Two facts, scarier together: most of us don’t have $600 saved for an emergency, and most of us plan to spend over $1,000 this holiday season. That leaves at least a $400 gap.
Holiday loans can ease the upfront hit. In this blog, we’ll cover how they work, why people use them, and how to get one online. Let’s get into it!
Key Takeaways
- Holiday loans help cover seasonal expenses such as gifts, travel, food, and decorations, offering predictable payments compared to credit cards.
- Lenders have different requirements, but most borrowers must be 18 or older, have steady income, a bank account, and valid contact details.
- Types of holiday loans vary, from personal loans and payday loans to lines of credit and secured options, each with different risks and costs.
- Borrow responsibly by planning repayment, reviewing fees, and avoiding scams or lenders promising “guaranteed approval.”
- Alternatives like payroll advances, borrowing from family, or selling unused items can reduce the need for a loan during the holidays.
What Is a Holiday Loan?
A holiday loan is a type of personal loan that can cover the expenses of the holiday season. They’re typically offered by banks, credit unions, and online lenders. With a holiday loan, you can cover the costs of gifts, meals, decorations, parties, and other holiday-related expenses.
Why People Use Holiday Loans
Why consider a loan for holiday spending? There are several reasons, but here are the common ones:
- Payment Predictability: During the holidays, the only surprise you want is an unwrapped gift under the Christmas Tree — not credit card bills. Instead of spending a lot of money on credit cards, many people prefer to take out a loan with fixed and predictable monthly payments.
- Expenses Surge: With the holidays so close together, covering the costs of gifts, family dinners, and decorations within a two-month period can be overwhelming. Holiday loans provide a lump sum to cover these expenses upfront with less stress.
- Preserved Savings: You might have savings, but emptying your emergency fund for holiday presents isn’t ideal. A small personal loan can preserve your savings for true emergencies or upcoming bills.
- Travel Costs: Many families travel to their loved ones living in other cities. These loans can help cover the expenses of airfare, gas, or accommodation. If travel is a big part of your holiday expenses, you can see how to save on airfares.
- Credit Access: Finally, many borrowers turn to online holiday loans simply because they cannot qualify for traditional loan types. Some online lenders offer personal loans marketed for holiday expenses and might consider you even if your score isn’t perfect.
How to Get a Holiday Loan Online
Requesting a holiday loan online is typically a quick and easy process. Below are the steps to apply for holiday loans online.
Step 1: Determine Your Budget and Loan Amount
Start by itemizing your holiday expenses, including gifts, travel, food, and other related costs. This will help you understand how much you need to borrow. Avoid the temptation to borrow extra. Only proceed if you’re confident you can handle the payments, as a holiday loan should be a helpful tool, not a long-term burden.
Step 2: Check Your Credit
It’s wise to check your credit score before applying, so you know where you stand. You can ask for a free report from one of the three credit bureaus (Experian, Equifax, and TransUnion). In fact, you can get free weekly reports from all three bureaus at AnnualCreditReport.com. If your score is low, don’t panic, as there are lenders that may consider applicants with subpar credit.
Step 3: Submit a Request
You can fill out our online request form in just a few quick steps. We’ll usually ask for some basic personal and financial details, along with the amount you’d like to borrow.
Step 4: Receive a Prequalified Offer
After you send in your request, you may get some initial results right on your screen. If a lender is interested, they’ll ask you to fill out a complete loan application. Take your time to read through the fees, terms, and conditions before agreeing to anything. And remember, getting approved doesn’t mean you have to take the offer.
Step 5: Get Your Funds and Use Responsibly
If you accept the offer and sign the loan agreement, the lender will disburse the funds to you. Depending on the lender, it may take one to several business days to receive the money. You can go ahead and spend it while you make timely repayments according to the agreed-upon schedule.
Holiday Loan Requirements
Lenders set their own standards, which may include credit score thresholds or income minimums, but a few basics apply almost everywhere. To qualify, you’ll generally need to be at least 18 years old, a U.S. citizen or permanent resident, and show proof of steady income. You must also have an active checking account, along with a current email address and phone number, so lenders can contact you.
The Different Types of Holiday Loans Available
When we talk about holiday loans, we typically refer to unsecured installment loans. However, holiday loans can come in other shapes and forms, namely:
- Personal Loans: This is the most common type of loan. Personal loans have fixed loan amounts, interest rates, and repayment terms. They are mostly unsecured, meaning no collateral is required.
- Payday Loans: A payday loan is a very short-term loan typically due on your next payday. While these loans are relatively easier to obtain than personal loans, they come with very high interest rates and are prohibited in some states.
- Line of Credit: A revolving line of credit functions similarly to a credit card or an overdraft. You have a credit limit, and you can draw up to that limit as needed during the holiday season. It can be handy for covering ongoing holiday expenses, but it requires discipline to avoid carrying a balance.
- Secured Holiday Loans: These loans can be in the form of personal or installment loans, but they require collateral. Interest rates can be lower than what you’ll find with unsecured loans, but you risk losing your collateral if you default.
Things to Consider Before Applying
A key thing to remember about Christmas loans is that they should disappear with the tinsel, not linger into next December. Just like other types of loans, holiday loans also carry a significant responsibility. Before you click any “submit” or “accept” buttons, here are a few things to keep in mind:
- Write the loan’s payoff date on your calendar and think about whether you can clear it as soon as possible without touching your savings. A shorter term means bigger payments, but it also stops the debt from creeping into next Christmas.
- Calculate all fees to get a better picture. This refers not only to the APR but also to origination fees, late fees, and any payment-processing charges. Explore your options before you land on the cheapest and most convenient loan term for you.
- Stress-test your cash flow and establish a fallback plan. Does your budget survive a surprise bill? If not, consider reducing the amount or rethink borrowing.
- Be cautious of scams and double-check who you’re dealing with. Steer clear of lenders that promise “guaranteed approval,” ask for upfront fees, or pressure you to decide right away — those are classic warning signs. Before applying, make sure the lender is legitimate by checking reviews on trusted sites.
Holiday Loans Alternatives
Before you decide to take out loans for Christmas, it’s worth exploring a few alternatives first — especially if you’re borrowing with bad credit. These options might help you cover holiday expenses without needing a loan:
- Payroll Advances: Some employers offer payroll advances to allow you to draw against an upcoming paycheck to cover expenses. If this is an option, speak with HR to confirm eligibility, the repayment schedule, and any fees or tax implications.
- Borrow from Friends and Family: If you have someone close who is financially comfortable, consider asking to borrow from family or friends for the holidays. The benefit here is potentially no interest and flexible terms.
- Sell Unwanted Items: You can also sell unwanted items, such as old electronics or furniture on eBay or Facebook Marketplace. This will help you generate quick cash without borrowing and cover a portion of your holiday expenses.
- Save in Advance: If you’re already short on cash this season, it’s a valuable lesson for the future. Consider planning ahead for next season and starting a holiday savings fund. Saving money on a tight budget can be difficult, but it’s not impossible.
FAQs About Holiday Loans
Can You Get a Loan for a Holiday with Bad Credit?
It’s typically challenging to obtain a holiday loan with poor credit. However, it’s not entirely impossible. Some lenders may consider other factors, such as your current income and employment history, when determining your eligibility. But even if you score a loan with bad credit, interest rates will typically be very high.
What Is the Easiest Way to Get a Holiday Loan?
Taking out a loan is never an easy process. However, requesting one doesn’t need to be a hassle. When you start at BuddyLoans, we can help you ask for a short-term loan in minutes and get you your on-screen results even faster than that.
How Fast Can I Get the Money?
This depends on the lender’s policies. Many online lenders can deposit funds the same or next business day if you’re approved, but one to three business days is more common. ACH transfers can be slowed by weekends and bank holidays.