What is a travel loan?
Most lenders using the term travel loan or holiday loan just mean a standard personal loan covering flights, accommodation, tours or spending money. Nimble's holiday loan option is a Medium Personal Loan used for a travel purpose, not a separate product type. Moneysmart lists holidays as one of the common reasons people take out personal loans. So the real question isn't whether a travel loan sounds right. It's whether the repayments will still fit your budget once the holiday's over.
Like any personal loan, the amount, rate or fees, term and approval decision come down to the product and your circumstances.
When you're comparing options, you're really comparing personal loans: some are just marketed for holidays.
The holiday might last two weeks. You could still be paying it off years later.
How much does a travel loan really cost?
The most useful number is usually the total amount you'll repay, and three figures get you there: the interest rate, what you're charged for borrowing before fees; the comparison rate, a figure that folds in interest and most fees so you can compare loans, based on a standard example so it won't necessarily match your loan; and the total amount payable, the full amount you'll repay over the term, what you borrowed plus interest and fees.
Use the comparison rate to shop around, but check the total amount payable for the actual amount and term you're considering before you sign anything.
Fees differ between lenders too. Nimble's smaller Personal Loans are fee-based, while larger loans come with an interest rate plus an establishment fee. Your exact costs get disclosed before you confirm the loan, so check the current rates page for the figures that apply to you.
Why can a smaller repayment cost more?
A longer term spreads the loan over more repayments, so each one's smaller. But because you're borrowing for longer, the total cost can be higher. A shorter term usually means bigger repayments but less interest overall.
The table below shows the effect when the amount borrowed, interest rate and repayment frequency stay the same and only the term changes.
approx. monthly repayment | Approx. total repaid (incl. interest and fees) | |
|---|---|---|
| 1 year | $547 | $6,816 |
| 3 years | $214 | $7,950 |
| 5 years | $149 | $9,195 |
approx. monthly repayment
- 1 year
- $547
- 3 years
- $214
- 5 years
- $149
Approx. total repaid (incl. interest and fees)
- 1 year
- $6,816
- 3 years
- $7,950
- 5 years
- $9,195
Note: this is a hypothetical $6,000 example, just to show how the loan term can affect total cost. It's not based on a specific Nimble product, rate or offer, and it's not a quote. Try Moneysmart's personal loan calculator with your own numbers. Your actual repayments and total cost depend on the amount borrowed, rate, fees and loan term.
The key point: a smaller monthly repayment doesn't automatically mean a cheaper loan. Compare the total amount payable.
What do lenders look at when you apply?
Lenders don't just look at your credit score. Under ASIC's responsible lending requirements, they also weigh up your requirements and objectives, your financial circumstances, and whether the loan is not unsuitable for you. In plain English: the decision comes down to more than one number.
Nimble, for example, looks at credit history alongside other info like recent bank statements and its basic eligibility criteria.
A lower credit score can matter, but it doesn't automatically mean you'll be declined, just as a strong score doesn't guarantee approval. It comes down to your overall circumstances and the lender's criteria.
What's on your credit file?
These terms can sound similar. The OAIC's credit reporting definitions break them down like this:
Term | What it means | |
|---|---|---|
| Credit report | Credit Report | Your credit-related history and activity, held by a credit reporting body. |
| Credit score | Credit score | A number generated from your credit report using a scoring model. It's one input into a lender's decision. |
| Credit enquiry | Credit enquiery | A record created when you apply for credit. The OAIC says an enquiry can stay on your credit report for up to five years. |
| Lender assessment | Lender assessment | The lender's review of your overall financial situation, not just your credit score. |
| Final decision | Final decision | The lender's decision on that particular application. A different lender or product might land somewhere else. |
Term
- Credit report
- Credit Report
- Credit score
- Credit score
- Credit enquiry
- Credit enquiery
- Lender assessment
- Lender assessment
- Final decision
- Final decision
What it means
- Credit report
- Your credit-related history and activity, held by a credit reporting body.
- Credit score
- A number generated from your credit report using a scoring model. It's one input into a lender's decision.
- Credit enquiry
- A record created when you apply for credit. The OAIC says an enquiry can stay on your credit report for up to five years.
- Lender assessment
- The lender's review of your overall financial situation, not just your credit score.
- Final decision
- The lender's decision on that particular application. A different lender or product might land somewhere else.
A credit enquiry can sit on your file for up to five years, so compare your options and narrow down your choice before you apply, rather than firing off several applications at once.
How do the options compare?
There's no single best way to pay for a trip. Here's how the common options stack up when the trip cost itself stays the same. And there's no universal winner here. It comes down to whether you already have the money, how quickly you could realistically clear any balance, and how much certainty or flexibility you want.
Savings / delaying the trip | Personal loan | Credit card | BNPL / interest-free finance | |
|---|---|---|---|---|
| Cost structure | No interest or fees | Interest plus any fees, set out in the contract | Interest if not paid off within any interest-free period, plus possible fees | Often fee-based rather than interest-based, but late fees can apply |
| Repayments | None: you pay once, upfront | Fixed regular repayments over an agreed term | Flexible minimum repayments, which can stretch out how long the balance lasts | Fixed instalments over a shorter, set schedule |
| How long you could be paying | No debt created | As long as the loan term you choose | Indefinite if you only make minimum repayments | Typically shorter and fixed, but can stretch out with additional purchases |
| Flexibility | Full control, but you need the funds to already exist | Fixed once the contract's signed, aside from any early repayment | Ongoing access to a credit limit for other spending too | Usually tied to a specific purchase or provider |
| What happens to your credit file | None | Application creates a credit enquiry; the loan itself gets reported | Application creates a credit enquiry; ongoing balance and repayments get reported | May or may not be reported, depending on the provider |
| If you miss a payment | Not applicable | May lead to fees, a default listing and collection action, depending on the lender | Interest and fees may apply, depending on the card and offer terms | Late fees are common, and some providers report missed payments |
Savings / delaying the trip
- Cost structure
- No interest or fees
- Repayments
- None: you pay once, upfront
- How long you could be paying
- No debt created
- Flexibility
- Full control, but you need the funds to already exist
- What happens to your credit file
- None
- If you miss a payment
- Not applicable
Personal loan
- Cost structure
- Interest plus any fees, set out in the contract
- Repayments
- Fixed regular repayments over an agreed term
- How long you could be paying
- As long as the loan term you choose
- Flexibility
- Fixed once the contract's signed, aside from any early repayment
- What happens to your credit file
- Application creates a credit enquiry; the loan itself gets reported
- If you miss a payment
- May lead to fees, a default listing and collection action, depending on the lender
Credit card
- Cost structure
- Interest if not paid off within any interest-free period, plus possible fees
- Repayments
- Flexible minimum repayments, which can stretch out how long the balance lasts
- How long you could be paying
- Indefinite if you only make minimum repayments
- Flexibility
- Ongoing access to a credit limit for other spending too
- What happens to your credit file
- Application creates a credit enquiry; ongoing balance and repayments get reported
- If you miss a payment
- Interest and fees may apply, depending on the card and offer terms
BNPL / interest-free finance
- Cost structure
- Often fee-based rather than interest-based, but late fees can apply
- Repayments
- Fixed instalments over a shorter, set schedule
- How long you could be paying
- Typically shorter and fixed, but can stretch out with additional purchases
- Flexibility
- Usually tied to a specific purchase or provider
- What happens to your credit file
- May or may not be reported, depending on the provider
- If you miss a payment
- Late fees are common, and some providers report missed payments
What happens if things don't go to plan?
A few things are worth checking before you commit.
Can you repay early?
Paying a loan off early can save you money, but not always. It depends on how interest and fees are calculated and whether early repayment fees apply. Nimble doesn't charge an extra fee for repaying its Medium Personal Loan early, but check your own contract because terms vary.
What if the trip gets cancelled or changed?
Cancelling or changing the holiday doesn't automatically cancel the loan. Your travel booking and loan are separate contracts: any refund or credit depends on the airline, travel provider or insurer, while loan repayments keep going under the loan terms.
What if repayments get difficult?
If repayments start feeling difficult, Moneysmart recommends contacting your lender early to ask about financial hardship assistance, rather than waiting until you miss a payment. A hardship arrangement may show on your credit report for a limited time, but Moneysmart notes the arrangement itself doesn't affect your credit score.
If money's tight more generally, the National Debt Helpline (1800 007 007) offers free, independent financial counselling.
Before borrowing for a trip, look past the monthly repayment and work out what the loan will actually cost in total. The real question is whether those repayments will still feel comfortable once the holiday's over and you're back to your normal expenses.
Frequently asked questions
Applying for credit generally creates a credit enquiry on your credit file, which other lenders can see. Approval still comes down to the lender's broader assessment of your finances.
A lower credit score doesn't automatically mean you'll be declined, and there's no single definition of 'bad credit' every lender uses. Lenders generally weigh up income, expenses, existing commitments and credit history together, so outcomes vary by person and lender.
It depends on the lender and product. Nimble doesn't charge an extra fee for repaying its Medium Personal Loan early, but check your contract because early repayment rules and interest calculations vary.