A Christmas loan is a personal loan that you can use to cover your Christmas expenses. It works just like typical personal loans, where you borrow an agreed amount to be repaid with interest and fees over a period of time.
You can use the loan funds for any purpose, whether it's for a family holiday, party or gifts, or to consolidate your other personal debts and finances. The amount you're able to borrow will be based on the lender you choose, your income, and your credit score.
If you have a lower credit score, you may find it harder to get a cheap rate. Payday loans are an option may be an option here, but they are more expensive than others and should be approached with caution. You should only consider them if it's a financial emergency as they can exacerbate existing financial problems and lead to further debt. Consider carefully if Christmas gifts are worth such expensive debt.
Typical personal loans are exactly what you'd expect. You apply a certain amount and then repay that amount plus interest. Your rates tend to depend on your credit score and borrowing history. Generally, this option could suit someone wanting to borrow between $2,001-$80,000 (depending on if you secure the loan) and who wants to repay the loan over a period of several years.
Credit cards tend to have higher interest rates than personal loans however, especially if you are able to repay the debt within the interest-free period, they're an option worth considering.
Buy now pay later can be good if all you need to do is stagger the cost of your purchases. It has a much lower borrowing limit than other options, but charges no interest. It can be easy to overspend with this option, so be sure you can afford to pay all your instalments to avoid late fees.
Merging multiple debts into one loan could be gift by itself if you're stressed with multiple debts. They're designed to push multiple debts into one single loan, with one set of repayments. Just make sure your new rates with this loan is lower than the costs of your existing debts.
Everyone's situations and needs are different, but these are what you should consider before deciding if a Christmas loan is right for you.
If you organise your finances and plan ahead, you'll limit your chances of overspending. Plan for gifts and parties in advance and keep to the budget. Planning ahead can give you time to find the best deal.
Don't hesitate to make the most of coupons and coupon codes. You can also check out Finder's Christmas gift guides.
If you're part of a reward scheme, Christmas could be the best time to spend your reward points. If you're looking for ways to earn rewards, there are various credit cards with reward programs. This lets you earn points for every dollar spent.
Having the stress of debt hanging over you can ruin the festive mood. Try to get on top of your existing debt before the holiday season. Pay off as much credit card debt as you can. If possible, make extra repayments to reduce how much you pay in interest.
There are lenders who are more open to borrowers with less than perfect credit. These include peer to peer lenders and payday lenders. Keep in mind that bad credit personal loans generally cost more. If the lender offers personalised rates or risk based financing, your credit score will be a big factor in how much the loan costs.
There are also payday loans with no credit checks. Their eligibility criteria is more flexible and their decision will be based on whether you can repay the loan. As mentioned before, these loans are expensive and should be approached with some caution. Consider carefully if things like Christmas gifts are a worthwhile reason to get into this kind of debt.
If you're struggling financially and would like to speak to someone for free financial advice, information and assistance you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday). If you are suffering financial problems related to the coronavirus pandemic you may be eligible for additional support.
Compare productsUse Finder's comparison table to find a loan that suits you. Pay attention to the interest rate, comparison rate, fees and ability to make extra repayments.
Go to siteClick 'Go to Site' on our tables to be taken directly to the lender's website, where you can find more information or get a quote. Click 'More Info' on our table to go to our dedicated review page.
Apply for the loanSubmit your application for the loan. It will help to have the right documents on hand, such as your driver's license and any income/employment details.
Review and make your decisionThe lender will look at your application and, if you're approved, will send you their final quote. This normally takes a couple of business days, but could be as short as minutes. Review all the details, make your decision, and then the money will be on its way!
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