Holiday Loans: Find the Best Option

The holiday season is often a time when we face the financial gap between what we can afford and what’s on our holiday shopping list. In such situations, holiday loans with no credit check can be a smart solution.

If you need extra cash to cover your holiday expenses, we have a list of reliable partners to turn to. Compare terms and rates and get personalized offers for holiday loans today, even with bad credit.

Where to Get Holiday Loans for Bad Credit

What Are Holiday Loans?

A holiday loan is an unsecured personal loan people use to get through the holiday season. Usually, they arrive as a one-time payment sent in full to the borrower’s bank account. After that, a lender adds interest to the original loan amount, and the borrower makes a series of fixed monthly payments. The repayment period typically spans from 12 to 60 months, but there may be choices with shorter or longer maturities.

Holiday loans are often not secured by collateral, and therefore, your income, credit score, and debt-to-income ratio are what lenders use to assess your eligibility. However, low-income individuals and consumers with a poor credit history also have some options.

How Can I Use a Holiday Loan?

Holiday loans can be used for various expenses and costs you may face during the festive season. Although most lenders don’t monitor how you spend the money, you will be asked to specify your loan purpose in an application form. Here are some common uses of holiday loan funds:

• Buying gifts for your family and friends;
• Financing a holiday party;
• Going on vacation;
• Purchasing holiday decorations;
• Buying groceries for a Christmas dinner;
• Covering other holiday-related expenses.

Other Holiday Financing Options?

Holiday loans can be obtained from various personal loan lenders, such as:

Banks: Bank loans are known for being flexible and fairly priced. However, they come with certain minimum income requirements and hard credit history checks. Therefore, you need to have a good credit score to qualify for one on favorable terms. Otherwise, you may be offered a personal loan with a cosigner.

Credit unions: A credit union is a member-owned, non-profit financial institution. It often provides personal loans at inexpensive rates since it doesn’t put profit first. Some credit unions also have options for members with less-than-perfect credit. They still run hard credit checks, though, which can affect your FICO score. Also, you must be a credit union member to get a loan from one.

Online lenders: Online lenders are alternatives to traditional financial institutions. They offer fast and convenient application procedures, fast funding times, and more lenient qualification requirements. However, their APRs may be higher compared to traditional options.

What Is The Average Cost of a Holiday Loan?

An average holiday loan costs between 5.99% and 35.99%. This is an annual percentage rate that includes your interest rate and any fees related to your loan. However, the exact cost depends on the loan type and your credit score. If you’re opting for a bad credit holiday loan, your APR may be higher.

Pros and Cons of Holiday Loans

Holiday loans have both advantages and drawbacks that you should be aware of to make an informed decision.

Pros:

• Fixed interest rates and monthly payments. As they don’t fluctuate, it will be easier for you to budget;
• Fast funding. Many lenders offer same-day or next-day deposits;
• No restrictions on a loan purpose. You can use the funds for any holiday spending;
• Potential credit boost. You can improve your credit score by making on-time payments.

Cons:

• Months of debt long after the holiday season. Some borrowers still pay their previous holiday loans when the next festive season starts;
• Not all borrowers can qualify. People with bad and poor credit can be denied holiday loans or have limited options at less favorable terms;
• High loan minimums. Many lenders have minimum loan amounts of $1,000, $2,000, or $5,000;
• Extra fees. Besides interest rates, lenders may also charge additional fees for processing a loan or paying late or early. 

Holiday Loan Alternatives

If you think a holiday loan won’t work for you but still need extra cash to cover holiday expenses, here are a few more options to consider.

Buy Now, Pay Later

“Buy now, pay later” options can be a great solution if you want to finance your holiday shopping. They allow you to split your purchase into several payments, with the first one you make upfront. BNPL can come with repayment terms of several weeks, months, or rarely years. The major benefit is that these borrowing options usually come with no interest.

Credit Cards

If you’re a credit card holder, you can use it to pay for your holiday expenses. Some credit cards offer 0% APR promotional periods. This makes the amount you owe interest-free as long as you repay it within the set time. Just plan your shopping in advance to avoid overspending. If you have a high credit limit, you may end up with unnecessary debt. 

Cash/Savings

Paying in cash or with your savings is the best way to cover your holiday-related expenses. This is because it’s a debt-free option. However, it also requires some preparation ahead of time. Start thinking about your holiday expenses in the spring or summer and set a fixed amount aside each month. This will help you avoid debt and all the costs related to it.

How to Compare Holiday Loans?

When choosing holiday loans, compare several options, paying special attention to the following features:

• APR. Personal loans usually come with APRs from 5.99% to 35.99%. Try to avoid loans with higher APRs;
• Fees. Extra fees may be charged for late or early payments, loan processing, or non-sufficient funds. Learn more about all the costs that can potentially affect your total loan cost;
• Repayment terms. Make sure to choose a lender with reasonable repayment terms. A short-term loan will be difficult to manage. A longer repayment period makes your monthly payment lower but also results in a higher total loan cost. Aim for the Golden mean and use a loan calculator to determine an optimal repayment term;
• Loan amounts. Some lenders can set high minimum loan amounts, forcing you to borrow more than you really need. Try to avoid such situations or ask a lender whether you can pay off a portion of your loan early.
• Funding times. If you have a specific time by which you need the money, make sure the lender can transfer it within that deadline;
• Bad credit options. If you don’t have good or excellent credit, check out whether a lender accepts your credit score. You can also consider lenders with joint or co-signer options to get better loan terms.

How Do Holiday Loans with No Credit Check Work?

Holiday loans with no credit check are usually personal installment loans for bad credit offered by alternative lenders. Although their name may suggest that these loans don’t involve credit checks at all, this is not entirely true.

In fact, loan providers want to lend money to reliable borrowers, so they perform a soft credit pull to make sure you’re likely to repay the loan on time. Such an inquiry doesn’t affect your credit rating and involves no denial just because of a borrower’s bad credit score. However, you should be aware of high interest rates that usually come with no credit check holiday loans. Some options may even have three-digit APRs.

Be Careful with Holiday Loans During the Festive Season

Beneath the festive wrapping of Christmas loans typically lie predatory payday loans, which are difficult to handle due to their high costs and short repayment terms. Although these loans involve no hard credit checks and can be obtained within as little as 24 hours, they are quite risky. You may be forced to pay between $10 and $30 for each $100 you borrow, which is from 260% to 782% in terms of APR for a 14-day loan.

Many payday loan borrowers end up renewing their existing loans, which adds more fees and leads to a cycle of debt. Even if you have bad credit and need money quickly, consider safer alternatives.

Methodology

BadCredify does thorough market research and provides independent opinions based on the received information. When choosing lenders, we analyze and fact-check the data we get from their representatives and websites. Our team of writers reviews offers from more than 40 loan providers and pre-qualifies to compare potential loan terms.

We take into account the key loan parameters, such as interest rates, loan amounts, repayment terms, eligibility requirements, attitude towards bad credit, and safety. Before creating a final top, our writers check out customer reviews and ratings to learn more about the overall experience of borrowing money from a particular lender. Then, we rank lenders from best to worst and provide our top 5.

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