Is Getting a Holiday Loan a Good Idea?
Chloe Jones
Published on 29th January 2024

Key Takeaways

  • Holiday loans offer easy access to funds and flexible repayment options, allowing Australians to enjoy vacations without upfront financial strain, though interest rates and fees should be carefully considered.

  • Potential downsides include limited flexibility with some loans tied to travel companies, the risk of accumulating debt, and possible negative impacts on credit scores if repayments are not managed well.

  • Responsible borrowing is essential — comparing lenders, budgeting carefully, and understanding loan terms can help individuals make informed decisions and avoid financial pitfalls.


Holiday or travel loans have grown in popularity as Australians eagerly return to travel post-pandemic. According to the Australian Bureau of Statistics (ABS), the total value of new personal loan commitments has surged – up roughly 18% year-on-year by late 2024. Notably, loans categorised for “other” personal purposes (a grouping that includes travel and holidays) jumped about 25.9% over the year, indicating a significant rise in holiday financing.

Industry analysts note that personal loan demand is at all-time highs after rebounding from 2020 lows, suggesting many Aussies are turning to personal loans to fund vacations alongside other needs.

The Good Thing About Holiday Loans

Holiday loans serve as a financial tool that individuals consider for various reasons, especially during festive seasons. In this section, we’ll explore the advantages of holiday loans, shedding light on their practical benefits and the convenience they offer.

Easy Access to Funds for Immediate Travel Plans

Holiday loans in Australia provide a convenient way to access funds quickly, allowing individuals to make immediate travel plans without the need to have extensive savings. This is particularly beneficial for spontaneous trips or last-minute travel arrangements. The funds are typically deposited directly into the borrower’s bank account, facilitating easy and quick access to the required amount for planning a vacation.

Flexible Repayment Options in Australia

Borrowers in Australia can enjoy flexible repayment options when taking out holiday loans. Lenders often offer various repayment plans tailored to the borrower’s financial situation, making it easier to manage the loan without causing undue financial strain. This flexibility allows individuals to choose a repayment schedule that aligns with their income and budget, ensuring a more comfortable and manageable financial arrangement during and after the vacation period.

Related article: How Do Personal Loans for Vacation Work

Enjoying Vacations Without Immediate Financial Burden

Holiday loans provide the opportunity for individuals to enjoy vacations without experiencing an immediate financial burden. Instead of having to save for an extended period before going on a trip, borrowers can spread the cost of their vacation over time through manageable loan repayments. This allows them to create lasting memories without compromising their current financial stability.

2025 Interest Rates for Holiday or Travel Loans

We always try our best to provide the freshest information and data to our readers. Below we discussed some key changes on interest rates for personal loans; specifically those used for holiday or travel.

...In Summary:

  • Average interest rates are high but varied: Fixed personal loans average around 11%, while variable rates sit slightly lower at 8.5–9%.

  • Best rates are under 6%: Borrowers with excellent credit may find rates as low as 5.49–5.76% p.a. through lenders like Mozo, RateCity and Savings.com.au.

  • Unsecured loan rates can exceed 15–20%: Those with fair credit could face much higher rates, so credit history matters significantly.

  • Fixed vs Variable loans:

    • Fixed: Lock in your rate for predictable repayments – ideal for budgeting travel.

    • Variable: Rates can change, but may offer lower starting points.

  • Big banks' holiday loan rates vary widely: For example, CBA currently offers unsecured fixed personal loans from 7.75% up to 19.75% p.a. depending on creditworthiness.

  • Tip: Comparison sites help you find the best rates — many borrowers secure better offers by shopping around.

Interest rates for personal loans in Australia (including holiday loans) have risen in the recent high-rate environment, but competitive deals are still available. As of mid-2024, Australians were paying around 11% on average for new fixed-rate personal loans. – near the highest level in years – while average variable rates were slightly lower (approximately 8.5–9% as of mid-2024).

Typical personal loan interest rates span a wide range from the mid-single digits up to about 15–20% depending on the lender and borrower’s credit profile. In fact, rates below 6% p.a. are attainable for borrowers with excellent credit: for example, Savings.com.au’s holiday loan comparison shows interest offers starting around 5.76% p.a. for some low-rate products.

Similarly, loan comparison sites like Mozo and RateCity list personal/holiday loans with advertised rates beginning in the ~5–6% range for qualified applicants (as low as 5.49% p.a. in some cases) and ranging upward for higher-risk borrowers.

On the higher end, unsecured holiday loan rates can exceed 15% or even reach around 20% p.a. for those with fair credit, so the rate you’ll pay is highly dependent on your credit history and whether the loan is fixed or variable.

Major lenders typically offer both fixed and variable rate options – fixed loans give the certainty of a locked-in rate (helpful for budgeting travel costs), while variable loans can fluctuate with market rates. For example, one big bank (CBA) currently advertises unsecured fixed personal loan rates from about 7.75% up to 19.75% p.a., and variable rates from 8.25% to 20.25% p.a., with the lowest rates reserved for excellent-credit customers.

The current interest rate climate for holiday loans sees most borrowers landing somewhere in the high single to low double digits, though shopping around on comparison platforms can uncover competitively low rates even in 2024–2025.

How Can You Finance Your Holiday Vacations?

When considering financing options for holidays in Australia, individuals often contemplate holiday loans, credit cards, personal savings, and travel-specific loans. Each option carries its own set of benefits and drawbacks.

Type of Loan

Pros

Cons

Holiday Loans

  • Tailored Financing: Holiday loans provide specific financing for travel needs, ensuring borrowers have funds dedicated to their vacations.

  • Predictable Repayments: Fixed interest rates and structured repayment plans help borrowers manage their budgets with predictability.

  • Interest Rates: Some holiday loans may come with less favourable terms, including higher interest rates. Borrowers need to compare options to avoid excessive costs carefully.

Credit Cards

  • Convenience: Credit cards offer immediate access to funds, providing a convenient payment method while travelling.

  • Rewards Programs: Certain credit cards offer travel-related rewards and benefits, adding value for frequent travellers.

  • High Interest Rates: Credit cards often come with high interest rates, and failure to repay the full balance can lead to substantial interest charges.

  • Potential Overspending: The ease of using credit cards may lead to overspending, impacting financial stability.

Personal Savings

  • No Debt Accumulation: Using personal savings avoids debt accumulation and interest payments.

  • Financial Security: Relying on savings provides a sense of financial security and control.

  • Reduced Liquidity: Depending solely on personal savings may limit liquidity for other financial goals.

  • Opportunity Cost: Using savings for a holiday might mean missing out on potential investment opportunities.

Travel-Specific Loans

  • Tailored Financing: Loans designed specifically for travel may offer unique features catering to vacation expenses.

  • Flexible Repayment: Some travel-specific loans may provide flexibility in repayment terms.

  • Limited Use: These loans are often tied to travel expenses, limiting their use for other financial needs.

  • Terms and Conditions: Borrowers should carefully review terms and conditions, ensuring transparency and fair practices.

Tips for Responsible Borrowing

When considering holiday loans in Australia, responsible borrowing is crucial. Here are essential tips derived from local sources to make informed decisions and minimise risks:

Making Informed Decisions About Holiday Loans

  • Research Loan Options: Explore reputable Australian lenders for holiday loan offerings and compare interest rates and terms.

  • Understand Your Needs: Assess the amount required for your holiday and choose a loan amount that aligns with your travel expenses.

Importance of Budgeting and Researching Lenders

  • Create a Budget: Before borrowing, create a detailed budget outlining your holiday expenses, ensuring you borrow only what you can comfortably repay.

  • Check Lender Reputation: Research and read reviews about potential lenders to gauge their reputation and reliability.

Understanding Loan Terms and Conditions

  • Read the Fine Print: Carefully review the terms and conditions of the loan agreement, including interest rates, repayment terms, and any additional fees.

  • Clarify Terms with Lender: If uncertain about any aspect of the loan, seek clarification from the lender to avoid misunderstandings later.

Strategies to Minimise Risks

  • Borrow Responsibly: Only borrow what is necessary and within your means to repay comfortably.

  • Emergency Fund: Maintain an emergency fund to cover unexpected expenses and minimise reliance on borrowed funds.

Holiday loans in Australia offer a convenient way to fund vacations, offering easy access to funds, flexible repayment options, and a stress-free vacation experience. However, they also have drawbacks such as less favourable loan terms, ties to specific travel companies, and potential impact on credit scores.

It’s essential for individuals to carefully consider these factors before committing to holiday loans. Other financing options include credit cards, personal savings, and travel-specific loans. Responsible borrowing is crucial, and borrowers should research lenders, understand loan terms, and budget effectively. Creating a detailed plan, checking lender reputations, and maintaining financial discipline can contribute to a positive borrowing experience. By following these tips, individuals can make informed decisions that enhance their travel experiences while safeguarding their financial well-being.

About the author
Chloe Jones Personal Finance Writer
Chloe is a seasoned financial services professional with over 15 years of experience in banking, financial strategy, and risk management. She shares industry insights as a Financial Services Consultant and writer.
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