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A holiday loan is an unsecured personal loan that can help you spread the cost of a trip.
You can typically borrow between £1,000 and £25,000. You then repay your loan with interest in fixed monthly instalments over an agreed period.
Because a holiday loan is unsecured, you don’t need to use an asset, such as your home, for security.
No need to put up an asset as security
Speedy application process – if you're approved, the money could land in your account within a few days (or hours if you’re already a customer)
Interest rates are usually fixed, making budgeting easier
Choose how much you borrow and for how long
You could improve your credit score if you make your monthly repayments on time.
You'll pay interest (the longer you borrow for, the more you'll pay) – so it could end up being an expensive holiday
Late or missed payments could result in a penalty fee
If you don’t repay your holiday loan on time, it can damage your credit score and make it harder to borrow again
Your existing holiday debt could make it harder to get another loan in an emergency (e.g. if your car or boiler breaks down).
Before you start packing your suitcase, run through our holiday loan checklist so you know what to expect.
Bear in mind
Don’t be tempted to borrow more and take on unnecessary debt. Only borrow what you need and can afford to comfortably pay back.
Looking for other ways to help cover the cost of a holiday? You could explore these options:
Use your savings, if you can.
You might need to delay your travel plans until you’ve saved up enough, but you'll also avoid paying interest that way.
Compare savings accounts
You could pay for your holiday upfront with a 0% purchase credit card and spread the cost with monthly repayments. You won't pay any interest if you make at least the minimum repayment each month.
Compare 0% credit cards
Some travel companies offer payment plans. You'll usually pay a deposit, then spread the rest over time.
Be sure to check fees and interest – it may cost you more than a holiday loan.
It's worth taking the time to think carefully before taking out a holiday loan. It’s a debt that you could be repaying long after your travels are over.
Plus, with interest and other potential fees, you'll be paying back more than you borrow. On top of the cost of the actual holiday, it could end up being a more expensive trip than you budgeted for.
That said, a holiday loan could help you spread the cost if your savings won't cover it or you want to manage your budget over time.
For some people, it can make a one-off expense more manageable – as long as the repayments are affordable.
Did you know?
The average holiday loan amount people apply for through Compare the Market is £4,0272.
Eligibility criteria can vary between lenders, but you usually need to:
Be 18 or over – for some lenders, it may be 21. There may be an upper age limit too.
Be a UK resident
Have a regular income (job, pension or benefits)
Be on the electoral register
Have an active bank account
Be able to afford your repayments.
The easiest way to find out if you're eligible for a holiday loan is to use our eligibility checker. It runs a soft credit check, so it won’t affect your credit score in any way.
Try our eligibility checkerCompare the Market Limited acts as a credit broker, not a lender. To apply for a personal loan, you must be a UK resident and aged 18 or over. Loan approval is subject to status and eligibility criteria set by the lender.
Find out how loans work, what APR is and what your other borrowing options could be
If you’re off backpacking, it may be more difficult to get a personal loan to pay for your travels. Most people who go travelling are away for a few months and often live on a tight budget, with little or no income.
Lenders want the assurance that you can pay back a loan, which often means you’ll need to show you have a regular income.
You’ll also need to consider how you’d keep up with regular monthly repayments while you’re away.
You might be able to get a holiday loan with bad credit, but you’ll probably have to pay a higher rate of interest. And the loan might come with restrictions, such as a limit on how much you can borrow and for how long.
Charlie is a senior commercial leader with close to a decade of experience across the UK’s leading personal-finance and comparison platforms. Before joining Compare the Market as Head of Commercial in 2024, he held senior commercial roles at TotallyMoney and MoneySuperMarket Group.
1 Based on Trustpilot ratings (July 2026).
2 Correct as of June 2026.
What our expert says...
“A holiday loan can help spread the cost of your trip away. But think very carefully before taking one out as you could end up paying off the debt for months, or even years, to come. Consider alternative options, like setting up a holiday fund and saving into it each month or using a credit card.”