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Should You Take Out a Personal Loan to Travel?


Dec 06, 2022 8 min read

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Vacation Loan Canada

This blog post is sponsored by Fairstone. Read our advertiser disclosure.

With inflation continuing to rise, many Canadians are wondering how to fit travel expenses into their budget. The high cost of fuel has certainly added to the price of a flight, and a sudden increase in demand for travel has likewise caused a steady climb in the cost of accommodation. According to Statistics Canada, airfares are steadily rising, up more than 18 per cent in October 2022 compared to October of last year. The cost of a hotel room is also on the rise, due mainly to increased demand and the rising cost of labour. So, does that mean your holiday plans are grounded indefinitely? Not necessarily.  

While Canadians are scaling back and looking for ways to travel for less, if you had your heart set on planning a trip for this winter or spring break, a vacation loan could be an option to consider — along with budgeting and saving — to make your travel dreams a reality.

What is a Vacation Loan?

A vacation loan is an unsecured personal loan that you can use to pay for travel expenses. An unsecured loan simply means that you don’t need to provide an asset (like a house) as collateral to guarantee repayment. 

When you’re approved for a vacation loan, you’ll receive one lump sum payment that you can then put towards travel-related expenses like flights, hotels, rental cars, food and other travel costs. Note that travel loans aren’t limited to costs associated with a vacation. A travel loan can also be used for urgent or unexpected trips and last-minute or emergency travel expenses, such as a death in the family that requires you to travel for a funeral.

You can usually get a vacation loan from a lender, such as Fairstone, that offers personal loans. Once you find the right lender and apply for a loan, you’ll then be able to determine your loan amount, your payment frequency and your loan term. The right loan will help you manage travel expenses though budget-friendly loan payments.

Vacation Loan RBC

Benefits of Using a Vacation Loan

Fixed Rates

It may be tempting to put your vacation expenses on your credit card but such a move could be a costly mistake. Credit cards in Canada usually charge a minimum interest rate of at least 20%. 

Credit card debt can also easily balloon out of control if you only make your minimum payments or skip the occasion payment. On the other hand, a vacation loan offers the potential of a lower fixed interest rate, which would make your payments much easier to manage and less likely to lead to debt.

Fixed Monthly Payments

With a vacation loan, you can spread out the cost of travel expenses over time, which can make payments more manageable. When you take out the loan, your total loan amount and interest charges are spread out over a predetermined number of payments.

Based on your budget and cashflow, you can determine which payment frequency might work best for you: monthly, semi-monthly, bi-weekly or weekly payments. In general, if you make more frequent payments, you’ll pay less interest overall and save money.

Can Help Fund Emergency Travel

Sometimes you just can’t plan for travel. A loan can be a lifeline if a family emergency arises and you need to unexpectedly visit a sick family member or go to a funeral. 

Provides Flexibility

A loan can provide the sudden infusion of cash you need to take advantage of a sale offering the lowest vacation prices and other special offers. In some cases, the money you save by booking a fantastic deal could be greater than the interest on a loan.

Travel loans Canada

Should You Take Out a Personal Loan to Travel?

Ideally, vacation travel would not be funded by a loan. While a loan can be a good option in certain circumstances, you should always try to save up and budget for travel expenses ahead of time — that way you don’t have to worry about the added cost that interest will add to your trip.

Though we all feel as though we deserve a special trip, the fact is that a vacation is a luxury – so think carefully before taking out a vacation loan. If you decide to take out travel loan, search for a responsible lender and make sure the loan payments fit your monthly budget. Holiday travel should never lead to a debt obligation that you can’t pay off comfortably.

If the trip is urgent or an emergency, however, and you don’t have enough savings set aside to pay for travel (possibly because you used your savings to tackle a frightening financial emergency), a loan may be your best option.

Other Ways to Pay for a Vacation

Before taking out a vacation loan, consider some alternative ways to pay for the trip and/or reduce costs.


Slow and steady wins the race — and keeps your bottom line healthy! The best way to pay for a vacation is always to pay in full with your own funds.

A smart way to put aside vacation money is to work it into your monthly budget. Calculate how much you earn and then allocate a portion of your income each month for necessities like rent and food. Then figure out how much money you have left over to spend on “wants” like entertainment and meals out. When deciding how much cash to spend on your various “wants”, be sure to include a vacation fund as one of your spending categories and then carve out a piece of your earnings to put towards a future trip.

Save Money

Be disciplined about setting aside $50 or $100 each month to put it directly into a high-interest savings account. Don’t touch the funds until you’re ready to withdraw them to pay for your trip. The best way to keep up with your savings goals is to automate them by having your bank set up an automatic transfer from your paycheques every payday into a savings account. 

Travel Cards and Reward Programs

If you have a rewards credit card that earns points or miles, you could focus on earning as many points as possible and then redeem them towards a flight, vacation package or hotel expenses.

Travel With a Group/Split Costs

Another option might be to split the expenses of a trip with another family or individual who also wants to go on vacation. You could divide up accommodation, car rental and gas costs. Another possibility might be to do something like a house swap. So, for example, if you lived in a vacation-worthy destination and knew someone who lived in a city you wanted to visit, you could offer to do a house swap for a week.

Shop Around for Discounts and Promotional Offers

Experts suggest that you are most likely to get the best travel deals if you book between three to five months before your date of departure or book last minute a few days before your vacation. The latter option — filled with uncertainly and sure to get stress levels up — is not for everyone, and certainly not usually for those with families. Another option is to look for deals around reliable deal-getting dates like Black Friday and Boxing Day. 

Choose a Less Costly Vacation/Staycation

A less exotic vacation close to home can be incredibly fulfilling because there is much less cost and stress. For this reason, staycations can often be more relaxing than a “real” vacation.

Consider Off-Season

Traveling off season in September and October can be very rewarding. You'll enjoy good weather and fewer crowds, and prices tend to be lower to attract tourists.

Can you take out a loan for a vacation

How Do You Get a Vacation Loan?

If you think taking out a loan is your best option, follow these steps to research and apply for a personal loan: 

1. Check Your Credit Score

You’ll get the most favourable interest rate and be able to choose from the largest selection of lenders if you have a high credit score. Some sites, like Borrowell, offer quick and easy access to free credit scores and reports. The site can also help you better understand what exactly a credit rating of good or fair means and how it affects your financial life.

2. Find a Responsible Lender

It’s vital to research lenders before you apply for a loan so you can be sure you’re getting the best possible rates and payment schedule. The right lender can be the difference between a comfortable loan versus unmanageable debt. It’s best to look for a trusted, Canadian lender like Fairstone; a company with almost 100 years of lending experience.

3. Get a Loan Quote

Some lenders offer a no-obligation loan quote with a soft credit check. A soft credit check has no impact on your score, whereas a hard check means a potential lender does a deep dive into your credit health and carefully reviews your entire credit file. A loan quote will let you find out how much money you could qualify for and what your loan payments might be.

4. Apply for Loan

Once you’ve selected a lender you can then submit your loan application. Some lenders allow you to complete the loan process quickly and securely online. Depending on your lender, to complete your application, you may need to provide verification documents, such as official Canadian ID, employment stubs and income, and housing information.

5. Receive Your Loan

Once you’ve received your loan, aim to always be on-time with your payments, which will ensure your credit score doesn’t decrease. If possible, set up automatic online payments with your lender so you never miss a loan payment.

Bottom Line

There are plenty of ways to reduce costs and keep your travel budget on track. Ideally, you’ll have enough money saved to pay for your vacation without the need to borrow. If you can’t wait to save up or a travel emergency arises, however, and you’re confident you will be able to pay back the loan, a vacation loan could be an option worth considering.

Get a Loan Quote from Fairstone

Completing a loan quote won't impact your credit score and there's no obligation to take out a loan. In addition to finding out how much money you could qualify for, you can find out what your loan payments might be.

Get a Loan Quote

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Fairstone is a leading provider of responsible lending solutions, with a nearly 100-year legacy in Canada. As an operating subsidiary of Fairstone Bank of Canada, Fairstone offers personal loans and home equity loans to near-prime customers online and in more than 250 branches coast to coast. More at

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