Get Away With The Best Holiday Loan
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If an overseas holiday is on the cards, using savings to fund the cost is, of course, an ideal scenario. But if this is just not possible, or your savings are ring-fenced for another purpose, a competitive holiday loan could be the next best solution.
What are the best holiday loans?
So which holiday loans offer the best value? We carried out some research (June 2023) and listed the deals we found, below.
The rates you see are representative. That means you’ll need a very good credit score to qualify. If you are accepted for a loan, the APR you are offered could be much higher. Bear in mind also that, while information was correct at the time of publication, loan rates are changing frequently.
Holiday Loans between £1,000 and £2,999
AIB (NI)
Representative APR
12.3%
Early Repayment Charges*
No
Borrowing term
1 to 5 years
Representative Example
Borrowing £2,000 at a representative APR of 12.3%, annual interest rate (fixed) 12.3%, will result in 60 monthly payments of £44.14. The total cost of credit is £648.56, and the total amount payable is £2,648.56.
Representative APR
12.3%
Early Repayment Charges*
No
Borrowing term
1 to 5 years
Representative Example
Borrowing £2,000 at a representative APR of 12.3%, annual interest rate (fixed) 12.3%, will result in 60 monthly payments of £44.14. The total cost of credit is £648.56, and the total amount payable is £2,648.56.
AIB (NI) is offering highly competitive rates on smaller sized loans.
Loans can be taken over one or five years. Online loan decision within three hours – if you’re an existing current account customer.
There is flexibility to repay the loan early, either partially or in full, without penalty charges.
- Leading APR for loans of this size
- Flexible loan with no early repayment penalties
- Phone application only if you’re not an AIB customer
- Loans only over one to five years
Santander
Representative APR
14.5%
Early repayment charges*
Yes
Borrowing term
1 to 5 years
Borrowing £2,000 at a representative APR of 14.5%, annual interest rate (fixed) 14.5%, will result in 60 monthly payments of £46.14 The total cost of credit is £768.40 and the total amount payable is £2,768.40.
Representative APR
14.5%
Early repayment charges*
Yes
Borrowing term
1 to 5 years
Borrowing £2,000 at a representative APR of 14.5%, annual interest rate (fixed) 14.5%, will result in 60 monthly payments of £46.14 The total cost of credit is £768.40 and the total amount payable is £2,768.40.
Santander is offering competitive rates on smaller sized loans.
Loans can be taken over one to five years. There is flexibility to overpay on the loan but there are penalty charges for full early repayment.
- Competitive APR for smaller-sized loans
- Flexibility to make overpayments
- Preferential rates only apply to some existing customers (1/2/3 World and Santander Select)
- Loans only over one to five years
Holiday loans between £3,000 and £4,999
The AA
Representative APR
9.9%
(9.8% for AA members)
Early Repayment Charges*
Yes
Borrowing term
1-7 years
Representative Example
Borrowing £4,000 at a representative APR of 9.9%, annual interest rate (fixed) 9.9%, will result in 60 monthly payments of £83.96. The total cost of credit is £1,037.78 and the total amount payable is £5,037.78.
Representative APR
9.9%
(9.8% for AA members)
Early Repayment Charges*
Yes
Borrowing term
1-7 years
Representative Example
Borrowing £4,000 at a representative APR of 9.9%, annual interest rate (fixed) 9.9%, will result in 60 monthly payments of £83.96. The total cost of credit is £1,037.78 and the total amount payable is £5,037.78.
Borrow at this level with the AA at a leading fixed rate over a 1 to 5 year term.
Charges apply to full early repayment, while there are no fees for just paying extra off your balance.
- Penalty free overpayments allowed
- Early repayment charges apply
- No preferential rate for AA members
M&S Bank
Representative APR
9.9%
Early Repayment Charges*
Yes
Borrowing term
1-7 years
Representative Example
Borrowing £4,000 at a representative APR of 9.9%, annual interest rate (fixed) 9.90%, will result in 60 monthly payments of £83.96. The total cost of credit is £1,037.78 and the total amount payable is £5,037.78.
Representative APR
9.9%
Early Repayment Charges*
Yes
Borrowing term
1-7 years
Representative Example
Borrowing £4,000 at a representative APR of 9.9%, annual interest rate (fixed) 9.90%, will result in 60 monthly payments of £83.96. The total cost of credit is £1,037.78 and the total amount payable is £5,037.78.
M&S is offering a competitive representative APR of 9.90% on loans over one to 7 years for borrowing of between £3,000 and £4,999.
- Competitive APR
- Quick approval process
- Borrow between £1,000 and £25,000
- Slightly higher rate than best buy
Holiday loans between £5,000 and £7,499
AIB (NI)
Representative APR
5.6%
Early repayment charges*
No
Borrowing term
1 to 5 years
Representative Example
Borrowing £6,000 at a representative APR of 5.6%, annual interest rate (fixed) 5.6%, will result in 60 monthly payments of £114.50. The total cost of credit is £869.97 and the total amount payable is £6,869.97.
Representative APR
5.6%
Early repayment charges*
No
Borrowing term
1 to 5 years
Representative Example
Borrowing £6,000 at a representative APR of 5.6%, annual interest rate (fixed) 5.6%, will result in 60 monthly payments of £114.50. The total cost of credit is £869.97 and the total amount payable is £6,869.97.
AIB (NI) is offering highly competitive loan rates.
Loans can be taken over one or five years. Online loan decision within three hours – if you’re an existing current account customer.
There is flexibility to repay the loan early, either partially or in full, without penalty charges.
- Leading APR for loans of this size
- Flexible loan with no early repayment penalties
- Phone application only if you’re not an AIB customer
- Loans only over one to five years
Sainsbury’s Bank
Representative APR
6.2% (nectar card holders)
(7.1% for non nectar members)
Early Repayment Charges*
Yes
Borrowing term
1-5 years
Representative Example
Borrowing £6,000 at a representative APR of 6.1%, annual interest rate (fixed) 6.1%, will result in 60 monthly payments of £115.82. The total cost of credit is £949.07 and the total amount payable is £6,949.07.
Representative APR
6.2% (nectar card holders)
(7.1% for non nectar members)
Early Repayment Charges*
Yes
Borrowing term
1-5 years
Representative Example
Borrowing £6,000 at a representative APR of 6.1%, annual interest rate (fixed) 6.1%, will result in 60 monthly payments of £115.82. The total cost of credit is £949.07 and the total amount payable is £6,949.07.
This is a strong rate for a personal loan of this level. It comes with fixed repayments which you can choose to make over one to five years.
You will need to have Nectar card for at least 6 months to qualify for the rate, with slightly higher rates and more restricted borrowing available for non-Nectar card holders.
If you want to overpay or clear the loan ahead of schedule, you’ll pay an early settlement fee of 58 days interest on your remaining balance.
- Competitive APR
- Funds paid in little as 2 hours
- Nectar card holders only
- Minimum gross income of £7,500
The AA
Representative APR
6.3%
Early Repayment Charges*
Yes
Borrowing Term
1-5 years
Representative Example
Borrowing £6,000 at a representative APR of 6.3%, annual interest rate (fixed) 6.3%, will result in 60 monthly payments of £116.35. The total cost of credit is £980.77 and the total amount payable is £6,980.77.
Representative APR
6.3%
Early Repayment Charges*
Yes
Borrowing Term
1-5 years
Representative Example
Borrowing £6,000 at a representative APR of 6.3%, annual interest rate (fixed) 6.3%, will result in 60 monthly payments of £116.35. The total cost of credit is £980.77 and the total amount payable is £6,980.77.
The AA is offering a representative 6.3% (fixed) for AA members and non members over terms of one to five years. The deal is only available to applicants with top credit scores.
- Competitive APR
- Quick approval process
- Higher APR for non AA members
* Based on a settlement figure as set out under the Consumer Credit (Early Settlement) Regulations 2004. This states that if you have less than 12 months remaining of your loan, providers can charge up to 28 days’ interest. An extra 30 days’ interest can be added on if there is more than one year of the loan term remaining, taking the total maximum penalty to 58 days’ interest.
How are the holiday loans ranked?
We looked at the best holiday loans based on borrowing of between £1,000 and £7,500 – a wide enough budget to cater for anything from a solo traveller, to a family holiday abroad.
To rank the deals, we looked primarily at representative APR but also considered borrowing terms, early repayment charges and late payment fees.
Finally, bear in mind that, while the holiday loan deals are correct at the time of publication and we’ll endeavour to update this page frequently, loan rates can change.
What exactly is a holiday loan?
A holiday loan is essentially an unsecured personal loan. But when you are asked the purpose of your loan during the application process, there is an option to select Holiday. This is for the lender’s own records and to check that a personal loan is the most suitable kind of borrowing. It shouldn’t affect whether you are accepted for the loan or not.
A personal loan allows you to choose how much you want to borrow (which could be between £1,000 and £25,000) and over how long. You then pay back that sum at a fixed rate of interest over an agreed term in a finite number of monthly instalments.
The duration of the personal loan (known as its ‘term’) is up to you – periods of 1 to 5 years are typical, but loan terms of up to 7 years are available. The longer the term, the lower the monthly payments will be. However, you’ll be paying interest for longer, so the total amount you pay over the term will be greater.
Personal holiday loans are ‘unsecured’. This means the debt is not secured against an asset, such as your home. This is different to a secured loan, such as a mortgage, where the lender could take your asset to recover its money if you miss payments.
What are the pros and cons of a holiday loan?
Taking out a holiday loan is a significant financial commitment and requires thought. To make things a little easier, here are the main pros and cons to consider:
Pros
- Fixed payments are handy for budgeting
- Choose the time you need to repay
- Funds paid directly into your bank meaning any surplus can be put towards holiday spending
- You can often borrow more with a personal loan than a credit card or overdraft will allow
- Many loan providers allow for penalty-free overpayments
- Some very competitive rates available.
Cons
- The lowest rates on personal loans are for larger borrowing above £7,500
- The lowest-rate deals require a good or excellent credit score
- Monthly payments are not flexible, like with a credit card
- Personal loans charge interest which means paying back more than the ‘face cost’ of your holiday
- If you want to repay your loan early you’ll be charged one to two months’ interest depending on the term outstanding.
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