credit score.
Applying for a Loan
Once you’ve decided you’ll get a personal loan to travel, here are the steps you should take to get one:
- Improve your credit scoreas much as possible. Your payment history and your credit utilization are the two biggest factors that affect your score. Having an excellent score (720 or higher) will give you the best shot at approval at the lowest interest rate.
- Choose a lender. You can get an idea of their minimum borrower requirements online to make sure you have a good chance of getting a loan through them.
- Fill out a loan application either online or in person.
With any luck, they’ll approve you, and you’ll be good to go.
Is Getting a Loan to Travel a Good Idea?
The elephant in the room here is whether it’s smart to borrow money just so that you can travel.
If you’re able to save the money you need instead within a reasonable timeframe, that’s certainly the preferable option. Remember also that you’ll need to make monthly loan payments for the money that you borrow. You’ll still need a source of income while you’re traveling to pay back your loan.
Before you get a loan, spend some time trying to build income streams or work that you can do from anywhere in the world. That’s the superior option if you can swing it, as you never want to take on more debt than necessary.
Now, that’s not to discourage you from following your dreams of seeing new places. If that’s what you want and you need a loan to do it, then there’s nothing wrong with taking the plunge. Just make sure that you’ve thought out the situation and you’re prepared to pay back what you borrow.