Travel and vacation loan.
The liquidity of the travel loan
With the travel loan it is possible to obtain the liquidity necessary to carry out both a leisure holiday, a transfer linked, for example, to a study stay, or for medical treatments.Through this type of loan it is possible to obtain a loan that covers up to 100% of the cost of the holiday. The amount that is paid is on average less than 10,000 USD, but can go up to around 30,000 USD.
In some cases, the financial companies also make offers available which include the costs of the preliminary investigation and installment collection free of charge. Since the amounts disbursed for holiday loans are usually low, the investigation and disbursement phase of the loan are very fast. The loan can have a duration ranging from 12 to 60 months, and provides for a fixed rate repayment and constant installments.
The autonomous availability of the amount of money necessary for the holiday allows the applicant maximum freedom to organize the trip. In fact, it becomes possible to decide to purchase the trip at any agency or directly online, or even pay the living expenses directly at the holiday resort.
Also, the holiday loan can be requested from the travel agency, taking advantage of agreements stipulated by the tour operator with specialized financial companies, almost always exclusively. In this way, on the one hand you can get a discount on travel by virtue of the commission received by the agency on the intermediated loan, on the other hand the possibility of choosing, among the available loan offers, the loan at the interest rate more convenient.
To obtain a holiday loan, specific requirements are not required, other than to prove that you have a certain income and a good creditworthiness.
The elements of the contract
The law states that a vacation loan contract must contain the following elements:
- the interest rate applied;
- any other prices and conditions applied, including higher charges in the event of late payment;
- the amount and methods of financing;
- the number, amounts and due dates of the individual installments;
- the annual percentage rate of charge (APR);
- the detail of the analytical conditions according to which the APR can be possibly modified;
- the amount and reason for the charges that are excluded from the calculation of the APR;
- any guarantees required;
- any insurance coverage required and not included in the APR calculation.
The law guarantees the consumer the possibility of carrying out the early repayment of the loan. If the consumer decides to choose this option, in addition to the reimbursement of the residual capital, he could pay a penalty that must not exceed, by law, 1% of the financed capital; the exact terms of the penalty are shown in the contractual conditions signed.
Evaluation criteria of the holiday loan
Below we schematically illustrate some specific evaluation criteria of the holiday loan.
- Risk policies : each Institute applies its own risk policy in the evaluation of requests, based on the statistical data it possesses (credit scoring). These data constitute the tool that allows the Institute to keep insolvencies below a certain level.
- Income level : the acceptance of requests is normally also subject to the appraisal of the applicant’s level of income and the relationship between the latter and any repayment installment.
- Credit reliability : the creditworthiness of the applicant is of great importance. It is important to stress that this assessment has no “moral” meaning. The Institutes merely estimate the level of risk associated with each request, also on the basis of the indications transmitted by the Risk Centers. If the applicant’s credit history has some “flaws” (delays in repayments of previous loans, outstanding, etc.), the probability that the request will be accepted is obviously lower. In some of these cases, a valid alternative is constituted by the Transfer of the fifth: this solution, by offering the appropriate guarantees to the lender, allows to adopt more flexible evaluation criteria.
Vacation loans are provided by financial institutions and banks. They do not require specific requirements, except a certain income and a credit position of the loan applicant which confirms an adequate financial reliability of the same.