Holiday loan: finance your holiday in installments now!

 

Can you pay for every vacation in installments?

Can you pay for every vacation in installments?

Yes, this is best done with a vacation loan. It is a classic consumer loan. Only that this is not about furniture or a car, but about a journey with payment in installments. You receive a certain amount and pay it back with interest over a specified period. You get a vacation loan for free use. You are not tied to any specific use or to any specific tour operator – for example, you can also co-finance a set of new suitcases.

Attention: Since the purpose of a vacation loan is not fixed, the interest is slightly higher than for a home loan or car finance. Unlike real estate or cars, banks have no security as security.

How do I find the best vacation loan?

How do I find the best vacation loan?

You get the best overview in our installment loan comparison. Here you specify the loan amount, the term and the usage – in this case vacation. With information on the monthly charge and the interest rate, you will then be shown the best offers for your vacation with payment by installments. You can apply for the holiday loan at your preferred bank immediately. In the application form for traveling on installments, you have to provide a few personal details for the optimal loan calculation – if all questions have been clarified, you will receive a loan offer from the selected bank and can return it signed. You then have to legitimize yourself using the video or postident procedure. You will then receive the desired amount.

What loan amount makes sense for a vacation on installments?

The best amount for a vacation loan varies greatly from person to person because every vacation involves different expenses. The rule applies: as high as necessary and as low as possible. That means two things:

  • Since the interest on the holiday loan is somewhat higher, the loan should only be as high as absolutely necessary. Because every dollars that can be dispensed also entails unnecessary follow-up costs. A young couple in love love may want to experience something special during their honeymoon. But also in order to finance this special holiday in installments, affordability must remain the first thought – also for people who want to fulfill their lifelong dream and want to finance a trip around the world.
  • At the same time, you should not set the credit amount too low, since the actual travel price almost always comes with daily expenses on site. Try to calculate in advance what other costs will be added to the travel price due to excursions, car rentals or restaurant visits during the holiday season. Less the available capital, this is your loan amount to finance the planned trip.

Info: “Can you finance vacation in installments?” Used to be a question that did not arise. There was only vacation when there was enough money. However, with the current low interest rates, payment by installments for vacations is no longer uncommon. According to a study by the Society for Consumer Research, 6% of all installment loans are taken out for a vacation. Especially since a vacation loan is cheaper than the extremely high overdraft interest that you have to pay if you overdraw your checking account.

What is the interest rate for a vacation on installments?

What is the interest rate for a vacation on installments?

When you book a vacation on installments, the interest rate is very different for each borrower. If you have very good creditworthiness, also known as creditworthiness, you can get a loan of $ 5,000 for 1 – 2% effective interest for the trip with payment in installments. If the rating is poor and the term is longer, the interest rate jumps to over 9%. Two examples show possible interest and interest costs.

Examples of interest on a vacation loan

In example 1, the loan amount is $ 5,000, which is required for an all-inclusive trip to Ibiza. If the loan has a term of 2 years, the cheapest offer has an annual percentage rate of 3.19%. As a borrower, you pay interest costs of around $ 165.

In the second example, a vacation loan of $ 10,000 is taken out for a 4-month trip around the world. To reduce the monthly charge, we choose a term of over 3 years. Here too, an effective interest rate of 3.19% must be paid for the best offer, which results in interest costs of just under $ 500.

In both examples, the offers correspond to the two-thirds interest. That is the interest rate that is offered to two thirds of all borrowers.

Differences in loan terms for different vacation loans

  example 1 Example 2
Loan amount $ 5,000 $ 10,000
running time 2 years 3 years
best interest rate 3.19% 3.19%
Monthly rate $ 215.25 $ 291.45
Interest costs at the end of the term $ 165.41 $ 492.14

 

Which is better: installment loan or installment purchase from the tour operator?

Many tour operators also offer their customers the hire purchase. This often looks very practical at first glance – in the course of booking, the financing for the trip is paid in installments. However, the offer of tour operators is usually significantly more expensive than a classic installment loan.

While the installment loan is usually made without any additional surcharges, travel providers often ask for additional items such as one-time service fees. The insolvent travel provider Thomas Cook, for example, paid a fee of 12% of the travel price for installment payments – together with the loan interest, an effective annual interest rate of over 20% was incurred.

How long should I choose the loan term?

If you are thinking about traveling in installments and are thinking about when the loan should be paid off, you can follow a rule of thumb: The loan for the holiday should be paid off before the next holiday begins. This will help you avoid the problem of building up a debt tower that will no longer be manageable at some point.

This means that if a major trip is due once a year, the holiday loan should run for 12 months. When it comes to a special trip such as a honeymoon that only takes place once in a lifetime, the term of the loan can be chosen longer. This reduces the monthly installments, as the following table shows using the two-thirds interest rate.

Comparison of monthly rates with different terms

Loan amount Two-thirds interest running time Monthly installments
$ 10,000 3.19% 1 year $ 847.80
$ 10,000 3.19% 2 years $ 430.65
$ 10,000 3.19% 3 years $ 291.65
$ 10,000 3.19% 4 years $ 222.18

Source :vergleich.de, as of November 2019

How important are possible breaks in installments on a vacation loan?

That depends on your personal circumstances. If you are in a permanent employment relationship or are civil servants, then it is rather unlikely that you will have to take a break in the installment – for example due to unemployment. This applies in particular to smaller loans that are paid off after a few months. On the other hand, if you are self-employed and your earnings are irregular, a break in the installment can be very helpful. However, this extends the term of the loan by the suspended months.

Do I need residual debt insurance?

In many cases, residual debt insurance is unnecessary. It pays your monthly installments in the event of illness, accident or death. Experts recommend residual debt insurance for very high loans, such as real estate financing, and if you are the sole earner in the family and want to protect your relatives from financial problems.

Good to know: With a contractually agreed special repayment right, you can repay the entire loan or parts of the loan outside the agreed monthly installments without additional fees. This special repayment can also be useful for a holiday loan. If you are given the opportunity to pay off the loan early, you can use it free of charge.

Under what conditions do I get a vacation loan?

To finance a vacation on installments without or with a down payment, the credit rating is the A&O as with any loan. Your interest rate depends on this, but also the question of whether you can get the loan at all. As a rule, a bank will not grant a loan with a poor Credit Bureau score or only grant it with high interest premiums.

Further requirements for a vacation loan are:

  • Legal age
  • permanent residence in Germany
  • Account details within Germany
  • Proof of income

Can I get a vacation loan without Credit Bureau query?

The banks are obliged to check your creditworthiness. Planning a vacation on installments without a Credit Bureau query is therefore often associated with dubious offers. Some providers promise their customers to grant a loan without an entry at Credit Bureau – that is, the creditworthiness is checked, but this has no negative impact. However, you regularly have to pay additional fees for such offers. The alternative for a vacation loan without Credit Bureau query are the so-called P2P loans, i.e. loans from private individuals. With these you also get a bad Credit Bureau score on your holiday allowance – but often at the price of high interest and additional fees.

Instant credit with no upfront costs

 

The topic of instant credit with no upfront costs arises with classic loans, which German banks do not lend to customers at all. The preliminary costs are always discussed when consumers contact a credit intermediary to apply for an instant loan.

There are credit intermediaries who charge their customers upfront costs. However, this shows little of seriousness. With our contribution we want to point out that consumers take particular care to apply for an instant loan without any upfront costs when they turn to a credit agency.

Why a credit broker is needed

Why a credit broker is needed

In particular, consumers with negative Credit Bureau information have little chance of getting a loan from German banks. Anyone who has had the experience that inquiries are always rejected and urgently need money must look for alternatives. The credit intermediary offers an alternative. Credit intermediaries work with banks abroad.

They are able to provide the loan without Credit Bureau, which is often interesting for people with poor Credit Bureau. Intermediaries charge a commission for this credit brokerage service. That is also legal and quite legitimate. However, if you request advance costs without having brokered a loan, loan seekers can in principle assume that they are being ripped off.

It is by no means customary for loan seekers to pay upfront costs before a loan could even be arranged. It is the responsibility of the consumer to make sure to contact a reputable broker who can mediate the instant loan without any upfront costs – or at least tries to.

Not every loan seeker with a bad Credit Bureau is eligible for a Credit Bureau-free loan. The foreign bank, which provides credit without Credit Bureau, also requires creditworthiness of the customers. Only applicants who can demonstrate a permanent position with attachable income that has been in place for at least one year receive an immediate loan without any upfront costs.

What to consider when choosing a credit intermediary

What to consider when choosing a credit intermediary

The credit intermediaries live on the commissions that either the customers or the banks pay them. Basically, however, it is a performance fee that only arises if a loan can be arranged.

If a loan broker asks a loan seeker to pay money first, it is dubious. Customers shouldn’t go into it and turn to a reputable broker. Those who pay upfront costs do not have the guarantee that they will be given a loan. The money is usually gone.

In order for it to be an instant loan with no upfront costs, consumers must first find out about the credit intermediary and its seriousness. This is possible via the website and through customer reviews on loans without Credit Bureau from customers. Reputable credit intermediaries like Fine Bank have been active on the German market for more than 30 years.

Even in their advertising, they do not promise that they can provide credit to everyone. Consumers who land on a website where the credit broker promises credit even in difficult or hopeless cases should change the page as soon as possible. You will not get the instant credit without any upfront costs. On the contrary, they will have a cost but will not see a loan.

Details on Swiss credit

Details on Swiss credit

The so-called Swiss loan has not come from Switzerland for some time. Only Agree Bank from Liechtenstein is authorized to grant loans to German customers without Credit Bureau information. These are fixed offers of either 3,500 dollars or 5,000 dollars with a term of 42 months and 40 installments to be paid. The first two months are redemption-free. The interest on this loan is not dependent on creditworthiness, but is above ten percent. This means that the Credit Bureau-free loan from Liechtenstein is significantly more expensive than a loan of a comparable amount from German providers.

People without attachable income like unemployed and Hartz 4 recipients have no chance to get this loan without Credit Bureau. The bank does not accept sureties as security.

Instant credit with cash payment

If the topic of instant credit with cash payment is mentioned, it does not mean that the loan is paid out immediately after approval. An instant loan with cash payment rather refers to the fact that there is cash on this loan that can be used freely. This is not a matter of course for all instant loans. If an instant loan is taken out in connection with the purchase of goods, which is often the case with electronics, furniture and cars, the loan is not paid out to the customer in the form of cash. In these cases, the instant loan is granted for a very specific purpose. In practice, this is as follows:

A customer wants to finance a car with credit and therefore turns to a car dealer. For example, if the car bank approves the loan, the customer gets the car – the loan is paid in return to the dealer who provides the car. The situation is similar with furniture and electronics. It is often an instant loan because it is granted immediately, but there is no cash payment to the borrower.

Consumers who are actually looking for an instant cash loan should know the differences. There is a difference between a cash payment and a cash payment. Most of the loans that are advertised in this way are paid out in cash to the borrower’s checking account, who can then use the money freely without having to report to the bank. Most direct banks that advertise the instant credit with cash payment do not have any branches in which a cash payment could take place.

The cash payment for classic loan applications in the form of cash

The cash payment for classic loan applications in the form of cash

A credit with a cash payment, in which money is actually paid out in cash, is rather unusual today because we are in the age of cashless payment transactions. It also has something to do with crime. Many banks have very little cash on hand. Even if customers want to withdraw a lot of cash from their own account, they have to register with their bank beforehand so that they can stock up on cash. If the instant loan is taken out at the house bank and a cash payment is desired, this is of course still possible today. However, the procedure with the cash payment is no faster than a transfer. The money has to be requested, and the bank can transfer the current account just as quickly.

The situation is somewhat different with a mortgage loan. Here the customer goes to the pawnshop, deposits his deposit and always receives the loan in the form of a cash payment. As a rule, this is also about smaller amounts. Customers who go to the pawnbroker often only need the money for living expenses and not for the purchase of consumer goods.

How cash payments for online loans work

How cash payments for online loans work

When applying for an online loan from a direct bank, there is no bank counter and no branches. Nevertheless, an instant loan with cash payment can be applied for online. The term cash payment only refers to the intended use. The credit will not be transferred to the borrower’s account in cash. The latter can then use the money as he wishes.

Conclusion

 

Instant credit, where cash is paid out directly, is no longer standard. Standard is an instant loan for free use, where the borrower gets money transferred to his account and can then do what he wants with it.