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Published: January 15th 2018
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Personal Loans are very difficult to avail for someone whose credit score is not so good. And getting a personal loan for traveling can be very expensive as you might get the loan at a very high rate of interest.
This personal loan can be offered in two forms, one is an unsecured loan, where you might have to pay more rate of interest, and such a loan is very risky for any bank to lend. Hence they charge a very high rate of interest. But on the other hand, if the loan is a secured loan, that means the bank has some kind of collateral to recover the loan amount in case if you fail to pay.
If you are a senior citizen and want to go out to travel abroad or visit your grandchildren, you can avail travel loans that allow senior citizens to repay the amount in 36 easy monthly installments. Some of the travel packages take care of senior citizens to give them a comfortable and memorable experience without stress.
Note that you should make a travel budget by considering your income and expenses. Once you have calculated this you will be able to pay your loan EMI easily without having any problem handling your basic expenses. Also, try using your credit card for things like hotel rooms, travel ticket charges and food charges, which you can pay later after your vacation.
Moreover, always check your credit score before you take a travel personal loan because it is a possibility if your scores are low you will get the loan at a very high rate of interest. You can improve your credit scores by paying your bills and payment of any credit account before due dates. Once your credit score is very good you might be offered a travel loan on a very low-interest rate. Make sure to also check for options in the fixed and variable rate of interests and go with the one best that suits you.
Debt consolidation Additionally, it is worth noting that debt consolidation can also help with your credit score.
This option helps you refinance your current loans in order to pay only one single monthly EMI for all your loans. In case you have several loans such as student loan, personal loan, or credit card dues etc, and you are paying several EMIs, in debt consolidation, a new loan is taken to settle all the other loans you are paying, so you only have to pay one loan account and settle the other loans. The important thing to keep in mind is that you should look for a lower rate of interest, in order to save a lot of money in paying interest unnecessarily.
Types of Debt consolidation: Debt consolidation through secured loans: In this option, you can
consolidate all your unsecured debts to a secured debt by taking a loan against property, fixed deposit, gold, life insurance policy etc. In this scenario, you will pay a very low rate of interest, in order to clear all your unsecured loans. As the new loan is secured, it is more affordable and for real estate, you might also get tax deduction
Debt consolidation through unsecured loan: It is a very good option if you don’t want to pledge your collateral against a loan. Banks will offer you a low rate of interest in order to consolidate your debt, but the rate of interest can be higher than the secured loan. You can check special offers such as low rate of interest, or no interest for the first few months. The benefit in going with the unsecured option is that your collateral is not at risk.
Documentation required The documents required in these scenarios are the same as any personal loan you would apply. Only in the case of secured loan, they will ask you paperwork for the collateral. The document required can be:
●Proof of Identification, Proof of residence
●Proof of income and Bank statement
●The letter of consent from the debt loan company to allow you to close the loan account prematurely, with or without any penalty charges.
If you feel this is very confusing for you, you can also take a help of your credit counselor who can guide you with the right options. Essentially, it is important that whenever you
take a Personal Loan for Travel or any loan, you ensure to get the best offer. And a good credit score always helps you get the best deal. This again makes debt consolidation crucial to someone with a bad credit score.
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