Credello: How do honeymoon loans work?

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NEW YORK – May 20, 2022 – (Newswire.com)

A honeymoon loan is exactly what it sounds like – it’s a loan you take out to use on your honeymoon. The national average for a honeymoon costs around $5,000, and one in 10 couples will spend $10,000 on their post-wedding celebration. Everyone wants to take a once in a lifetime trip, so some people choose to take out a honeymoon loan.

It’s a type of personal loan for holidays which you can get from banks, credit unions or online lenders. They will normally have a fixed APR, meaning it will not fluctuate over the life of the loan. The APR can vary from 2.49% to 35.99% depending on creditworthiness. If you have good credit, a honeymoon loan can mean you pay less interest on payments than if you put them on a credit card, which will normally have a variable APR of around 15%.

Things to consider:

To qualify for a honeymoon loan, you will need proof of income, a maximum debt to income ratio, and a minimum credit score. These factors and thresholds vary by lender, but you can generally expect to need a credit score of 640 or higher, a minimum annual salary of $10,500 to $25,000, and a ratio of leverage of 36% or less.

How to get a honeymoon loan:

  1. Prepare your documents and go through your credit file. Make sure you know your score and your debt ratio.
  2. Get prequalified. This will allow you to receive APR offers from multiple lenders without a thorough investigation of your credit report.
  3. Compare the prices. Compare APRs, loan terms, and origination fees between lenders to see which works best on your terms.
  4. Complete the application, which will include a credit check, submission of pay stubs and bank statements. Note that further investigation with your credit bureau will result in a lower score.
  5. Receive your money and start planning your trip. Some lenders may process the application and disburse the funds the same day, while others may take a few days.

Honeymoon loans can be great options for those working on a budget to take the trip of their dreams. However, you can also cut costs during your trip by traveling off-season, taking advantage of points and miles for hotel stays or flights, and being flexible about dates and locations. Look for discounts or flash deals when planning your trip and bargain where possible.

If your credit rating is low, making your APR high, you could be paying double or more the amount you originally borrowed from interest. Keep this in mind when deciding how much to borrow and how to spend it. Read the terms and conditions of the loan carefully and make sure that you will be able to make the loan repayment every month until the loan is fully paid off.

It’s time to go enjoy your honeymoon!

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Credello: How do honeymoon loans work?


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