Travel Loans & Borrowing for Travel
Are travel loans and borrowing for travel (in some capacity or another) a realistic option for sustainable long term travel? How much does it really cost to go travelling? It can be pretty expensive, it can also be pretty cheap, it really just depends on how you go about things. Couch-Surf, eat lots of home prepared food, avoid the touristy areas in high season and avoid restaurants where you can and you can do it on the cheap. On the other hand if you want to splurge a bit.. things can get pricey very quickly. Long term though, unless you’re richer than Mr Burns, or have some form of viable way to attract money to you while abroad, staying in expensive hotels, drinking Moet and scoffing lobsters every-night is not really a doable option. Making money while you travel is a whole separate topic i’ll address elsewhere but for now here are some random travel tips that might held you save money on the road, but failing that, read on!
I’ve written before about cash saving tips for long term travel but what if something comes up, you have a green light to go and not too much spare cash in your back pocket, what do you do? I would usually say, you don’t go. I’m generally of the opinion that if you can’t afford it now, then it’s not really an option so take it off the table, but, what if that once in a lifetime opportunity to climb a mountain with Richard Branson comes along and you simply have to go? (Ok so maybe not a good example, if Richard Branson really wanted to climb a mountain with me, which of course, he must do, I’d be leaning on him to pay for it – offer’s on the table Sir, your move).
Okay, so the chance to climb that mountain with Sir Richard rears it’s expensive looking head and gnashes it’s teeth at you and he’s not dipping into his illustrious well stuffed pockets to help out, what are your options? Borrow is the obvious answer. We have all had (or experienced) borrowing in our lives in some way or another, whether it’s a personal loan from family, friends, bank or by getting into credit card debt (my least favourite type of debt).
There can be no doubt that access to credit has really helped humanity out – In fact in his amazing book Sapiens by Yuval Noah Harari (seriously go read it now) he argues that access to credit was one of the things that enabled humanity to claw its way out of the dark ages. But just because travel loans exist, that does not mean you have to use a travel loan to propel you across the globe – It’s expensive money, so make sure that if you’re looking at borrowing for travel, you fully understand all the options.
I thought I’d write a few ideas down on borrowing cash for travel and what options are available.
Don’t travel go till you have the money
Here’s a novel idea, maybe just don’t go unless you have the funds up front or some way of generating income while you travel. It’s the simplest option for sure and one that is probably quite painful to stick to in the present moment (piss off Richard, if you want me to hold your hand up there, you pay for it, I’ve go bills to pay), but also the cheapest in the long run. It’s also probably the smart decision and we all know it. Not borrowing puts you in control, but then again.. no adventure of the lifetime with Branson either.. your call, but my advice is save your cash before you go travelling, there’s nothing worse then a financial ‘travel hangover’ after the travel ‘glow’ fades and you return back into normal life.
Travel loans from family or friends
You could always break out the old school call to the parents (depending on how old you are, this may or may not be possible – or acceptable), while a bit of a last resort to me it’s something we’ve all done or at least thought about at some point. The ‘bank of Mum and Dad’ has funded many an expedition i’ll bet. I like to stand on my own two feet and crawling back to the folks for money is not an option I like to entertain too readily but, in the end, it’s still an option that can be put on the table. The cheapest option as unless your folks or friends are bankers, they probably wont charge you any interest. Just make sure you pay these debts back as losing a friend or having a fall out with the family just because you’re too stingy to pay them back is not cool.
Take out a personal travel loan
Another option to get cash into your bank account fast if the need arises (damn you Branson!), although an expensive and potentially a painful one. There are more types of travel loans out there today than you can poke a debt collector at, and the options and costs vary depending on the loan itself and the lender. Generally smaller amounts from short term lenders tend to be very expensive in the long run, but possibly (depending on your situation) the access to fast money might be worth it.
The advantage to a personal loan over credit card debt is that generally the interest is lower (but not always.. so check this in depth) and the fixed amount and terms make ‘snacking’ on debt while you travel less of a concern. Some travel loans may have about half the interest rates of most credit cards but it’s still debt… Depending on the lender, the terms may have fairly flexible repayment options so dive deep in your research if you can. Personal travel loans taken out before you leave can be a good way to set and stick to a clearly defined budget (or you can just not spend more than your pre-saved budget.. ok I’ll shut up about saving your money before you go now), which is an advantage over using credit cards, although that’s putting a brave face on what is still an expensive way to travel. I wouldn’t ever do this personally, instead i’d just save my ass off first.
The apex of expensive money (aside from those really short term personal loans). In my opinion only use these bad-boys where you have a capacity to pay them back right away and avoid the interest all together. Interest rates of 20+% are the financial equivalent of being kicked in the family jewels (painful to say the least), unless you have the capacity to pay back this debt before you start getting charged any interest. Personally I do have a credit card (a couple of them , actually), and I think I’ll do a whole post about them in the future at some point, given things like travel rewards etc.. If I were you, I’d really try to stay in the black when it comes to plastic and I heavily lean towards the other options first. Like the alcohol in your system on a big night out, credit card debt also has the habit of creeping up on you slowly until you’re in trouble, so use it wisely, or not at all.
Last words on travel loans and borrowing for travel
My personal preference is that you need to have enough money to get by at least for the most part, before you leave for an adventure (or have the capacity to earn while you travel) but if you do get one of those once in a lifetime ‘Branson style’ opportunities to travel and you’ve taken a long, hard, sobering look into the mirror and found it just can’t wait, explore what travel loan options you have to fund your travels very carefully. If you can bear asking for a travel loan from the bank of Mum and Dad, then as long as you intend to pay it back (of course you do!), obviously a free loan is the best. Alternatively a personal travel loan from a lender could do the job, but take another long hard look in the mirror (and at the T&C’s) first. Finally, if Richard Branson’s decided to sweeten the deal and bring along an entourage of scantily clad Virgin air hostesses (or hosts.. sure why not) up the mountain with you and they just need you to be there and you have no other options… only then should you reach for the plastic!