A vacation is a fun and exciting way to relax, spend time with family and friends and let off some steam. It can also be expensive, depending on the trip you have in mind.
The average cost for one person to go on a week-long vacation in the U.S. is $1,982. If you’re traveling with family or plan to leave the country, prices could be much higher. With inflation continuing to be a challenge, many Americans are struggling to pay for vacations this summer, with many scaling back and looking for ways to travel cheaper.

If you are planning a trip and are unsure if you will be able to pay for it, you do have the option to finance the trip with a vacation loan. While a vacation loan should be treated as a last resort and should only be applied for if you are certain you will be able to pay it back on time, it could be a decent option to help you pay for a once-in-a-lifetime trip or urgent travels. You should always try budgeting and saving before taking out a loan. If you think that taking out a vacation loan is the right move for you, there are plenty of reputable lenders out there to help.

Key statistics

  • The National Travel and Tourism Office projects that inbound travel will return to pre-pandemic levels by 2025.
  • Atlanta, Boston, Las Vegas, Los Angeles and Miami are the top destinations for U.S. domestic travelers in 2023.
  • The average domestic traveler in the U.S. spends $1,982 per person on a week-long vacation, which translates to about $283 per day.
  • Most Americans (20%) plan to spend between $1,500 and $3,000 on travel in 2023, with 26% saying they’ll be spending more this year due to inflation.
  • Despite having the lowest traveling budget, more than half of Gen Z adults and millennials (52%) travel three times or more per year, compared to 41% of Gen Xers and 35% of baby boomers.
  • When it comes to planning trips, roughly 62% of consumers think cost is the most important factor.
  • Over 82% of U.S. travelers plan on financing at least a portion of their trip.
  • More than a quarter of travelers say that traveling is worth going into debt for.

How has inflation affected travel costs?

The U.S. economy has been experiencing a difficult time in the last several months, as rising inflation and a looming recession have affected nearly every industry with travel as no exception. Airfare prices have risen by roughly 18 percent between last March to March 2023, according to the U.S. Bureau of Labor Statistics Consumer Price Index. Nevertheless, Americans are still traveling.

If you are planning a vacation this summer but are unsure of how inflation will factor into the overall cost, consider all the individual elements of the trip before making any decisions. This could include flights, hotels, car rentals and food costs.

Here is a breakdown of some of the common travel expenses and how rising inflation has impacted pricing:

Travel expenses Percent change since 2022
Flights 17.7% increase
Lodging 7.3% increase
Car Rental 38.7% increase
Food 8.8% increase

Hotel and air travel prices dropped significantly during the peak of the COVID-19 pandemic a couple of years back, but prices have risen significantly in the face of inflation over the last year.
Hotel prices have risen due to the increased demand for travel after a two-year period of reduced activity. The increase in price for car rentals, flights and food costs can be attributed to high fuel costs increasing overall transportation costs.

Average amount people spend on vacation by age

Generation Average summer vacation budget
Gen Z $2,788
Millennials $4,141
Generation X $5,060
Baby Boomers $6,126

Despite having the smallest average travel budget, Gen Zers along with millennials travel more frequently than other generations. According to Morning Consult, 52 percent of Gen Z adults and millennials travel at least three or more times per year, compared to 41 percent of Gen Xers and 35 percent of boomers.

What is a vacation loan?

A vacation loan is an unsecured personal loan that you can take out to help cover travel or vacation-related expenses.

Vacation loans can be used to cover any and all travel expenses, including transportation, lodging, food and entertainment. You can get a vacation loan from any lender that offers personal loans, which include banks, credit unions and online lenders. That said, vacation loans should only be used for once-in-a-lifetime trips, special occasion trips like a honeymoon or emergency trips because of the effect they can have on your credit score and finances. Only take out a vacation loan if you are sure you will be able to pay it back on time.

What are the pros and cons of a vacation loan?

While vacation loans can help you take the trip of your dreams sooner rather than later, they should be considered a last resort unless the trip is an unavoidable emergency. Before considering a vacation loan, you should try to save up and budget for a trip so that you can afford it on your own. If you are considering taking out a vacation loan, consider the pros and cons first.


  • Fixed monthly payments. Because payments are fixed, you will pay the same amount each month, making it easy to plan ahead.
  • Potential for lower interest rate. Depending on your credit, personal loans often have lower interest rates than alternatives like credit cards. If you were planning to use a credit card to pay for your trip, a vacation loan could be a lower interest alternative.
  • Help fund emergency travel (or higher cost travel). If you are taking a trip out of necessity rather than pleasure and it is time-sensitive, a vacation loan could be a great option to enable you to travel more quickly.


  • Interest increases the cost of the trip. If you take out a loan, you will have to pay interest on top of the expenses of the trip itself.
  • Fees can increase the cost of borrowing. Many lenders charge a variety of fees. Always look into the fees a lender charges before applying.
  • Monthly payments. If you take out a vacation loan, you will be on the hook for monthly payments until it is paid off. This means that you could be paying off your trip months after the fact. Taking out a loan is a long term investment.,
  • Can negatively impact your credit score if you don’t make the payments. If you are late making payments or end up having to defer them, your credit could take a serious hit.

How do you get a vacation loan?

If you decide to take out a vacation loan, there are several steps you will take.

Check your credit score

First, you should check your credit score. Different lenders have different minimum credit score requirements, but you generally need good to excellent credit to qualify for a lender’s lowest rates.
Here’s a breakdown of FICO scores and their meanings:

FICO Score Rating Meaning
Source: myFICO
800+ Exceptional Your score is much higher than that of the average U.S. consumer, so lenders consider you to be an “exceptional” borrower.
740-799 Very Good Your score is above average, making you a reliable borrower.
670-739 Good Your score is slightly above average, which means most lenders will approve you for credit.
580-669 Fair Your score is below-average, but many lenders will still issue you a loan.
<580 Poor Your score is much lower than that of the average U.S. consumer, making you a risky borrower.

Knowing your credit score is important because it informs what lenders you may qualify with and the terms you might be eligible to receive. If your credit is less than stellar, you may want to consider a lender that works with bad credit borrowers.

If you aren’t sure where your credit stands, you can always visit AnnualCreditReport.com to get a free copy of your report from all three major bureaus once every 12 months. Although these reports won’t show you your score, they will give you an idea of what needs to be improved. However, you can also visit the websites from each individual bureau (Experian, TransUnion and Equifax) to get a copy of your report, although some may charge a nominal fee in exchange for this.

Research lenders

Once you have reviewed your credit score and overall financial picture, start researching top lenders. When comparing lenders, consider the interest rates offered, fees charged, minimum and maximum loan amounts, repayment terms and any additional features offered by individual lenders.

Many lenders allow you to pre-qualify without hurting your credit. This lets you see the rates you will be eligible for without officially applying.

Submit your application

Once you have chosen a lender, you will submit a formal application, including identifying documents like your ID, W2s and pay stubs. If you are accepted, the next step is to sign off on the agreement, receive the funds and begin paying back the loan in monthly installments.

Bankrate insight
While many lenders offer fast approval and funding within just a few days, it is best to apply for a travel loan at least a month before your planned vacation to ensure you have enough time.

Should I apply for a vacation loan?

While taking out a vacation loan could be the right decision in certain circumstances, you should generally try to save up and budget for expenses that are not necessities rather than taking out a loan.

Because a vacation is a luxury, not a necessity, you should think carefully about taking out a vacation loan. If the trip is an emergency, a vacation loan may be a good idea. Other circumstances that warrant taking out a vacation loan include special occasion trips like a honeymoon or once-in-a-lifetime trips.

Essentially, if there is a sense of urgency and you don’t think you have time to save up, taking out a vacation loan could be the way to go. However, you should budget and save instead of taking on debt if it is at all possible. If you do decide to take out a vacation loan, make sure to search for the best rates and make sure that the loan fits your budget.

5 best vacation loan lenders

Discover: Discover vacation loans are available for as much as $40,000 with rates ranging from 7.99 percent to 24.99 percent. Funds can be acquired as quickly as the next business day after approval.

SoFi: SoFi offers as much as $100,000 for vacation loans with rates that start at 8.99 percent and go up to 29.49 percent. Loan funds can be dispersed as quickly as the same day of approval, and origination fees are not required.

Prosper: Prosper loans can be used for practically anything and offer rates as low as 8.99 percent. Loans are available from $2,000 to as much as $50,000. There are no prepayment penalties and you can get funds in as little as one business day.

Avant: You can borrow from $2,000 to $35,000 from Avant for vacations. APR rates range from 9.95 percent to 35.99 percent with loan terms from 12 to 60 months. There are fees with Avant loans to be aware of including late payment fees, administration fees, and dishonored payment fees.

LightStream: Rates on LightStream personal loans range from 7.49 percent to 25.49 percent, and there are no fees. Loans are available for as much as $100,000 and you can get your rate reduced as much as 0.50 percent by signing up for automatic payments. But prequalification isn’t an option with LightStream, so check your rates with other lenders first.

What are some alternatives to vacation loans?

Before taking out a vacation loan, consider the following alternatives.

  • Budget. If you plan accordingly, there are many ways to save money on a trip. Spend time researching the cheapest travel and lodging options, as well as looking up tips and tricks for cheap travel in a certain area. Creating a budget and finding options that fit into that budget is the best way to save money while traveling.
  • Travel cards and reward cards. Many credit card companies offer perks and reward programs for traveling. Find a credit card that lets you build up travel points as you spend. This could help you cut travel costs, with some cards even awarding airline miles as you spend and pay off the card.
  • Saving. If you know you want to take a trip, it is always a good idea to start saving early. Set aside a predetermined amount from each paycheck to go toward a travel fund. Figuring out a travel budget will make it easier to figure out how much and for how long you will need to save.
  • Traveling with a bigger group and splitting costs. Traveling with a group and sharing accommodations can help with travel costs significantly.
  • Find discounts. There are often discounts available if you search for them. Do your research to find the cheapest flights, hotel rooms, etc. There are almost always deals to be found online.
  • Choose a less costly vacation. If the vacation you’re planning is turning out to be too expensive, you might want to consider a smaller-scale trip, or changing your destination to a less costly area.
  • Wait until the offseason. Prices are higher in certain areas during certain times. For example, it is more expensive to go to the Bahamas during the summer than it would be to go during the fall or winter. Consider visiting your chosen location during the offseason to take advantage of lower prices and less crowded destinations.

The bottom line

Despite rising costs, Americans are ready to travel after the pandemic. While rising inflation does make travel more difficult, there are still plenty of ways to reduce costs and keep your travel budget on track.

If you can’t wait to save up but are confident you will be able to pay back the loan, a vacation loan could be a great way to finance your upcoming trip. However, you should do your research and compare financing options before making that decision. Saving up and finding deals is always a better option than taking on debt.