Have you been dreaming of a summer getaway with a cool drink in your hand and white-sand beaches? For sure, searching for airline tickets can be challenging, especially if the fares are very expensive, outstripping your savings.
Here’s a secret: you can book your flight today and pay it later. Many airline companies like United Airlines, JetBlue, and American Airlines offer “buy now pay later” options into their online flight booking.
These airlines work with technology startups that offer the fund or loan to travelers who’d prefer to pay their flight in installments. To know more about this option, read on!
Layaway or Loan
Do you want to find the best installment loan for your travels? Don’t worry! According to the CEO and founder of Uplift, Brian Barth, the “buy now pay later” option is designed to help people make their dream travels into reality. Travel creditors usually appeal to individuals with average credit scores who might not be eligible for travel reward cards that need an excellent credit score.
Also, the loans are ideal for people who are establishing their credit and like the discipline and control of fixed payments than the revolving payments of credit cards. Moreover, it is not only airline companies that offer funds for travelers.
In fact, many travel deal websites like Groupon Getaways, Expedia, and CheapAir.com offer loans via a San Francisco-based lender called Affirm. If you are looking for layaway-style plans, FlightLayaway.com and Airfordable offer such plans.
These plans allow you to repay your flight in online installments even before your flight. Furthermore, other websites such as STA Travel offer loans to college students.
The Price Or Expense Of Convenience
Although a travel loan may be ideal for you, make sure you know how you will repay it, such as using a tax refund or taking a portion out of your budget. Before choosing or selecting a loan, ensure to understand all the fees included.
For instance, the average customer in UpLift borrows money between 500 to 2,500 dollars. Also, the company charges APR (annual percentage rates) from 8.99% to 36%, contingent on your credit profile.
So, let’s say, you borrow 1,500 dollars and repay it over a year at 17%, you will pay a total of 1,642 dollars over 12 months or 137 dollars per month. Other than that, lenders might charge modification and cancellation fees if your travel plans change. Also, they might persuade you to buy travel insurance.
The Credit Effect
Most travel loan lenders perform a soft credit pull, which is literally a background check or examination of your credit report. Don’t worry because credit checks will not hurt your credit score.
If you’re approved for the loan, your payment history and loan will be shown on your credit report. And what will help you build your credit score is to pay on time. Otherwise, you will be charged with fees for late-payments and will hurt your credit score.
Most lenders prefer borrowers with low to average credit scores and consider data over credit scores, for example, the travel history of the person with an airline.
Best Travel Lenders
Many companies have become popular and well-known in allowing people to pay for their tours, hotels, and flights in monthly installments. The following are some of the best companies to consider:
- FomoTravel: This company entices travelers with its social savings plan, requiring recurring monthly payments. Even so, it allows borrowers to invite family and friends to make payments. So, when you share your travel experience on social media, the process of payment changes.
- Flyr: This company offers installments at zero percent APR interest, plus, without a credit examination.
- Airfordable: This company charges between 10% and 20% of the price of the ticket as a fee, keeping the costs down. And instead of doing credit checks, Airfordable has made a risk assessment software, thus, making the process much easier and more efficient.
- UpLift: This fintech company helps travel brands offer installment plans to their customers. UpLift does not charge late fees and steer clears from credit-check hits, penalties, and holds.
- Affirm: This fintech company offers many different products, such as layaway plans for booking a hotel. Borrowers can repay their loans over 3, 6, or 12 months through a bank transfer.
Are you looking for alternative options to travel loans? Well, the simplest way is to save money for your travels and fund your dream vacation. In many instances, charging your flight to your credit card and repaying more than the least monthly payment might be more affordable compared to a travel loan with interest, provided that you repay it within the designated time frame.
Moreover, if you are still dreaming of that perfect beach vacation, yet don’t have the money, then look for an inexpensive version of it. For instance, go to Florida instead of Bali, so that you won’t put yourself in debt.